Massachusetts Senate Proposes Mortgage Fraud Protection


According to the Associated Press, Massachusetts yesterday endorsed legislation in its Senate to help homeowners faced with the prospect of foreclosure, and to put a stop on fraudulent and harmful practices by the mortgage industry.

Mortgage brokers would have to obtain a license to work in Massachusetts and mortgage fraud would become a felony. The measure would crack down on deceptive advertising, give homeowners a last-minute opportunity to avoid a foreclosure auction and require borrowers to educate themselves to risks.

The Senate bill also proposes the creation of a state subsidy for businesses that pay portions of employees’ housing costs. Buoniconti said the goal was to have the state eventually contribute $1 for every $2 spent by businesses that help their employees pay for homes.

It is great to see that some of the states are finally starting to act, but I hope it is not too little, too late. The aftermath of the recent real estate bubble has resulted in record foreclosures across the nation. This was easily predicted as an obvious result to poor lending practices and worse government oversight of the lending industry.

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Joshua Dorkin

Joshua Dorkin (@jrdorkin, Google+) founded when he saw a need for free, trustworthy information about real estate investing online. Over the past 12 years, Josh has grown the site from self-funded hobby to full-time job and passion. Today, BiggerPockets brings together over 600,000 members, housing the world’s largest library of real estate content, iTunes’ #1 real estate podcast, and an array of analysis tools, all geared toward helping users succeed.


  1. I am curious about the proposal to crack down on “rescue schemes”. I wonder if they are going to limit investors availability to buy pre-foreclosures.

    I think the whole idea of bailing out people facing foreclosure is only going to delay the inevitable. If you don’t know how to manage your money before the re-finance, how are you going to know how after it?

    I like the idea of educating people about the risks involved. I think education should be the focus. Even more than just basic education about risks, though.

    I always wondered why basic financial education isn’t mandatory in high school and college. How to balance a checkbook or live by a budget is beyond 95% of our population’s understanding. Let alone delayed gratification and living below your means.

  2. I had no idea that the real estate market in the US had fallen this bad. Whilst the rest of the world seems to enjoy a boom in house prices it looks like Americans are really suffering from the “dodgy” lending that has gone on. I can say I’ve learnt something today!

  3. “Mortgage brokers would have to obtain a license to work in Massachusetts”

    Wow, it’s sad that some states are just realizing now that they need licensing for LO’s… In Nevada, brokers AND bankers both have to be licensed. -Jason in Vegas

  4. This reminds me of the Maryland Protection of Homeowners in Foreclosure Act of 2005, which was partly put in place to keep predatory investors from approaching people in foreclosure directly. That created a whole new profession called Foreclosure Consultants. What’s next, Mortgage Consultants?

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