BOSTON, Mass. (WWLP) — The Patrick administration’s Division of Banks is seeking public comment as they set out to write regulations for a new law that aims to reduce home foreclosures.
“These are strong consumer protections that were put in place to protect consumers and to provide a clear process,” said Division of Banks Commissioner David Cotney. “We’re trying to have an open mind on how we put this altogether.”
The foreclosure law requires banks to offer loan modifications to eligible homeowners when it’s a cheaper option than to foreclose. The process calls for mailing piles of documents back and forth between lenders and borrowers. Banking advocates asked for clear rules that encourage borrowers to respond quickly.
“Lenders also need to have some protection against the borrower that is simply consciously delaying the process and not responding to the lender on purpose to delay the process,” said David Brennan, the Senior Vice President of Cape Cod Five Cent Savings Bank.
Consumer advocates agree that clear rules need to be spelled out. They want to know when documents are received, contact information and clarity on financial language. But they are frustrated that banks won’t agree to come to the discussion table and talk one on one with borrowers.
“It’s a little frustrating,” said Alliance Against Predatory Lending coordinator Grace Ross. “The Banking Association opposed mediation… Mediation, unlike this by-mail process, is overseen by a neutral third-party …They meet once by mutual agreement and come to a settlement of some kind.”
The Division of Banks will draft proposed regulations after they conduct informational hearings and seek comment until September 7
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