LYNN — A newly minted city foreclosure mediation and prevention plan will probably face legal challenges from lenders, but Southern Essex Register of Deeds John L. O’Brien Jr. Tuesday dared banks to sue him over his pledge to enforce the ordinance.
O’Brien repeated a previous pledge to not record foreclosure deeds not accompanied by the mediation certificate required under the “homeowners bill of rights.”
“If they want to sue — come on in,” said O’Brien as more than 250 people crowding the Council Chamber stood and cheered.
But assistant city solicitor James Lamanna prior to the 11-0 vote in favor of the anti-foreclosure ordinance said he “anticipates legal challenges” to the measure.
Mayor Judith Flanagan Kennedy on Monday said she “has somewhat of a problem” with the ordinance, and said bank and mortgage company representatives have contacted city officials, raising concerns about the plan.
Kennedy is concerned the council plan imposes “an additional layer of regulation when the town next door doesn’t.” She said she will take the 10 days allowed under the City Charter to review the foreclosure proposal before deciding to sign or veto it.
“I have somewhat of a problem with Lynn developing its own banking regulations — that’s within the realm of the federal government,” she said.
City Council President Timothy Phelan and Ward 6 Councilor Peter Capano drafted the proposal, and more than two dozen advocates and other proposal supporters spoke in support of it, including Fearless Avenue resident Ellen Thomas, who told councilors she was foreclosed on in 2012.
“I thought I signed for a fixed rate. I found out it wasn’t so and I lost my home,” she said.
The ordinance requires lenders to sit down with homeowners facing foreclosure. A city-selected mediator would assist lender and homeowner in trying to reach a loan modification agreement and any foreclosure deed sent to the registry for recording.
The plan also includes provisions allowing homeowners to remain in their homes as renters and requirements aimed at ensuring banks and mortgage holders maintain property.
Massachusetts Bankers Association members “have reached out” to Lynn officials to discuss their concerns about their council plan, association senior vice president John Skarin said Tuesday.
Skarin said the Association wants Lynn and other communities to delay action on foreclosure prevention proposals and wait for a state task force to wrap up its foreclosure prevention study in December.
He said the council plan’s homeowner rental provision raises questions about how lenders are going to evict a homeowner if and when a home is sold to a new buyer. He said banks cannot lend in a business climate tempered by foreclosure and loan modification regulations that vary from city to city.
“How is anyone going to be able to keep up with that?” Skarin asked.
No bank or lender representatives spoke against the ordinance Tuesday night but St. Jean’s Credit Union chief executive David Surface spoke in support, noting that small, local lenders do their best to work with clients facing foreclosure. Surface said St. Jean’s has foreclosed on one homeowner in 15 years.
Kennedy on Tuesday said she is “thinking of following Springfield’s lead” in reviewing the “homeowners’ bill of rights.”
Springfield associate solicitor Thomas Moore said the city’s elected officials passed a foreclosure mediation proposal in 2011 because they did not think state and federal laws did enough to protect homeowners facing foreclosure.
The Springfield ordinance requires lenders to meet “face to face” with homeowners within 90 days after the owner receives a foreclosure notice. Failure to meet and mediate carries a $300 fine, but Springfield’s plan — unlike Lynn’s — does not require a foreclosure deed filing to include a mediation certificate.