Owners Become Renters under Foreclosure Legislation
By: Gerri L. Elder
Six city councilors in Boston are working to take the sting out of foreclosures for the city's residents who find themselves in the middle of housing emergencies. The councilors have written a new home-rule petition which would force lenders who foreclose on Hub properties to allow the foreclosed homes and apartments to be rented to the occupants rather than evict the families.
According to a report by the Boston Herald, Boston city councilors Michael Flaherty, Steve Murphy, Michael Ross, Chuck Turner, Charles Yancey and Sam Yoon say that the City of Boston is now facing a serious public emergency in regards to foreclosures as the foreclosure epidemic sweeps the nation. They decided to write the proposal in order to address the problem and offer a solution that could benefit both the families facing foreclosure and the lenders that seize the properties in foreclosures.
The councilors' proposal would require lenders to lease the foreclosed properties to the ex-owners or tenants at market rates. The ex-owners would be allowed to stay in the homes or apartments and not be evicted unless the property is sold to a third party or until the proposed measure expires in 2014. Lenders who refuse to allow the ex-owners or tenants of foreclosed properties to stay in the homes as renters would be fined at least $10,000.
Michael Ross said at a Government Operations Committee hearing on the proposal that lenders have a responsibility to fix the housing crisis and blamed the lending industry for the crippled U.S. economy. He says that the measure was written primarily to aid those people who have always paid their rent on time, but because of their landlord's inability to make the mortgage payments on the property, are facing eviction after bank foreclosures. The measure would also help homeowners who have defaulted on the mortgage loans on their primary residences.
The councilors decided to help individual homeowners in the measure because they felt that the high-interest and adjustable rate mortgage loans that many people are now defaulting on were designed for foreclosure. Ross said that people who have lost their homes to foreclosure should not end up on the street.
The measure needs the support of just one more Boston city councilor in order to pass the 13-member City Council. The mayor of Boston, Thomas M. Menino, the state legislature and Massachusetts Governor Deval Patrick will also have to approve the measure before it becomes law.
It comes as no surprise that the banking industry and Boston area realtors are against the measure. A spokesman for the Massachusetts Mortgage Bankers Association criticized the measure as too far-reaching because it would give the former owners of the foreclosed homes the legal rights of tenants.
Learn how filing bankruptcy can prevent foreclosure.
