The Massachusetts House has unanimously passed a compromise bill designed to prevent unnecessary home foreclosures by requiring lenders to modify certain mortgage loans and banning foreclosures lacking proper documentation.
The Senate is expected to vote Thursday.
The legislation would require lenders to assess a borrower’s circumstances and determine whether the net value in changing an existing loan is more than the anticipated recovery from foreclosure. If so, the lender would be required to offer a loan modification.
It also includes provisions to create a task force to study mediation programs, as well as ways to prevent unnecessary vacancies following foreclosures.
The bill is based on recommendations from Massachusetts Attorney General Martha Coakley.
Representative Michael Costello said a Senate proposal to make all loans subject to mediation was dropped because there wasn’t enough data regarding effectiveness. Instead, he said, the committee followed the House proposal to go after ‘‘risky’’ loans and included a commission to study mediation.
‘‘We didn’t say mediation is a bad idea. We just chose a different path,’’ said the Newburyport Democrat. He said the bill would provide residents facing foreclosure with necessary relief.
Coakley has been pushing for the legislation, calling it ‘‘critical’’ to keeping people in their homes. She said the bill will help the state’s economy by creating standards for ‘‘reasonable loan modifications.’’