Thursday, December 11, 2008

SJC approves restrictions for foreclosures

The Supreme Judicial Court has upheld an injunction against a California bank preventing it from foreclosing on an "unfair" mortgage.
The decision, Commonwealth v. Freemont Investment and Loan sets a pre-foreclosure procedure for the bank to follow for loans featuring a combination of four "unfair" characteristics : "(1) the loans were ARM loans with an introductory rate period of three years or less; (2) they featured an introductory rate for the initial period that was at least three per cent below the fully indexed rate; (3) they were made to borrowers for whom the debt-to-income ratio would have exceeded fifty per cent had Fremont measured the borrower's debt by the monthly payments that would be due at the fully indexed rate rather than under the introductory rate; and (4) the loan-to-value ratio was one hundred per cent, or the loan featured a substantial prepayment penalty..."
This is apparently one of the first in the nation, according to Mass Lawyers Weekly.
For more information see our page on Foreclosures.