Pushback on foreclosure protection bill

BOSTON (State House News Service) - Homeowners facing foreclosure should have a day in court before banks cast them out of their homes, advocates argued Wednesday, calling on lawmakers to make Massachusetts the last New England state that requires judicial review of foreclosures.

But real estate attorneys pushed back, contending that the Massachusetts court system is already overburdened – the victim of repeated budget cuts and increased caseloads – and adding foreclosure cases to its docket would be overwhelming.

Christopher Pitt of the Real Estate Bar Association of Massachusetts said that the state Land Court processed 30,000 cases in 2010. If the court were required “to hold a mandatory judicial proceeding as a precondition to every mortgage foreclosure,” he said, the backlog would “overwhelm the court’s ability to handle these cases in a timeframe that is acceptable to anybody.” He also noted that tenants could use the process to delay foreclosure, taking issue with every aspect of a bank’s petition.

“There are not the resources on any level of the trial court to handle that level of flooding,” Pitt said.

The resistance from the attorneys – whose arguments were echoed by Massachusetts bankers – underscored a challenge facing lawmakers, who have slashed the judiciary’s budget but have also cast themselves as protectors of homeowners who have been taken advantage of by predatory lenders. The debate played out at a hearing of the Judiciary Committee at in a basement hearing room at the capitol.

“Homeownership is the American dream, and we’re talking about how we’re going to lose that and how we’re going to protect it as a matter of resources,” said Rep. John Fernandes (D-Milford), vice chair of the committee. “If the public policy and justice dictates that we ought to have pre-foreclosure judicial review … it would seem to me it then becomes the Legislature’s obligation to establish a foreclosure session of the Land Court or the Superior Court.”

Fernandes and Rep. Daniel Winslow (R-Norfolk), another member of the committee, argued that a lack of resources shouldn’t trump residents’ ability to seek justice for improper foreclosures.

Eleven members of the 17-member Judiciary Committee attended portions of the packed hearing in a sweltering and dimly lit hearing room. Anti-foreclosure advocates, lobbyists and other stakeholders filled every seat, crammed the aisles of the room and lined the walls for the first three hours of the hearing. Rep. Eugene O’Flaherty (D-Chelsea) and Sen. Cynthia Creem (D-Newton) chair the committee.

Anti-foreclosure activists called on members of the committee to back bills that would give homeowners access to a courtroom before they’re foreclosed upon and require banks to engage them face to face for mediation proceedings before advancing foreclosure petitions. They also backed legislation to allow homeowners who lose their property to remain in their homes as renters until homes are resold by the banks and that would require banks to demonstrate they hold the title to a home before they foreclose upon it.

Secretary of State William Galvin backed bills that would give courts jurisdiction over foreclosure proceedings, arguing that the issue has taken on heightened urgency following a pair of recent court cases that called into question whether banks had engaged in thousands of improper foreclosures.

“We can no longer ignore this problem,” he said, adding, “I do think it’s something that requires the Legislature’s urgent action.”

Municipal officials also described fears that foreclosures will continue to rise if homeowners aren’t given additional tools to push back. A housing advisor to Boston Mayor Thomas Menino said about 210 families lost their homes last year with another 2,000 properties that are more than 90 days late on their mortgage payments.

Officials with Massachusetts Bankers Association urged lawmakers to proceed cautiously, noting that recent Federal Reserve statistics showed that states with judicial foreclosure processes showed no statistical difference for homeowners than non-judicial states.

“There was no benefit to having judicial foreclosure in terms of the outcome for the homeowner,” said Jon Skarin, executive director of the MBA.

Skarin also argued that efforts by banks to engage delinquent homeowners and modify hefty mortgages have proven onerous and unsuccessful.

“This is a two-way street,” he said.

Skarin and Kevin Kiley, also from the bankers association, argued that existing foreclosure proceedings take about a year and requiring judicial review would delay the process another three to six months.

Organized labor rejected the concerns raised by bankers, questioning their profit motive and pointing to the trillions of dollars in assets managed by companies like Citigroup, Goldman Sachs and Wells Fargo.

“Banks and lenders, through their predatory practices, put people in positions where they can too easily rip away their homes and their property,”