BOSTON - Massachusetts Attorney General Martha Coakley recently issued emergency regulations to deal with foreclosure rescue schemes, which she says are plaguing the Commonwealth.
Coakley used her power to do so Friday under the Consumer Protection Act, and her regulations are valid for 90 days.
Foreclosure rescuers like lenders, brokers and lawyers, she says, are rife with fraud and prey on vulnerable homeowners by taking a foreclosure situation and making it worse.
She says the rescuers do so "by liquidating any remaining equity in the homes to their own advantage and the homeowners' detriment."
"This practice has become widespread, and a new regulation under our Consumer Protection Act is the best way to quickly and proactively combat this problem and to prevent further harm to distressed homeowners," Coakley added.
Her emergency regulation prohibits foreclosure rescue transactions that are carried out for profit, defining a foreclosure rescue transaction as one that is designed to avoid or delay foreclosure and one where the homeowner transferring the home maintains a legal or equitable interest in the home, such as a lease interest or right to reacquire the property.
Coakley says she is also considering further regulations for the mortgage industry. Problematic practices often result in consumers having mortgage loans they cannot afford, she says, and thus contribute to the rise in foreclosures in the Commonwealth. These practices, according to her release, include:
-"Mortgage brokers and lenders inflating the income of borrowers on application forms and misstating the source of the borrowers' income;
-Mortgage brokers making mortgage loans which are not in the borrowers' interests;
-Mortgage brokers and lenders processing and making mortgage loans without considering whether the borrowers can repay them;
-Mortgage lenders making mortgage loans which are not suited to the borrowers by evaluating criteria other than credit and bona fide credit qualification criteria; and
-Businesses being assigned predatory loans without allowing the borrowers the means of asserting claims against the assignees."
Coakley will accept written comments regarding amendments to the Motrgage Brokers and Mortgage Lenders Regulations until June 28.
The Attorney General's Office will accept written comments concerning potential amendments to the Mortgage Brokers and Mortgage Lenders Regulations on or before June 28, 2007. Following the comment period, the Attorney General's Office anticipates that any filing of proposed amendments to the Mortgage Brokers and Lenders Regulations will be followed by public hearings on those proposals.
Coakley's emergency regulations may be permanently promulgated after public hearings at the end of their 90-day period. Coakley also is attempting to establish a group of private attorneys willing to work pro bono with homeowners facing foreclosure.