By Gerry Tuoti
GateHouse Media
As appeared in Cape Cod Times
A bill aimed at increasing legal protections for people who buy foreclosed homes is working its way through the state legislature, but faces criticism from opponents who say it would disproportionately harm minorities.
“This really is a consumer protection bill,” said the proposal’s sponsor, state Sen. Michael Moore, D-Millbury. “How would you feel if you bought a house 20 years ago or 15 years ago, you think it has a clear title, then after you purchase it, your ownership is clouded? You can’t refinance. You can't resell it if you decide to move on.”
Moore’s bill passed the Senate in September and is currently awaiting a hearing in the House Ways and Means Committee.
The proposal would significantly shorten the window for legal challenges to foreclosures down to three years. Under current law, a homeowner who has been foreclosed upon has up to 20 years to challenge for the title to the property.
“This is not a piece of legislation designed to bail out banks,” said Plymouth-based attorney Richard Serkey, who co-chairs the title standards committee for the Massachusetts Real Estate Bar Association. “It says that if they’re no longer in the property, at least the good-faith purchaser of value should not be a hostage to this situation.”
A 2011 Supreme Judicial Court case found that certain technical errors by lenders could invalidate a foreclosure and cloud the ownership of the property in question. While the court ruling meant that banks needed to establish a clear path of ownership before selling a foreclosed home to new buyers, many homes were sold at auction before the lender formally acknowledged having possession of the mortgage.
In many cases, the new buyers are unaware there is an issue with the title of the home until they try to refinance or resell the property, sometimes several years after the purchase.
“I would conservatively say thousands of people across the commonwealth are in this situation,” Serkey said.
The subprime mortgage bust made the problem more widespread over the past decade.
Moore said his bill would protect “innocent homeowners.”
Several minority leaders, including NAACP New England president Juan Cofield, Harvard law professor Charles Ogletree and city councilors Jass Stewart of Brockton and Dana Rebeiro of New Bedford, wrote a letter to Senate leaders opposing the bill. They claimed it would have disproportionate negative impacts in minority communities ravaged by subprime mortgages.
They also argued the bill strips victims of illegal foreclosures of their rights.
“These homeowners, from communities of color and more broadly, must retain their rights,” the letter stated. “They must have access to adequate legal redress. Denying them the ability to sue to regain title to their illegally foreclosed home is not justice.”
Moore said that while his bill would prevent some illegally foreclosed homeowners from suing to regain their homes, they could still sue for monetary damages.
A version of the bill came up in the legislature last year, but stalled out when then Governor Deval Patrick disagreed with lawmakers over the length of the window for legal challenges. Legislators generally supported a three-year limit, while Patrick wanted to make the window 10 years.
Mike McDonagh, general counsel for the Massachusetts Association of realtors, said his organization backs Moore’s bill, including the three-year limit.
“We think a three-year period strikes the right balance,” he said. “Clearly, there are considerations on both sides of the issue, people who went through foreclosure with certain rights and people who bought a home not knowing it had an issue. They should have the ability to sell or refinance without having to wait 10 years.”
Source: http://m.capecodtimes.com/article/20151011/NEWS/151019953