Help for borrowers and tenants in arrears

The Hampshire Gazette newspaper has published on Op-Ed from Mary Olberding, the Hampshire County Register of Deeds, that explains recent legislation at the state and federal level intended to assist tenants and home owner/borrowers who are in financial distress due to the Covid-19 emergency.

Here's the article:

Guest column by Mary Olberding, register of deeds: Help for those who can’t pay mortgage or rent

Published: 4/29/2020 3:35:52 PM

During these unprecedented times, federal and state legislators are working on relief packages for those financially impacted by COVID-19, including protections for those struggling to make their mortgage or rent payments.

At the federal level, the $2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES) includes a moratorium on foreclosures and allowing forbearance for mortgage payments of up to one year. Massachusetts’ version approved last week puts a moratorium on evictions and foreclosures during the crisis.

These are steps that property owners and renters can use for direct assistance, but consumers need to know what these bills do for them.

In Massachusetts, no evictions or foreclosures can take place for 120 days after the bill was enacted on April 20, or 45 days after the state of emergency has been lifted, whichever is soonest. And, if necessary, the governor can extend the expiration date.

Renters, either small businesses or residential tenants, cannot be evicted for nonpayment of rent except in cases of criminal activity or for health and safety reasons. Nor can tenants be charged late fees. The law does not forgive payments or prevent landlords from later recovering monies owed. Rather, tenants must notify landlords in writing of their COVID-related circumstance no later than 30 days after a missed payment. Landlords may access deposit payment of tenants’ last month’s rent to meet their property-related expenses.

For homeowners, it is important to note that the federal CARES Act only covers mortgages that are federally guaranteed like Freddie Mac and Fannie Mae, while the law in Massachusetts applies to all mortgages. The federal CARES Act moratorium began on March 18th and extends for 60 days. Notably, the federal moratorium includes a halt to foreclosures initiated prior to the act, where state law is more ambiguous on this point.

In all of these cases, creditors are prohibited from reporting delinquencies to credit agencies and the request to miss any payment obligations rests with the debtor. Both laws allow for a period of forbearance for residential property up to 180 days. Forbearance is a suspension of payments, not forgiveness of debt.

There are some critical distinctions between these laws:

CARES allows borrowers to request a second forbearance of up to 180 days, where the Massachusetts law stops with only one 180-day forbearance period.

■CARES does not prohibit balloon payments, meaning someone may owe all of their missed payments at one time.

■Massachusetts law specifies that additional interest or fees beyond what is initially owed in the forbearance period are not allowed and payments subject to forbearance will be added to the end of the term of the loan.

■Better still, Massachusetts law provides for the opportunity to enter into alternate payment plans for those subject to forbearance. That means homeowners can negotiate how they want to make the missed mortgage and interest payments. For example, they can spread it over the life of the loan, make interest-only payments or prepay loans when the economy returns.

How difficult it is to obtain forbearance remains an open question. Banks and other mortgage servicers appear to have sole authority to grant the forbearance and for how long. The Consumer Finance Protection Bureau suggests that homeowners able to pay their mortgage should do it. Those that can only pay part should contact their lender.

Much of the financial fallout from COVID-19 is unknown. We can use the housing crisis of 2007-2012 as a guide to prevent some unnecessary turmoil. During that time, banks did not have proper documentation before initiating foreclosures and they were therefore unlawful. Many safeguards have been since put in place, but none of the current legislation requires documentation for forbearance of mortgage payments by either borrower or lender. That opens both parties up for disputes of the agreed upon terms and conditions and possible default action later by the mortgagee.

I strongly encourage anyone seeking forbearance to put all requests in writing — and get it from a lender too. I am also advocating for legislation at the state and federal level for more reporting and accountability by mortgagees.

One remedy would be a notice of default sent to the borrower, much like that required now by the Servicemembers Civil Relief Act, to give people an opportunity to prove their COVID-19 hardship. They would have a prescribed number of days to respond to the notice and could make an appearance in court to demonstrate the forbearance to avoid foreclosure. The lender would bear the burden of recording that order at the Registry of Deeds and providing public notice. Not only would this prevent unnecessary and unlawful foreclosures, it would give clear chain of title for the property for future sale, either by mortgagor or mortgagee.

Already, the Registries are seeing an uptick in foreclosure-related activity. The moratorium prevents mortgage banks and servicers from taking any action on foreclosures, but with no penalty or enforcement provisions in the legislation, outside of legal action, there is no remedy for homeowners that the moratorium is designed to help.

I have contacted Congressman Jim McGovern’s office, our state legislators and the Consumer Protection Division of the Massachusetts Attorney General’s office to work on increased protections.

In the Great Recession, we learned how devastating it can be to property owners and to the economy if banks are not accountable for complying with protections. There is potential for the pandemic to cause long-term financial hardship. Unlike the foreclosure crisis of 2008, which largely effected homeowners, the current crisis also impacts renters, landlords and small businesses — anyone with a mortgage.

