Massachusetts Bank Foreclosures 2nd in New England

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The Massachusetts bank foreclosures rate is the second highest in the New England region. But findings of the Boston University’s New England Center for Investigative Reporting showed that despite the high foreclosure activity in Massachusetts, it lagged behind compared with other New England states in terms of punitive actions against brokers and lenders.

According to the report, banking regulators in Massachusetts performed few punitive actions against brokers and lenders from January 2007 to June 2009. Punitive actions include revocation, suspension or forced license surrender. For the period, state banking regulators have filed stringent actions against 43 brokerage firms.

The report noted that only a fraction of lenders and brokers that received licenses from state banking regulators were penalized despite the rise in the number of Massachusetts bank foreclosures and the subsequent havoc the crisis caused on families and neighborhoods.

The total number of mortgage brokerage firms that were penalized represented less than three percent of the companies licensed by Massachusetts. This placed the state last compared with other New England states. For the same period, Connecticut implemented punitive actions against almost 24 percent of brokerage firms it licensed while 11 percent were reportedly penalized in New Hampshire.

According to industry experts, the state Division of Banks has the regulatory and legal authority to deny mortgage brokers and lenders license and to sanction them if they are proven to be unfair to their clients.

Some unfair practices of brokers and lenders are encouraging consumers to sign incomplete or blank mortgage documents, falsification of asset or income information, misrepresentation or omission of critical information about mortgage loan terms and making fraudulent claims in order to persuade buyers to take out loans.

Massachusetts regulators have admitted that since 2007, deceptive or unfair practices are serious problem in the state and one of the major factors driving up foreclosure rates, in addition to widespread unemployment and recession.

Industry experts said that state regulators should have been aggressive in monitoring and going after abusive brokers and lenders, especially those who issued subprime mortgages to borrowers who have poor credit.

They said that many brokers and lenders were able to get away from their role in the subprime collapse and the subsequent foreclosure crisis.

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