The Massachusetts Senate has passed a scaled-down version of a bill passed by the House of Representatives that imposes additional conditions and requirements on the conduct of foreclosure in Massachusetts. Echoing the Supreme Judicial Court’s concerns about inaccurate or incomplete documentation purporting to establish the lawful owner of a mortgage, the legislation will require foreclosing lenders to verify that they have all such documentation in place prior to initiating foreclosure. While the act will create a task force to study the effectiveness of mediation in cases of contested foreclosures, it stops short of requiring lenders to participate in mediation or other alternative dispute resolution processes before foreclosing on a defaulted borrower. A number of cities in Massachusetts, including Springfield, have recently enacted local ordinances requiring lenders to engage in mediation in advance of foreclosure (see July 10, 2012 Alert), but the status of such ordinances is now in doubt following this action by the Massachusetts legislature, thereby raising the possibility that further litigation will eventually place the issue before the Supreme Judicial Court.
Alert August 07, 2012