The Need for Mortgage TransparencyDec 31, 2020 01:09PM ● By Chuck Tashjian
With the legislative session winding down, Norfolk County Register of Deeds William P. O’Donnell reiterated the importance he places on pending legislation to promote mortgage transparency here in Massachusetts.
At the beginning of 2019, Register O’Donnell had two bills filed, H.1413 and S.960, which stated that when banks sold their residential mortgages to a different lending institution, that transaction, or assignment, would be required to be recorded with the relevant Massachusetts Registry of Deeds office within 30 days of its execution.
“During the most recent legislative session,” noted O’Donnell, “both H.1413 and S.960 wound their way through the legislative process. After both pieces of legislation were filed with the Massachusetts House and Senate Clerks offices by lead sponsors Rep. William Galvin (D-Canton) and Sen. John Keenan (D-Quincy) respectively and given a docket number, dozens of other state representatives and senators signed up as co-sponsors. The clerks’ offices then gave each piece of legislation a bill number (H. 1413 and S.960). Then eachbill was assigned to the Joint Committee on the Judiciary for further consideration. A public hearing on the legislation was then held where I provided arguments for supporting the legislation. The joint committee on the Judiciary reported the legislation favorably in early 2020. On February 13, 2020, H.1413, accompanied by S. 960, was ordered to a third reading by the Massachusetts House. Unfortunately, no further action has taken place on the legislation. Certainly, the members of the legislature have been dealing with many pressing matters including COVID-19 and the fiscal year 2021 State Budget.”
The Register further stated, “My specific arguments for supporting the mortgage transparency legislation included the fact the legislation would eliminate the possibility that a homeowner may not know who the holder of their mortgage is because an assignment was not recorded. Because some banks have gone out of business in previous years or merged with another lending institution, homeowners are in some instances forced to consult with the Federal Deposit Insurance Corporation website or the Massachusetts Division of Banks to determine who holds their mortgage. The legislation would make assignments of residential mortgages more transparent to the consumer.”
Another argument for the bill’s passage was that it created a more level playing field between smaller community banks and larger lending institutions. The smaller community banks tend to hold their mortgages while many larger nationwide banks are not diligent in recording their mortgage assignments.
The need for this legislation hit home recently when the Boston Globe published an article by Sean P. Murphy on December 8, 2020 which highlighted the difficulties that can result when an assignment is not recorded. O’Donnell stated, “The article spoke about a couple who had found a home in Worcester which needed work. To finance the purchase and remodeling costs, the couple wanted to sell their condo in Easton. However, a title problem developed with the Easton condo due to a mortgage assignment not being properly recorded. Because the assignment was not recorded at the Registry of Deeds, the lending institution who was the current holder of the mortgage lacked the legal authority to discharge the mortgage. A process that should have taken a few days took several weeks as two large lending institutions could not get their act together and solve the title problem by filing the assignment. After several weeks of back and forth the problem was resolved and the assignment was recorded, but only after the intervention of the Boston Globe.”
“The assignment legislation that has been filed would have eliminated this problem as an assignment would have been required to be recorded 30 days after the mortgage was transferred, or sold, to another lending institution,” stated O’Donnell.
“With the legislative session winding down, it is unlikely the legislation, H.1413 and S.960 will advance further,” noted O’Donnell. “However, I am not giving up the fight to help Massachusetts homeowners. I will once again be filing mortgage transparency legislation in the upcoming 2021-2022 legislative session. I am hopeful our arguments will be persuasive and after years of trying, the legislation will wind its way through the legislative process and onto Governor Baker’s desk for his signature.”