Alert September 05, 2012

Massachusetts Attorney General Urges FHFA to Comply with State Mortgage Law

Martha Coakley, Attorney General for the Commonwealth of Massachusetts, sent a letter to the Acting Director of the FHFA, urging him to reconsider the FHFA’s “refusal to engage in principal reductions for struggling homeowners.” In the letter, Ms. Coakley discusses recent legislative developments in Massachusetts regarding the conduct of foreclosures, such as the “Act to Prevent Unnecessary and Unreasonable Foreclosures” passed by the Massachusetts legislature in August (see August 7, 2012 Alert). The Act requires certain creditors holding “certain types of loans” (e.g., interest-only, adjustable rate mortgages, and loans featuring short term introductory rates) to “make commercially reasonable efforts to achieve a commercially reasonable loan modification” and codifies recent developments in state case law addressing the requirements for execution of a valid foreclosure, among other specific requirements. Ms. Coakley’s letter reflects ongoing efforts by various entities within Massachusetts, including local governments, state courts, and the legislature, to keep the Commonwealth at the forefront of the debate surrounding practices for loan modification and foreclosure.