City of Lynn, Massachusetts Bill of Rights for Homeowners

City of Lynn, Massachusetts Bill of Rights for Homeowners

Lynn, Massachusetts has enacted an ordinance establishing a bill of rights for homeowners, which addresses unsecured and unmaintained vacant properties and foreclosing properties, effective June 17, 2013.

 

 

“Building” means any structure having a roof and exterior walls or firewalls whether built for residential or commercial purposes, including, but not limited to a dwelling, dwelling unit, or mobile dwelling unit.

 

 

“Certificate of compliance” means a certificate issued by the Inspectional Services Department (“ISD”) Chief to the Responsible Party for a vacant and/or foreclosing property upon compliance with the provisions of the ordinance.

 

 

“Commercially reasonable alternative” means an alternative based on a comparison of the net present value of receiving payments pursuant to a modified mortgage loan, or the likely financial recovery from other foreclosure alternatives, to the anticipated net recovery following foreclosure incorporating an assessment of the borrower’s current circumstances, including, without limitation, the borrower’s current income, debts, and obligations.

 

 

“Lender” means a person or entity that holds or controls, partially, wholly, indirectly, directly, or in a nominee capacity, a mortgage loan secured by a residential property, including, without limitation, a lender, an originator, holder, investor, assignee, successor, trust, trustee, nominee holder, mortgage electronic registration system or mortgage servicer, including Fannie Mae, Freddie Mac, or any other government sponsored enterprise.  “Lender” also includes any servant, employee, subcontractor, or agent of a lender.

 

 

“Days” means consecutive calendar days.

 

 

“Fair market rent” means an amount equal to that established by the United States Department of Housing and Urban Development as it exists or may be amended, for a unit of comparable size in the area in which the property is located.

 

 

“Foreclosure sale purchaser” means a foreclosing owner only, as defined below, not intending to reside or have a family member reside in such housing accommodation as the primary residence.

 

 

“Foreclosing owner” means an entity that both:

  • Held or owned a mortgage in the housing accommodation at any point prior to the foreclosure of the housing accommodation or is the subsidiary, parent, or agent of, or otherwise is related to any entity which held or owned the mortgage in the housing accommodation at any time prior to the foreclosure of the housing accommodation; and
  • Holds title to this housing accommodation that it acquired at a foreclosure sale or by any other method of foreclosure.  The phrase “holds title” includes an entity which holds title in any capacity, directly or indirectly, without limitation, whether in its own name, as trustee, or as beneficiary.  Any entity, only as described and intended herein, which attempts to evict occupants from the housing accommodation, whether in its own name, as trustee, as mortgage servicer, or as beneficiary, or in any other role, without limitation, is considered to “hold title” for the purpose of this definition.  Any lender that holds title to a housing accommodation that has been foreclosed upon will be considered to be a foreclosing owner.

 

“Good faith effort” means each party is present and actively participates in the mediation, and has decision-making authority to negotiate and agree upon a commercially reasonable alternative to foreclosure.

“Housing accommodation” means any building or buildings, structure or structures, or part thereof or land appurtenant thereto, or any other real or personal property used, rented or offered for rent for living or dwelling purposes, located in Lynn, together with all services connected with the use or occupancy of such property.

“Local” means within 20 miles of the property in question.

“Just cause” means at least one of the following:

  • The occupant has failed to timely pay rent or reasonable use and occupancy charges as established by fair market rental value, as determined by the Lynn-approved mediator, and agreed upon during the mediation process by both the borrower and lender but only if the foreclosure sale purchaser notified the occupant in writing of the amount of rent or use and occupancy that was to be paid and to whom it was to be paid;
  • The occupant has violated an obligation or covenant of the occupancy other than the obligation to surrender possession upon proper notice and has failed to cure such violation within a reasonable time after having received written notice thereof from the foreclosure sale purchaser;
  • The occupant is committing or permitting to exist a nuisance in, or is causing substantial damage to, the unit, or is creating a substantial interference with the quiet enjoyment of other occupants;
  • The occupant is convicted of using or permitting the unit to be used for any illegal purpose; or
  • The occupant has refused the foreclosure sale purchaser reasonable access to the unit for the purpose of making necessary repairs or improvement required by the laws of the United States, Massachusetts, or any subdivision of them, or for the purpose of inspection as permitted or required by agreement or by law or for the purpose of showing the rental housing unit to a prospective purchaser or lender.