Here are some resources:

■The CARES Act can be found at financialservices.house.gov

Information about obtaining a forbearance and CARES can be found at consumerfinance.gov

Mortgage information may be found at MassLandRecords.com

Please note: While this is a summary of new legislation, it should only be used as guidance and not as financial or legal advice. Contact a professional financial advisor, attorney, or other expert for individual advice.

Mary Olberding is the Hampshire Register of Deeds.

Middlesex Probate Courthouse in Cambridge Closed Until Friday

The Trial Court has announced that the Middlesex Probate Courthouse in Cambridge is completely closed to staff for the next 48 hours. The Trial Court website states that staff will be allowed back into the building on Friday, April 24, 2020.

Because the Middlesex South Registry of Deeds is located in the Probate Courthouse in Cambridge, I assume that registry is closed to employees coming onsite which has implications for recording mail and dropped off documents.

I'll post updates as I get them.

For now, this office is running as normal (as in normal for the pendemic) so we're recording e-files, mail and dropped off documents.

Registry Update: April 21, 2020

We had a busy day today with 398 documents recorded. Mondays are usually our busiest day due to a high volume of mail, but Tuesdays that follow a Monday holiday (Patriots Day) are even busier.

Electronic recording is our biggest source of documents by far. However, we still get a considerable volume of mail and Fedex and UPS both routinely make deliveries. The Justice Center is closed to anyone who is not an employee, including mail carriers and delivery people, but the Court Officers staffing the entrance will take deliveries just outside the front entrance and we've had no problems getting packages intended for us.

This is also the case with documents that are dropped off for recording. We do ask you to call us to let us know you are coming or have just been here.

If you have Registered Land, we do require you to email your documents first to lowelldeeds@comcast.net so we can review them before you send them or drop them off. This makes it easier to make the minor technical corrections that are frequently necessary for Land Court registrations. Once we review the documents, we email you back with any needed fixes or with the go-ahead to get us your original documents.

We have the same requirement for plans. Take a picture of what you intend to record and email it. Once you get a reply from us, you can send or deliver your plan.

Finally, during the pandemic  emergency we have stopped recording at 4pm rather than our normal 4:15. Please keep that in mind if you're rushing to get something on record by the end of the day.

Electronic Signatures by Municipal Boards

Massachusetts Deed Indexing Standards 2018

April 2020 Amendment

The Massachusetts Registers and Assistant Registers of Deeds Association has adopted the following Amendment to the Massachusetts Deed Indexing Standards 2018. This amendment is effective April 17, 2020.

13-7. Electronic Signatures by Municipal Boards – The following procedure is recommended for municipal boards and committees that wish to execute documents in accordance with Massachusetts General Laws chapter 110G (Uniform Electronic Transaction Act) which documents are then to be recorded at the registry of deeds.

1.       At a properly called meeting, the municipal board or commission should formally vote that the board recognizes and accepts the provisions of M.G.L. c.110G regarding electronic signatures and that its members will henceforth execute documents either with electronic signatures or with wet ink signatures and that both will carry the same legal weight and effect.

2.       The board then records at the registry of deeds a Certificate of Vote that provides the language of the motion that was made regarding electronic signatures and attests to the vote taken, and obtains the Town Clerk’s certification.

3.       Then, board members may cause their electronic signature to be affixed to permitting or compliance documents that have been approved by a board vote. Such electronically signed documents should also include a statement that the signatures are made in accordance with M.G.L. c.110G and pursuant to the board’s electronic signature authorization vote recorded on [DATE] in [BOOK and PAGE] at the [NAME OF REGISTRY] Registry of Deeds.

4.       Any document so executed shall be accepted for recording at the registry of deeds either in electronic form or as a paper print of the electronically executed document.

NOTE - The Massachusetts Land Court does not permit this procedure so electronic signatures may not be used on any REGISTERED LAND documents. Please see the Land Court website for further guidance.

How Municipal Documents are Executed

Last week I shared some thoughts on how Municipal Boards might take advantage of MGL c.110G (the Uniform Electronic Transactions Act) to execute documents electronically during the pandemic. I recently heard from a lawyer who represents a number of municipalities who, while acknowledging the legality of my suggestion, offered a different way for municipal boards to execute documents. Here’s how it would work: 

The municipal board, at a properly held meeting, would vote to authorize a specific town employee to execute documents such as Orders of Conditions or Special Permits on behalf of the board. A certified copy of that vote would then be recorded at the appropriate registry of deeds.

For new documents created after that, the names of the members of the board would be typed onto the form and then the designated employee would affix his or her “wet” signature to the document with the annotation that this signature is made "on behalf of the Board pursuant to the vote dated xxxx and recorded at the registry of deeds in book yyyyy, page zzz."

I think this is a wise and workable procedure. It’s akin to executing a Power of Attorney authorizing another to sign documents on your behalf.