▸SECTION 1
Chapter 244 of the General Laws is hereby amended by adding after section 35C the following section:-
▸SECTION 35D
: Servicing and foreclosure of a subordinate mortgage
▸SECTION 35D
(a) As used in this chapter, unless the context requires otherwise, the following words shall have the following meanings:
“Subordinate mortgage,” a security instrument in residential real property voluntarily granted in connection with an extension of closed or open-ended credit that was, at the time it was recorded, subordinate to another security interest encumbering the same real property even if the primary lien has been satisfied. The term includes security instruments that function in the form of a mortgage.
“Creditor,” a person or entity that holds or controls, partially, wholly, indirectly, directly or in a nominee capacity, a subordinate mortgage loan securing an owner-occupied residential property, including, but not limited to, an originator, holder, investor, assignee, successor, trust, trustee, nominee holder, Mortgage Electronic Registration System or mortgage servicer, including the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation; provided, that ''creditor'' shall also include any servant, employee or agent of a creditor; and provided, further, that the bodies politic and corporate and public instrumentalities of the commonwealth established in chapter 708 of the acts of 1966 and in section 35 of chapter 405 of the acts of 1985 shall not be a creditor.
(b) The following constitute unlawful practices in connection with the servicing and foreclosure of a subordinate mortgage: (i) the failure to provide the borrower with any written communications regarding the loan for a period of twelve or more cumulative months; (ii) the failure to provide periodic statements for each billing cycle when required by federal or state law; (iii) the failure to provide a transfer of loan servicing notice to the borrower when required to do so by the Real Estate Settlement Procedures Act, 12 USC §2605 and12 CFR §1024.33; (iv) the failure to provide an early intervention notice or other pre-foreclosure notice as required by the Real Estate Settlement Procedures Act or state law including sections 34A and 35B of this chapter; (v) the failure to provide a transfer of loan ownership notice to the borrower when required to do so by federal or state law; (vi) the demand for payment of all or a portion of a subordinate mortgage loan when the statute of limitations for enforcement of the claim has expired; and (vii) any other circumstances that a court determines indicate an intent to abandon the debt.
(c) Contemporaneously with service of the notice of right to cure pursuant to M.G.L. c. 244, § 35A the creditor shall also serve the borrower with a notice signed under the pains and penalties of perjury that includes the following: (i) a list of the conduct that constitutes unlawful practices in connection with the servicing and foreclosure of a subordinate mortgage as enumerated in section (b), above; (ii) a verification that the creditor has reviewed the loan account history and determined that neither the creditor nor its predecessors committed any of the practices enumerated in section (b), or if the creditor or its predecessors engaged in such practices, a description of those practices and the dates they occurred; (iii) notification to the borrower that if the borrower believes the creditor or its predecessors engaged in any of the practices enumerated in section (b), the borrower may, prior to a foreclosure sale, petition the court for relief. As part of the court’s determination, the court may bar enforcement of any part of or the entirety of the debt through foreclosure.
(c) Upon the petition of the borrower, the court shall stay the exercise of a power of sale or any proceeding for recovery of possession of the property until a final determination on the petition has been made.
(d) If the court determines that the creditor or its predecessors engaged in any of the unlawful practices enumerated in section (b), the court may order the creditor to: (i) waive interest, fees, and charges added to the loan; (ii) cease all foreclosure activity and begin the foreclosure process anew with a Notice of Right to Cure itemizing the amounts owed after waiver of interest, fees, and charges; (iii) cease all collection activity on the loan; (iv) terminate all transfers or sales of the loan; (v) record a release of all liens securing the loan; (vi) request that the tradelines for the loan be deleted from the borrower’s credit reporting file with any credit reporting agency to which the loan owner, its agents, or their predecessors previously reported the debt; (vii)any other order the court deems just and proper.
(e) A creditor, shall not cause publication of notice of a foreclosure sale upon a subordinate mortgage loan unless at least 30 days prior to such notice, it has recorded an affidavit signed under the pains and penalties of perjury in the appropriate local land records certifying that the creditor served the borrower with the notice described in section (3), attaching a copy of the notice together with a verification and certifying that the content of the notice is true and accurate. The creditor shall deliver a copy of each notice to the division of banks.
(f) If a foreclosure sale has already occurred on a subordinate mortgage, the court may set aside the foreclosure sale upon a finding that the creditor engaged in unlawful practices as enumerated in section (b), failed to comply with provisions of this section, or claimed erroneous amounts due in the pre-sale section 35A notice or in a certification of compliance recorded pursuant to this section. The borrower may bring a claim under this provision as a counterclaim in post-foreclosure eviction proceedings brought by the foreclosing entity.
(g) If the court determines that a creditor or its predecessors engaged in any of the unlawful practices enumerated in section (b), including attempting to collect or collecting on an erroneous amount owed on a subordinate mortgage loan from a person or attempting to foreclose or foreclosing on any portion of such a loan, such creditor is liable to such person in an amount equal to the sum of: (i) any actual damage sustained by such person as a result of such conduct; (ii)punitive damages as the court may allow in the case of a willful failure to comply with any requirement imposed under this section; and (iii) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney's fee as determined by the court.
(h) A violation of any provision of this section is a per se violation of the Massachusetts chapter 93A and has created a rebuttable presumption that damages have been incurred, and grounds for license revocation.
(i) The Attorney General shall promulgate regulations necessary to carry out this section and be entitled to enforce these regulations, including by recommending to the Division of Banks that any licensure granted to the creditor be revoked and conducting investigations into compliance with these regulations.
(j) All notices required under the section shall be provided in English and Spanish and clear and conspicuous language at the top of the notice stating that the contents are important and should be translated immediately into the top 7 languages of the Commonwealth.