“Loan/mortgage mediation conference” means the formal discussion and negotiation undertaken by the parties in a good faith effort to negotiate and agree upon a commercially reasonable alternative to foreclosure and held in Lynn or at a location mutually convenient to the parties.  Both the borrower and lender must be physically present for the mediation conference unless telephone participation is mutually agreed upon and the mediation program manager certifies that the borrower has been made aware of his or her right to an in-person mediation conference.  The borrower is allowed to have a lawyer, an interpreter, and up to 3 additional persons of his or her choosing present at the mediation conference.  The borrower must be notified of this right at the time the mediation conference is scheduled by the mediation program manager.

 

 

“Mediation program manager” means a neutral not-for-profit organization, attorney, or qualified third party experienced in the mediation of the foreclosure process, familiar with all programs available to help homeowners avoid foreclosure, knowledgeable of the mortgage foreclosure laws of Massachusetts, and having no ownership interest or management interest in residential property in Lynn other than their primary residence.  The mediation program manager must sign a user agreement with Lynn authorizing the receipt and use of personal and financial information for the purposes of the mediation program only.  The mediation program manager must ensure the security and confidentiality of any and all information received or exchanged under the program consistent with applicable federal, state, and local laws.  Access to the program information is limited to those officers and employees of the organization who require the information to properly perform services under Lynn’s mediation program, and that the organization and its officers and employees may not access, modify, use or disseminate such information for inconsistent or unauthorized purposes.

“Mortgage servicer” means an entity which administers or services or at any point administered or serviced the mortgage loan, provided that such administration or servicing includes, but is not limited to, calculating principal and interest due on the mortgage loan, assessing fees and costs onto a borrower’s loan account, collecting regular payments from the borrower, acting as escrow agent for the owner of the mortgage loan, or foreclosing on a mortgage loan in the event of a default.

“Net recovery following foreclosure” means a monetary value that includes, but is not limited to, projected costs from:

·        Delinquency, interest, fees incurred by the date of foreclosure sale based on average length of Massachusetts foreclosure process;

·        Costs of all legally required actions to foreclose and percentage loss from foreclosure sale;

·        Meeting all sanitary code requirements;

·        Property maintenance;

·        Eviction; and

·        Other ownership costs until projected sale or re-sale to third party purchaser.

“Occupant” means any person or group of persons who included the principal borrower on the housing accommodation under the mortgage agreement and occupied the housing accommodation prior to foreclosure.

“Owner” means any person who, alone or severally with others, has a beneficial interest in a mortgage loan on a property on which there has been an initiation of the foreclosure process.

“Residential property” means real property that is owner-occupied as an owner’s principal or primary residence, located within Lynn, that is either a single-family dwelling or a structure containing not more than 4 residential units, and also includes a residential condominium unit or a residential co-op unit occupied by an owner as an owner’s principal or primary residence.

“Responsible party” means the owner and/or every person, entity, service company, property manager, or real estate broker, who or which, alone or severally with others:

·        Has care, charge, or control of real property, including but not limited to any dwelling, dwelling unit, mobile dwelling unit, or parcel of land, vacant or otherwise, including a mobile home park, or any administrator, executor, trustee, or guardian of the estate of the holder of legal title;

·        Is a lender of any such property who has initiated the foreclosure process; or

·        Is an agent, trustee, or other person appointed by the courts and vested with possession or control of any such property.

“Vacant” means any property not currently occupied by persons having a legal right to occupancy, such as owners or lawful tenants.

All mortgage foreclosures in Lynn pertaining to residential property which is owner-occupied as the owner’s principal residence are required to engage in a mediation program approved by the City Solicitor and obtain a certificate verifying the lender’s good faith participation in the mediation program.

 

The City Solicitor is authorized to enter into an agreement with the American Arbitrators Association and inquire as to their ability and/or willingness to voluntarily coordinate the mediation program.

Mediations conducted according to the program must use the calculations, assumptions, and forms that are established by or are made available through:

·        The Federal Deposit Insurance Corporation (“FDIC”) and published in the FDIC’s Loan Modification Program Guide available on the FDIC’s publicly accessible website;

·        The Home Affordable Modification Program;

·        Any modification program that a lender may use which is based on accepted principles and the safety and soundness of the institution and recognized by the National Credit Union Administration, the Division of Banks or any other instrumentality of Massachusetts;

·        The Federal Housing Agency; or

·        Similar federal programs.

