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Massachusetts draws up new regulations on foreclosures

Foreclosures are up 3.5 percent compared with last year.

David Zalubowski/Associated Press

Foreclosures are up 3.5 percent compared with last year.

The state is proposing new regulations that are designed to help more homeowners avoid foreclosure.

Under rules drawn up by the Division of Banks, many mortgage loan servicers would not be able to begin foreclosure proceedings on a borrower already in the process of modifying their loan.

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The state agency filed the proposal this week with Secretary of State William Galvin’s office. Public comment will be heard later this month.

As part of the new regulations, loan servicers would be required to make sure lenders have the right to foreclose and that all paperwork is properly prepared. Servicers, who administer borrowers’ monthly payments, also would need to provide homeowners at risk of foreclosure with a single point of contact and follow-up in a timely manner, the Division of Banks said.

“These enhanced rules continue the Commonwealth’s national leadership on consumer protection, foreclosure prevention, and debt-collection oversight,” said Barbara Anthony, undersecretary of the Office of Consumer Affairs and Business Regulation.

If approved by the state after the public comment period, the regulations would supplement legislation signed by Governor Deval Patrick in August. The law mandates that lenders consider whether it makes more financial sense to help a delinquent borrower than to seize their home.

The measures are meant to slow the mounting number of foreclosures in Massachusetts. Between January and September, there were 6,486 completed foreclosures statewide, a 3.5 percent rise compared with the same period last year, according to Warren Group, a Boston company that tracks local real estate.

Foreclosure petitions, the first step in the seizure process, also have increased this year to 13,876 between January and September. That was 47.3 percent more than during those months in 2011, Warren Group reported.

David Cotney, the state banking commissioner, said the new regulations will offer many of the same protections that were agreed upon as part of a national mortgage settlement between five major banks and a multistate group of attorneys general.

Grace Ross, the coordinator for the nonprofit Massachusetts Alliance Against Predatory Lending, based in Worcester, said she was encouraged by the state’s proposed regulations.

“If our Division of Banks is going to push [lenders] on strict compliance, that is going to make a huge difference,’’ she said.

A public hearing on the proposed regulations is scheduled for 10:30 a.m. on Nov. 29 at 1000 Washington St. in Boston. For more information, visit www.mass.gov/dob.

Jenifer B. McKim can be reached at jmckim@globe.com. Follow her on twitter @jbmckim.
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