Bill
SD 2427
Establishes a new framework to curb abusive servicing/foreclosure of subordinate, owner-occupied mortgages, enabling court relief, damages, and credit-report actions for borrowers.
An Act relative to unlawful practices in the servicing and foreclosure of a subordinate mortgage
Status and Schedule
- Introduced: February 27, 2025
- Legislative Action: Referred to The Judiciary (2/27/2025); House concurrence on the same date (2/27/2025)
- Bill Status: House concurred
- Class: Proposed bill for the 194th General Court (2025-2026)
Purpose and overall aim
- The bill creates a new statutory framework (Section 35D) within Chapter 244 to regulate the servicing and foreclosure of subordinate mortgages on owner-occupied residential property.
- It defines unlawful servicing and foreclosure practices and provides remedies, including potential court-ordered relief, sanctions, and credit reporting actions, to protect borrowers from abusive or improper conduct.
Key definitions
- Subordinate mortgage: A security instrument on residential real property that is subordinate to another lien recorded against the same property, including forms that operate as a mortgage.
- Creditor: The party that holds or controls a subordinate mortgage loan on an owner-occupied property, including originators, servicers, investors, assignees, trustees, and certain named entities; the Massachusetts Commonwealth’s public bodies are excluded from being a creditor in this context.
Unlawful practices (examples of prohibited conduct)
- Failure to provide written communications regarding the loan for 12 or more cumulative months.
- Failure to provide periodic loan statements as required by law.
- Failure to provide required loan servicing transfer notices (per RESPA requirements: 12 U.S.C. § 2605 and 12 C.F.R. § 1024.33).
- Failure to provide early intervention/pre-foreclosure notices as required by RESPA or state law.
- Failure to provide transfer of loan ownership notices when required.
- Demanding payment of all or part of a subordinate loan after the statute of limitations has expired.
- Any other circumstances a court finds indicate an intent to abandon the debt.
Notice to cure and court process
- Contemporaneous with service of the right-to-cure notice, the creditor must deliver a perjury-signed notice listing unlawful practices, confirming loan history review, and advising the borrower that they may seek court relief prior to foreclosure. The court may consider waiving or resetting debt obligations as part of relief.
- The court may stay foreclosure or recovery proceedings while a borrower’s petition is pending and until a final determination.
Court remedies and penalties (if unlawful practices are found)
- Potential orders may include:
- Waiving interest, fees, and charges
- Ceasing foreclosure and restarting with corrected notices
- Ceasing all collection activity
- Terminating loan transfers or sales
- Recording a release of liens
- Requesting deletion of loan tradelines from credit reports
- Other just and proper remedies as determined by the court
- Damages: The creditor may be liable for actual damages, and punitive damages may be awarded for willful noncompliance.
Foreclosure notice and publication safeguards
- Foreclosure notice for a subordinate mortgage cannot be published until at least 30 days after the creditor has recorded an affidavit in the local land records verifying service of the cure notice, attaching the notice and verification, and certifying accuracy. A copy must also be delivered to the Division of Banks.
Post-foreclosure relief
- If a foreclosure sale has occurred, the court may set aside the sale if unlawful practices occurred, if there was misapplication of the law or erroneous amounts, or in other qualifying circumstances. Borrowers may raise this as a counterclaim in post-foreclosure eviction proceedings.
Additional considerations
- The bill appears to apply to residential, owner-occupied subordinate loans and imposes a private right of action with broad remedial authority, including possible credit reporting actions.
- The text provided is truncated in one place, but core provisions establish a strong borrower-protection framework around subordinate-mortgage servicing and foreclosures.
Impact at a glance
- Strengthened protections for borrowers facing subordinate-mortgage foreclosure
- Expanded notice and transparency requirements for creditors
- Court-supervised remedies that can reset or mitigate debt and foreclosure activity
- Potentially higher accountability and enforcement options (damages, credit-reporting actions)
Notes
- The summary reflects the bill text as filed. If enacted, further implementing regulations and guidance from the Division of Banks and related agencies would likely follow.
Compiled from official sources — confirm details with the bill’s official record.
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