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SECTION 1. Chapter 244 of the General Laws is hereby amended by adding after section 35C the following section:-
Section 35D: Servicing and foreclosure of a subordinate mortgage
Section 35D. (a) As used in this chapter, unless the context requires otherwise, the following words shall have the following meanings:
“Subordinate mortgage,” a security instrument in residential real property voluntarily granted in connection with an extension of closed or open-ended credit that was, at the time it was recorded, subordinate to another security interest encumbering the same real property even if the primary lien has been satisfied. The term includes security instruments that function in the form of a mortgage.
“Creditor,” a person or entity that holds or controls, partially, wholly, indirectly, directly or in a nominee capacity, a subordinate mortgage loan securing an owner-occupied residential property, including, but not limited to, an originator, holder, investor, assignee, successor, trust, trustee, nominee holder, Mortgage Electronic Registration System or mortgage servicer, including the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation; provided, that ''creditor'' shall also include any servant, employee or agent of a creditor; and provided, further, that the bodies politic and corporate and public instrumentalities of the commonwealth established in chapter 708 of the acts of 1966 and in section 35 of chapter 405 of the acts of 1985 shall not be a creditor.
(b) The following constitute unlawful practices in connection with the servicing and foreclosure of a subordinate mortgage: (i) the failure to provide the borrower with any written communications regarding the loan for a period of twelve or more cumulative months; (ii) the failure to provide periodic statements for each billing cycle when required by federal or state law; (iii) the failure to provide a transfer of loan servicing notice to the borrower when required to do so by the Real Estate Settlement Procedures Act, 12 USC §2605 and12 CFR §1024.33; (iv) the failure to provide an early intervention notice or other pre-foreclosure notice as required by the Real Estate Settlement Procedures Act or state law including sections 34A and 35B of this chapter; (v) the failure to provide a transfer of loan ownership notice to the borrower when required to do so by federal or state law; (vi) the demand for payment of all or a portion of a subordinate mortgage loan when the statute of limitations for enforcement of the claim has expired; and (vii) any other circumstances that a court determines indicate an intent to abandon the debt.
(c) Contemporaneously with service of the notice of right to cure pursuant to M.G.L. c. 244, § 35A the creditor shall also serve the borrower with a notice signed under the pains and penalties of perjury that includes the following: (i) a list of the conduct that constitutes unlawful practices in connection with the servicing and foreclosure of a subordinate mortgage as enumerated in section (b), above; (ii) a verification that the creditor has reviewed the loan account history and determined that neither the creditor nor its predecessors committed any of the practices enumerated in section (b), or if the creditor or its predecessors engaged in such practices, a description of those practices and the dates they occurred; (iii) notification to the borrower that if the borrower believes the creditor or its predecessors engaged in any of the practices enumerated in section (b), the borrower may, prior to a foreclosure sale, petition the court for relief. As part of the court’s determination, the court may bar enforcement of any part of or the entirety of the debt through foreclosure.
(c) Upon the petition of the borrower, the court shall stay the exercise of a power of sale or any proceeding for recovery of possession of the property until a final determination on the petition has been made.
(d) If the court determines that the creditor or its predecessors engaged in any of the unlawful practices enumerated in section (b), the court may order the creditor to: (i) waive interest, fees, and charges added to the loan; (ii) cease all foreclosure activity and begin the foreclosure process anew with a Notice of Right to Cure itemizing the amounts owed after waiver of interest, fees, and charges; (iii) cease all collection activity on the loan; (iv) terminate all transfers or sales of the loan; (v) record a release of all liens securing the loan; (vi) request that the tradelines for the loan be deleted from the borrower’s credit reporting file with any credit reporting agency to which the loan owner, its agents, or their predecessors previously reported the debt; (vii)any other order the court deems just and proper.
(e) A creditor, shall not cause publication of notice of a foreclosure sale upon a subordinate mortgage loan unless at least 30 days prior to such notice, it has recorded an affidavit signed under the pains and penalties of perjury in the appropriate local land records certifying that the creditor served the borrower with the notice described in section (3), attaching a copy of the notice together with a verification and certifying that the content of the notice is true and accurate. The creditor shall deliver a copy of each notice to the division of banks.
(f) If a foreclosure sale has already occurred on a subordinate mortgage, the court may set aside the foreclosure sale upon a finding that the creditor engaged in unlawful practices as enumerated in section (b), failed to comply with provisions of this section, or claimed erroneous amounts due in the pre-sale section 35A notice or in a certification of compliance recorded pursuant to this section. The borrower may bring a claim under this provision as a counterclaim in post-foreclosure eviction proceedings brought by the foreclosing entity.
(g) If the court determines that a creditor or its predecessors engaged in any of the unlawful practices enumerated in section (b), including attempting to collect or collecting on an erroneous amount owed on a subordinate mortgage loan from a person or attempting to foreclose or foreclosing on any portion of such a loan, such creditor is liable to such person in an amount equal to the sum of: (i) any actual damage sustained by such person as a result of such conduct; (ii)punitive damages as the court may allow in the case of a willful failure to comply with any requirement imposed under this section; and (iii) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney's fee as determined by the court.
(h) A violation of any provision of this section is a per se violation of the Massachusetts chapter 93A and has created a rebuttable presumption that damages have been incurred, and grounds for license revocation.
(i) The Attorney General shall promulgate regulations necessary to carry out this section and be entitled to enforce these regulations, including by recommending to the Division of Banks that any licensure granted to the creditor be revoked and conducting investigations into compliance with these regulations.
(j) All notices required under the section shall be provided in English and Spanish and clear and conspicuous language at the top of the notice stating that the contents are important and should be translated immediately into the top 7 languages of the Commonwealth.