A new "Right to Cure" law has slowed the rate of new foreclosure filings to a relative crawl, according to state Land Court officials, but the drop may be only temporary, say some.
Beginning May 1, when the law first took effect, the rate of affidavits filed with the Land Court slowed to an average of less than 20 a day, said recorder of the court Debbie Patterson. The month before, the number of the same affidavits, which are an early required step in the foreclosure process, averaged around 150 a day.
"Big effect," she said.
According to the law, which was part of a larger package addressing the mortgage crisis signed by the governor late last year, lenders must now inform individual borrowers of their right to remedy any default on a mortgage, and give them a 90-day period to do so. It was passed with a number of other regulatory changes intended to give borrowers more recourse in the face of foreclosure, but some think the drop in numbers will be a temporary one.
"We think this may slow the number of foreclosures somewhat in the short term," said Department of Neighborhood Development spokesperson Lucy Warsh in an e-mail. "A 90-day window gives the lender and the homeowner, with our assistance, a little more time to work out an alternative to foreclosure. It is another tool that we can use to slow and reduce the overall number of foreclosures in Boston."
Only time will tell the law's true effect, but front-line foreclosure prevention counselors like Lionel Romain at Nuestra Community Development Corporation are already a bit skeptical.
"I am concerned because in a couple of cases, people think they have more time than they do," said Romain, citing the examples of two of his clients so far. "They're given a notice that says 90-day right to cure, and they say, 'I've got plenty of time.'"
Romain is also not sure that the Division of Banks, which monitors the 90-day period, will continue to give 30- and 60-day stays to borrowers in trouble after the 90-day period. The stays were given in the overwhelming majority of last-minute cases before the new law, according to Romain. Furthermore, he worries, banks may not be as lenient as they have recently become after being made to wait three months.
"I think we really need to see what happens in the long run," he said. "Do we gain 60 days now, and lose it on the other end?"
The answer to that question won't be known until early August, when the first of the 90-day periods begin to expire.