Advocates See Foreclosure Sales Slowdown as Sign of Banks Retooling After Court Losses and New State Policies

“While the Mass Alliance Against Predatory Lending is always pleased when there is a slow down in foreclosures. We are deeply concerned that this slow down not be misinterpreted and lead to a decrease in our vigilance on addressing the continuing foreclosures in Massachusetts,” said Grace Ross, Coordinator of the Mass Alliance Against Predatory Lending, in response to figures on foreclosures released today by the Warren Group that completed foreclosures decreased in the last couple of months although petitions rose slightly.

“As a recent string of mass SJC decisions has corroborated what people in the neighborhoods knew – that the banks have been engaging in illegal and fraudulent behavior, now that banks have been called out by our courts, this slowdown just means they are figuring out their next move, ” Lee Goldstein, Supervising Attorney, Harvard Legal Aide Bureau and Chair of Foreclosure of Massachusetts Task Force, National Lawyers Guild.

In 2011, with revisions to the national Making Homes Affordable Program (HAMP), there was a national increase in the number of successful loan modifications. “And there is some evidence of increased short sales in Massachusetts. Still, the only time that Massachusetts has experienced a significant drop in foreclosures was the passage of the Right to Cure period in 2008 and some slow down with the major Ibanez ruling or the banks, for instance, moving cautiously as they awaited the possible settlement with the Attorneys General,” Ross went on to explain.

“While we welcomed the affirmation by the SJC in the Eaton ruling that historically Massachusetts has always required a lender to hold both the mortgage and the note to foreclose, the prospective enforcement of that reality was a concern. However, the Eaton decision was expected to be a significant in the clarification of the endemically violated honor code system for our state’s foreclosures. Combined with some new procedural requirements in this year’s foreclosure bill, there was every reason to expect that the impact on the immediate foreclosures in the pipeline would be to create a stall out.”

The Eaton v. Federal National Mortgage Association case brought by Henrietta Eaton, the homeowner, challenged the validity of the foreclosure of her home on November 24, 2009; it alleged among that a lender has to hold both the note and the mortgage through valid timely assignment to foreclose. Arguments on the case were heard in the fall of 2011. On June 22, 2012 the Supreme Judicial Court of Massachusetts ruled that the foreclosure sale in Eaton’s case was indeed void and that from that day forward lenders would have to hold both the mortgage and the note to prove ownership at the foreclosure sale. In addition, on August 3 Governor Patrick signed into law a new foreclosure bill which included a new test pre-foreclosure for sub-prime mortgages, a dwindling percentage of the foreclosures today. However, that combined with some other added legal requirements lending institutions will have to complete prior to publishing the notice of and executing the foreclosure sale of residential properties in Massachusetts.

“What we do hope is this slow down will create a huge opportunity for homeowners to look into the legal violations in their foreclosures and consider legal action as we continue to receive more legal clarifications from judges underscoring rights of homeowners,” said Liz Bewsee, co-chair of MAAPL and leader of ARISE for Social Justice in Springfield. “And we hope policy makers will use the moment to create the mechanisms necessary for more homeowners to receive genuine loan modifications including realistic principle reductions down to present day values. This will help homeowners stay in their homes, take pressure off of the homeless situation and also stop the drop in housing prices below the appropriate market correction”.


The Mass. Alliance Against Predatory Lending (MAAPL) is a coalition of over 60 housing counseling agencies, legal services groups, social service agencies, and community-based social action groups that have joined together to address the foreclosure crisis in Massachusetts. MAAPL collects and distributes timely information on the foreclosure crisis and its effects to the public and to its member groups, drafts and supports legislation that provides important protections to homeowners and tenants facing foreclosure and eviction, documents the impact of the foreclosure crisis on local communities, networks with related organizations throughout the Commonwealth, and provides tools and information to help people navigate the legal system and advocate on their own behalf more effectively when challenging a foreclosure or eviction in court
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