Senator Michael Moore (D-Millbury) filed SD.2889, An Act establishing a COVID-19 homeowner protection act. The legislation protects homeowners by allowing them to take a 180-day forbearance on required mortgage payments.
The legislation is in response to adverse financial impacts created in the wake of the novel coronavirus outbreak, and the subsequent COVID-19 state of the emergency declaration. Therefore, mortgagers with residential property in the Commonwealth must adhere to this forbearance if the mortgagee demonstrates financial hardship as a result of COVID-19.
Additionally, the mortgagor will not report late payments to credit rating agencies or assess fees or penalties as a result of this forbearance. Mortgagors will also not deny loan modifications, new residential or commercial loans. Nor will mortgagees be denied certain credit card services due to the forbearance protection.
When the forbearance is terminated, the mortgagers and mortgagees will have 90 days to reestablish pre-forbearance monthly payments or create loan modifications to reduce the monthly payments.
Mortgagers may also not initiate foreclosure proceedings until 90 days after the emergency declaration is rescinded by the governor. Mortgagees will have until 180 days after the termination of the state of emergency to enact the payment forbearance.
“These are unprecedented times, and therefore we must take unprecedented actions,” said Senator Moore. “Many people have been and will be financially impacted by the coronavirus outbreak. We must protect these people, so they can keep their homes, and not have to worry about losing the roof over their heads so that they may stay safe during this public health crisis.”
This legislation will help prevent a bankruptcy and foreclosure crisis as we move through this pandemic. This is made evident through the Massachusetts Division of Banks who, in a letter to financial institutions, mortgage lenders, and mortgage loan servicers, explained the need to protect homeowners to decrease the adverse economic effects of COVID-19. In their letter, they proposed similar efforts to what is outlined in Senator Moore’s legislation, such as postponing foreclosures, mortgage payment forbearance, and refrainment from reporting late payments to credit agencies.