A Massachusetts regulation designed to stem foreclosures caused by the housing-bubble collapse of 2008 appears to be working, according to Gov. Deval L. Patrick’s administration. Recent data suggests that the number of foreclosure petitions, paperwork that starts the process, have significantly decreased. As a result, actual foreclosures have decreased as well.
Commonly known as the Right to Cure regulation, the Mass. Division of Banks on Jan. 31 temporarily withdrew amendments to the regulation in order to address some minor corrections that would not impact its purpose. The planned amendments are designed to provide a standard form to be sent to borrowers before commencing foreclosure proceedings. Incidental corrections to the form necessitated the delay.
“There were some technical glitches with the form that needed correcting and they have been fixed,” said Jason Lefferts, spokesman for the Division of Banks. The amended regulation, which does not need legislative review, should become effective March 2, according to Lefferts. The new form was due to become mandatory April 23, but the state has yet to announce if the April date will change due to the delay.
The earliest version of the law was established in May 2008, and required lenders to provide a 90-day right to cure, or fix, the loan problem – to borrowers prior to commencing foreclosure. The law was amended in 2010 in order to extend the period to 150 days. No official forms were provided with the regulation, leaving mortgagees and their loan servicers to define proper and adequate notice. This year’s changes will unify the information the notice is to provide.
Despite the lack of an official form to date, the measure appears to be working. According to information released by The Warren Group, foreclosures in Massachusetts lessened in 2011, even though an increase was observed in the month of December. More significantly, foreclosure petitions were down 47 percent, from 23,931 in 2010 to 12,634 last year. In addition, completed foreclosures dropped more than 30 percent, from 12,238 in 2010 to 8,528 in 2011. The Warren Group has reported real estate news in New England for 135 years and is the publisher of Banker & Tradesman.