By Andy Metzger
STATE HOUSE NEWS SERVICE
BOSTON -- Improper foreclosures have jammed up homeowners who purchased the properties from banks leading to a late-session push for legislation that opponents claim would unfairly bar those who lost their homes from winning back the titles.
The bill would create a one-year period starting the day it takes effect as law where those who lost homes because of improper foreclosures could sue to regain the title. Going forward, the House and Senate have differed on the window of time until any discrepancy in title would be cleared by another document. The legislation would not limit those who lost homes from suing banks for monetary damages.
"We're hoping frankly that the bill goes nowhere," said Roxanne Reddington-Wilde, treasurer of the Massachusetts Alliance Against Predatory Lending. Though the organization opposes both versions, Reddington-Wilde said the alliance prefers language recently adopted in the House that would provide a 10-year window going forward rather than the 3-year window approved by the Senate in January.
Reddington-Wilde said those windows are unworkable and represent a significant decrease from the current 20-year statute of limitations, which she said is a "longstanding right."
Real estate lawyers said the current law, set in part by a 2011 Supreme Judicial Court decision, has put certain homeowners in a situation where they can neither refinance their mortgage nor sell the property because of questions about the validity of the title.
"When they went to sell subsequently, they were extremely surprised to find out they had an unsellable title because of this decision," Framingham attorney Richard Vetstein told the News Service. He said, "They couldn't refinance and they couldn't sell their property. They're stuck."
The January 2011 SJC case U.S. Bank National Association v. Antonio Ibanez upheld a Land Court decision that denied a foreclosure because the bank did not actually hold Ibanez's mortgage when it began proceedings on his property in Springfield. Ibanez had obtained a mortgage through Rose Mortgage, which was packaged by Lehman Brothers into a mortgage-backed security, which did business with U.S. Bank. U.S. Bank foreclosed on the property starting April 2007, but was not actually assigned the mortgage until about a year later, the SJC found.
The financial collapse of 2008 was in part fueled by and exacerbated a foreclosure crisis around the country. Maps generated by the alliance show homes at varying stages of foreclosure dotting the state's landscape from Provincetown to North Adams.
Vetstein and Plymouth attorney Richard Serkey said banks have stopped the improper paperwork that led to the Ibanez decision so homeowners have already had years to attempt to regain their homes. Vetstein said those who have already begun legal action to regain title would not be affected by the bill.
"You're talking about at least a five-year period that's elapsed up until now," said Serkey, who said the 10-year window the House adopted is too long. He said, "How many people can afford to wait 10 years before they can refinance or sell their property?"
Serkey said he hires an investigator to track down the people who lost their home in foreclosure, sometimes offering them money and helping them discharge a secondary mortgage so that they will transfer an unsullied title for the house.
"There are two categories of equally deserving persons," said Serkey, acknowledging that people who lost homes because of improper foreclosures have justified grievances. He said, "The purpose of the bill is to provide relief to a large number of homeowners in Massachusetts who find themselves unable to refinance or sell their property."
MAAPL claims 58 percent of those who purchase foreclosed homes are "big, cash-only investors."
"A home is not just a financial investment," the organization wrote in a fact sheet, which said, "The only sure protection for new or old homeowners will be swift adjudication of or another remedy to the now numerous valid challenges to post-foreclosure titles and broken chains of ownership of mortgages and notes."
The bill was originally filed by Sen. Michael Moore, a Millbury Democrat, and moved through the Financial Services Committee. Last week the House adopted an amendment from Somerville Democrat Rep. Denise Provost that expanded the window from three years to 10 years.
This week the legislative two branches plan three back-to-back formal sessions, the final three of the year. Any lawmaker can object to the passage of a bill in the informal sessions, which will run clear through December, meaning Thursday serves as a deadline for any controversial bills.
Reddington-Wilde criticized the lack of a provision providing notice to people of the legal change and said the one-year period following the bill's passage would lead to a torrent of legal claims that would overwhelm the courts. Serkey said the foreclosures occurred years ago and predicted there would be "very few" who take action in the one-year period.