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Homeowners press lawmakers to let state reclaim and rework predatory mortgage assets
Summary
Multiple homeowners and housing advocates urged the Joint Committee on Financial Services to pass H.1146/H.1147, legislation proponents say would allow the Commonwealth to recognize and administer mortgages that were invalidly securitized and to create a fund to rewrite or otherwise make those loans affordable.
Dozens of homeowners and advocates told the Joint Committee on Financial Services that state legislation (filed as H.1146/H.1147) is needed to address what witnesses described as a backlog of predatory, improperly securitized mortgages that have produced illegal foreclosures and ongoing harm.
Grace Ross of the Mass Alliance Against Predatory Lending said the bill would create a vehicle for the state to “step in” and convert improperly securitized loans into legitimate, affordable mortgages and to establish a fund administered by the state treasurer to recapitalize hardest-hit communities.
Multiple homeowners described similar patterns: loans with missing or forged paperwork, securitized trusts that never legally existed, and foreclosures carried out by entities that lack legally recorded authority. Marie Colange told the committee: "I was tricked into signing documents that could never have been legal on day one." Margieli (Maggie) Philippe cited the Supreme Judicial Court’s Ibanez decision and said the securitized trusts in her case "never legally came into existence. The state has owned my mortgage."
Tommy L. Morris said he won a related decision at the Massachusetts Supreme Judicial Court and described being forced into predatory loan packages with multiple loans originating on the same purchase.
Speakers asked the legislature to let the state recognize the mortgages it already holds a legal interest in, write them down to affordable levels, and use resulting revenue streams to support foreclosure prevention and community stabilization. Grace Ross argued this would stop a multidecade “drain” on local economies and provide resources for recapitalizing vulnerable neighborhoods.
Jay Lively and others traced the problem to the early 2000s changes in federal and state rules that allowed aggressive securitization practices and cited unresolved litigation tied to failed originators such as Fremont. Witnesses urged the committee to advance H.1146/H.1147 so the state can administer and remediate large numbers of loans they said the Commonwealth effectively owns.
The committee did not vote on the bills during the hearing.
