Grandstanding by Gov. Patrick?
Governor Deval Patrick plans to introduce an ambitious program today to assist Massachusetts communities in preventing foreclosures by pressing lenders to accept losses on their mortgages so that homeowners are able to sell their properties and pay off smaller loan balances.
The initiative would start with a pilot program in cities with the highest incidence of foreclosures, including Lawrence and Springfield, where delinquent borrowers with subprime mortgages are prevalent. Other cities being considered are Boston, Brockton, New Bedford, and Worcester.
"We're identifying where the maximum need is," said an administration official briefed on the plan, who did not want to be identified prior to the governor's official announcement. "We want to stabilize these neighborhoods, and we need the lenders to be part of the solution."
...But Thomas Callahan, executive director of the Massachusetts Association for Affordable Housing, which provides mortgages to homebuyers with modest incomes, said the administration does not have leverage, legally, to force lenders to cooperate. He said most subprime lenders are out-of-state companies that are not regulated by the state. While Callahan supports the plan, it "is getting very limited cooperation from the lenders," he said.
UPDATE: From Squaring the Globe, Frank Phillips, Michael Graham, Jay Fitzgerald and James Taranto.