The City Solicitor’s Office provides for a means of evaluating and selecting qualified mediation program managers.  The City Solicitor’s Office will also provide for a means of assessing and evaluating annually Lynn’s mediation program, including reports and data related to:

·        The number of borrowers who are notified of mediation;

·        The number of borrowers who attend mediation and who receive counseling or assistance;

·        The number of certificates of completion issued under the program; and

·        The results of the mediation process, including the number of loans restructured, number of principal write-downs, total value of principal write-downs, interest ratereductions, and to the extent such information is available, the number of borrowers who default on mortgages within a year after restructuring.

The City Solicitor’s Office may terminate a mediation program manager’s participation in the mediation program for good cause.  In such case, the mediation program manager must deliver to the City Solicitor’s Office all records and information in its possession for appropriate preservation and storage.

If mediation is unsuccessful in avoiding foreclosure then, by agreement, which will not be unreasonably withheld by the lender, the parties may enter into a rental agreement, whereby a tenant is required to pay a fair market rent for the use and occupancy of the housing accommodation, as established by the mediator during the mediation process, on or until the foreclosing sale purchaser sells the housing accommodation to a bona fide purchaser.  Any agreement may include that the occupant must vacate the housing accommodation at the time of sale.

Except for financial information otherwise permitted by law to be disclosed, any financial statement or information provided to Lynn or its approved independent counseling agencies or provided to the lender or borrower during the course of mediation is confidential and not available for public inspection.  Any financial statement or information required to reasonably facilitate the mediation will be made available as necessary to the mediator and to the attorneys or representatives, if any, of the parties to the mediation.  Any financial statement or information designated as confidential must be kept separate and apart from other papers and matters not the subject of the mediation.  A lender is not required to disclose information in violation of Massachusetts security breach laws and regulations protecting personal information.

 

For the purpose of the mediation program, the lender or the lender’s servicer must send a copy of all notices given to the borrower regarding the right to cure, to the City of Lynn c/o The City Solicitor, Lynn City Hall, 3 City Hall Square, Lynn, MA 01901, within 10 days of giving it to borrower, that relate to residential properties in Lynn.  The borrower may also request mediation within 15 days of receipt of their notice of the right to cure.  The receipt by Lynn of the notice, or of the request from the borrower, constitutes the beginning of the mediation process, and at that time the City Solicitor will notify the lender and the borrower of their rights and responsibilities regarding mediation.  Mediation must commence within 30 days of the borrower receiving notice of his or her right to cure.

 

 

The City Solicitor’s Office will refer the matter for mediation to an approved mediation program manager, which will have the responsibility of assigning a mediator and scheduling the parties to immediately begin mediation.  The parties must participate in good faith in such mediation consistent with the lender’s and borrower’s rights and obligations regarding the right to cure, and the mediation must proceed with the parties’ good faith effort to negotiate and agree upon a commercially reasonable alternative to foreclosure.  The mediation must continue without delay until completion, but will in no way constitute an extension of the foreclosure process, nor an extension of the right to cure period.  Notwithstanding the limitation in the previous sentence, the mediation may be extended by mutual agreement for good cause.

The parties of the mediation program must participate in a mandatory loan/mortgage mediation conference at a location mutually convenient to the parties.  All parties and/or their respective representatives present at the mediation conference must have authority to enter into any agreements renegotiating the mortgage that is the subject of the foreclosure, or to otherwise resolve the pending foreclosure.

The mediation conference must be scheduled at a time and place to be determined by the mediation program manager, but not later than 30 days following the borrower’s receipt of his or her notice of right to cure.  The parties will receive notice under the mediation program by certified and first class mail at the parties’ last known address(es), if any, or if none, then to the address to which the tax collector last sent the tax bill for mortgaged premises.  The notice must contain the following declaration on the first page in English, Spanish, Cambodian, Russian, Greek, Vietnamese, French, Haitian Creole, and in any other language which the lender knows is the borrower’s primary language, and any other language deemed appropriate by the mediation program manager:

“The City of Lynn has a mediation program that may help you negotiate more affordable mortgage payments and avoid foreclosure however there is no express or implied guarantee foreclosure will be avoided.  Have this notice translated at once and contact us for help.”

If a borrower does not respond to the initial notice, the mediation program manager must, to the extent possible, utilize additional outreach methods to supplement mailed notices.

