The Massachusetts Division of Banks is filing regulations that will increase homeowner protections by preventing national and state lenders from foreclosing on a property if an application for a loan modification is underway.
“These new rules complement the recently adopted foreclosure prevention regulations that require lenders and servicers to modify certain mortgage loans if the cost of modification is less than the cost of foreclosure,” Consumer Affairs and Business Regulation Undersecretary Barbara Anthony said in a news release. The regulations are part of a law signed by Gov. Deval Patrick in August 2012. Mortgage servicers are required to explore more options to avoid foreclosure, and third-party servicers cannot initiate a foreclosure if an application for a loan modification is in process. Additionally, third-party loan servicers must provide a single point of contact for the borrower, follow detailed loan modification procedures, and provide borrowers with timely communication.