Massachusetts still has some of the country's most outmoded foreclosure laws. In most states, lenders must go to court to prove incurable default before foreclosing ("judicial foreclosure.") Such a procedure assures that the lender really holds the mortgage, has complied with all legal requirements, and that the borrower is actually in default.
MA has a legal framework for foreclosure which more resembles feudalism than modern ideas of homeownership. To start with, if you have a mortgage in MA, you don't actually hold title to - that is, formally own - your own home - until you make your last mortgage payment, and get the mortgage discharge. In MA, a lender can foreclose on a defaulted mortgage by entering and occupying the home in question, or by serving notice and auctioning it off.
Massachusetts courts have in recent years decided a series of cases clarifying the rights of home owners in foreclosure. Many of these decisions seem to state the obvious; for instance that financial institutions cannot foreclose on mortgages they do not own - though in the headiest days of trading in securitized debt, this is exactly what banks were doing, contributing to the financial meltdown of 2007-2008. These Court decisions protect consumers by holding that lenders must comply strictly with the legal requirements for foreclosure.
Legislative action, 2013-14 session:
As our courts clarified the rules for foreclosure, some buyers of previously foreclosed homes discovered that their properties did not have clear title, due to defects in the foreclosure process. Most such buyers had been prudent enough to buy owners' policies of title insurance, and made claims on their insurers to produce clear title. Title insurers and other financial services companies services then pressed the legislature to reverse these court decisions, leading to the 2013 passage by the Senate of a bill stripping homeowners of rights, and curtailing the time for claiming improper foreclosure. When that bill appeared on the July 29, 2014 House Calendar Agenda, I filed an amendment to lengthen the time in which an unlawful foreclosure could be contested
My amendment was adopted, but the Senate, non-concurred; so, the time-lengthening amendment was stripped out, and the remainder of the bill enacted. Advocates like Greater Boston Legal Services, and leaders in minority communities so hard hit by the predatory lending crisis urged Governor Patrick not to sign the bill. He didn't; instead sending it back to the legislature with an amendment restoring the longer statute of limitations. That bill died at the end of 2014, after neither branch of the legislature took action on it.
Legislative action, 2015-2016 session:
Essentially the same "title clearing" bill was refiled, and engrossed in the Senate in the summer of 2015. Almost a quarter of the senators voted "no." The bill was taken up by the House on October 14, 2015, where 23 members (including myself) voted "no;" one member voted "present," and another representative who was present simply didn't vote.
The bill was opposed, again, by many legal services organizations, by minority community leaders, by the Massachusetts Alliance Against Predatory Lending (MAAPL), and by the National Consumer Law Center. Governor Baker, however, signed the bill. On December 31, ten taxpayers invoked a little-used constitutional provision to try to stay the effect of the law until signatures could be gathered to put repeal of the new law on the ballot. However, Attorney General Maura Healey ruled on January 20, 2016, that because part of the bill effects the jurisdiction of the courts, a challenge to this bill may not go on the ballot (go to http://maapl.info/ for more information.)
Bloomberg News and other sources continue to report on a growing industry that finances the purchase of foreclosed homes, which are then used as rental properties. Four of the five foreclosure-involved properties I can see from my front porch have become revolving-door rentals. I'm deeply disappointed that in our state, where the wealthy have so much, and the poor so little, we've made it so much harder for homeowners to protect themselves against wrongful foreclosure.