This law, found in G.L. c. 244, § 35B, requires lenders to
make a "good faith effort" to avoid foreclosure for borrowers with
"certain mortgage loans." The definition of
"certain mortgage loans" is lengthy, but does cover a large share of
residential mortgage loans. Pursuant to the Division of Bank's
regulations, if the lender cannot determine if the loan falls into this list of
definitions, it is considered a "certain mortgage loan" and the
lender therefore must consider the borrower for a modification. The right
to request a modified mortgage loan only applies to borrowers who
have received a right-to-cure
notice after November 1, 2012.
The right to request a modified mortgage loan law requires
lenders to consider borrowers for a loan modification. Lenders have
several different loan modification models to choose from, but the federal Home Affordable Modification Program ("HAMP") is likely to be the most widely used option. For this
reason, this law is also known as "State HAMP," because it makes HAMP
a requirement at the state level (HAMP is presently a federal program that only
applies to a list of specific lenders).
Borrowers who are entitled to request a modified mortgage
loan will receive a notice from their lender informing them of this right, and
the documentation needed to process such an application. The deadline for
the borrower to respond to this letter is generally thirty days,
so borrowers need to act quickly in preparing an application. After
receipt of the application, the lender is suppose to respond to the
applicant's request with an assessment of their eligibility for a
modification.
G.L. c. 244, § 35B is important for foreclosure defense
because it makes many Massachusetts residents eligible for a loan modification
who previously had not been. I also like this law because it explicitly
requires a lender to perform a "compliant" loan modification
analysis. While it is no secret that lenders routinely
mess up loan modification applications, fighting these mistakes are not
always easy, as consumer protection laws and common law remedies do not always
cover these abuses. However, G.L. c. 244, § 35B appears to open the
door for allowing homeowners to challenge loan modification denials.