Prior to the scheduled mediation conference, the borrower will be assigned a volunteer city-approved loan counselor by the City Solicitor’s Office, if such services/volunteer are available.  If the borrower is already working with a city-approved loan counselor, an assignment is unnecessary.  However, the loan counselor must agree to work with the borrower during the mediation process.  The borrower is encouraged to attend a group orientation, if available, prior to the mediation conference.  The orientations must be scheduled as necessary at times convenient to borrowers.  Interpretation must be offered to borrowers ahead of time, and provided at the orientation if deemed necessary by the borrower.  The following will be invited to participate in the design and implementation of the orientation:

·        One or more local legal services organizations; and

·        One or more community organizations operating in Lynn that provide advocacy and peer-to-peer support for distressed homeowners.

The orientation must familiarize borrowers with the full range of options that are available as commercially reasonable alternatives to foreclosure, with the foreclosure process, and with obligations of lenders under the mediation program.

The borrower must cooperate in all respects with the mediation program manager, providing all necessary financial and employment information in a timely manner.  The borrower must complete any and all loan resolution proposals and applications as appropriate.  The borrower must provide evidence of current income.  The lender’s representative must bring and make available the mortgage, note, all assignments, as well as a detailed accounting of the outstanding balance, costs, and fees.

If, after two attempts by the mediation program manager to contact the borrower by mail, the borrower fails to respond to the mediation program manager’s request to appear for the mediation conference, or the borrower fails to cooperate in any respect with the requirements outlined in the ordinance, such requirements will be deemed to be satisfied upon verification by the Lynn-approved mediation program manager that the required notice was sent.  If so, a certificate will be issued immediately by the City Solicitor’s Office certifying that the lender has satisfied the mediation requirements.

If it is determined, after a good faith effort made by the lender at the mediation conference with the borrower, that the parties cannot come to an agreement to renegotiate the terms of the loan in an effort to avoid foreclosure, such good faith effort on behalf of the lender will satisfy the requirements of the ordinance.  A certificate certifying such good faith effort will be issued immediately and without delay by the City Solicitor authorizing the lender to proceed with its rights under Massachusetts foreclosure laws.

Lynn is authorized to enact and from time to time revise by ordinance a reasonable and appropriate mediation registration fee to be charged to the parties for the services attendant to administering the mediation program.  Any fees assessed must not be charged to the borrower either directly or indirectly by the lender.  The fee schedule will be established to ensure that all costs associated with the mediation program will be paid by the lender and no costs will be incurred by Lynn.  In no event with the total mediation fee exceed $1,500.

 

 

Notwithstanding any provisions relating to the power of sale, a foreclosure by sale in Lynn is not effective to foreclose on any mortgage unless all notices required regarding the power of sale specifically reference that a certificate from a mediation program manager approved by the City Solicitor’s Office has been issued verifying that the lender, its assignee, or any person obligated by provisions regarding the power of sale has successfully participated in a mediation program.

A foreclosure by entry in Lynn is ineffective unless a memorandum or recorded certificate of entry includes as an attachment or exhibit a copy of a certificate from the City Solicitor’s Office verifying that the lender has participated in mediation with the borrower.

A lender’s failure to comply with any provision of the ordinance will result in a fine of $300 owed to Lynn, for each instance of a violation, to be charged to the lender.  Every calendar day of noncompliance is a separate violation up until the end of the right-to-cure period given under a lawful notice regarding the right to cure.  Fines may be recovered by indictment or complaint.  A fine must not be charged to the borrower either directly or indirectly.

A foreclosure sale purchaser must not evict a tenant except for just cause, unless a binding purchase and sale agreement has been executed for a bona fide third party to purchase the housing accommodation from the foreclosure sale purchaser.  The tenant will be required to pay a fair market rent for the use and occupancy of the property pending the sale.  The fair market rent will be determined and agreed upon by the mediator during the mediation process.

Any foreclosure sale purchaser that evicts occupants in violation of any provisions of this memorandum can be punished by a fine of not less than $300.  Each wrongful eviction constitutes a separate offense.

The Lynn District Court, Essex Superior Court, and North East Housing Court have jurisdiction over an action arising from the provisions above and have jurisdiction in equity to restrain any such violation.  It is a defense to eviction that the foreclosure sale purchaser attempted to evict an occupant in violation of any provision of this memorandum.  It is a violation if the occupant fails to voluntarily vacate the housing accommodation at the time of sale between the foreclosure sale purchaser and the bona fide third party purchaser.

 

 

Any provision of federal law relating to rental units owned, operated, or subsidized by the federal government that is inconsistent with or contrary to the provisions of this memorandum supersedes the provisions of this memorandum.  Where consistent, the provisions of federal law apply in conjunction with the provisions of this memorandum.