Massachusetts enacts landmark foreclosure protections drafted by Harvard Law School students (video)

Groundbreaking legislation originally drafted by students from the Harvard Legal Aid Bureau (HLAB) to protect tenants from losing their homes after foreclosure was signed into law on August 7 by Massachusetts Governor Deval Patrick ’82, former president of HLAB. HLAB Director and Clinical Professor of Law David Grossman (photo below, right) and HLAB Clinical Instructor Pattie Whiting were present when Governor Patrick signed the bill in Brockton, Mass., standing before a foreclosed-on home.

The new law, if applied appropriately, will be a very important tool in keeping people in their homes and protecting neighborhoods from falling into decay, says Grossman. “It provides rights to tenants that no law in Massachusetts has for years,” he says. “It could solve the problem that’s plagued our communities and cost us thousands of hours trying to solve in a less-efficient fashion, through litigating against banks in court.”

The law is important not just for tenants and homeowners but cities and towns seeking to avoid empty properties and families living on the street, notes Lee D. Goldstein, Clinical Instructor at HLAB, who worked with the students on drafting the legislation. Vacant properties attract vandalism and crime, decrease neighborhood property values, and reduce a solid tax base. So far in 2010, 7,431 homeowners in Massachusetts have lost their homes to foreclosure, according to the Boston Globe, marking a 56.7 percent increase over the same period last year.

“An Act to Stabilize Neighborhoods,” passed unanimously by the Massachusetts legislature in late July, is the most comprehensive law in the country for protecting people living in foreclosed-on properties. HLAB students drafted what is considered the heart of the bill, a critically important “just cause” section that prohibits banks from evicting tenants from foreclosed-on properties unless the tenant fails to pay rent, harms the property, or otherwise gives “just cause” for eviction. It is believed to be the first “just cause” law in the country pertaining specifically to tenants in foreclosed-on properties. In addition, the bill imposes a longer pre-foreclosure period on banks that don’t make a good-faith attempt to restructure loans with homeowners, and it criminalizes mortgage fraud. It also provides property tax exemptions for purchasers of foreclosed properties.

The new legislation is part of a broad strategy – including targeted litigation, neighborhood outreach, and public protests – by students in HLAB, the WilmerHale Legal Services Center, and an affiliated HLS program, Project No One Leaves, which seeks to maintain Boston neighborhoods by keeping people in their homes despite foreclosure. Working with community partners in Boston including City Life/Vida Urbana, Harvard students have been successful in encouraging banks to sell foreclosed-on properties to a middleman, which then sells it to the former owner or tenants for market value, at a price typically much lower than the outstanding mortgage. Because of these creative efforts by the law students, Boston is having the most success among U.S. cities in keeping people in their homes despite foreclosures.

Read a related story on Project No One Leaves from the Winter 2010 issue of the Harvard Law Bulletin.

View a video on Project No One leaves (best viewed in Internet Explorer or Safari)

With new legal protections for tenants in place, the Harvard Law students can now focus their efforts on assisting homeowners, including helping them purchase back their foreclosed-on homes through the middleman-purchase process, Grossman says.

The original legislation was drafted almost three years ago by a group of four HLAB students working under Goldstein’s supervision, with Tim Hoitink ’08 as the primary drafter. A number of community partners were instrumental in getting the law passed, including the Massachusetts Alliance Against Predatory Lending, a nonprofit coalition of about 40 groups from around the state that lobbied for the bill. Students did extensive research including analyzing comparable laws throughout the U.S. When an opponent suggested the proposed law was unconstitutional, students prepared lengthy analyses of its constitutionality, which were presented to legislators. Before reaching the Massachusetts legislature, the bill was filed as a home rule petition in a number of municipalities throughout the state, and was passed into law by Boston and a half-dozen other cities. Students testified on behalf of the bill before the Boston City Council.

About a dozen students worked on the project over the past three years as it was bottled up in committees, missed legislative voting deadlines, and then reintroduced last fall. Sponsored by Senator Susan C. Tucker (D-Andover), it is less broad than the bill originally drafted by the students, which would have extended “just cause” protections to homeowners as well as tenants, allowing them to remain in a foreclosed-on property until it was resold as long as they paid rent to the bank. The students’ efforts had an impact in the national arena: one student, Marc Rotter ’09, pulled an all-nighter in the HLAB offices drafting a memo sent to U.S. Representative Edward Markey (D-Mass.) as the U.S. Congress considered a similar law, the Protecting Tenants Against Foreclosure Act, which passed last year.

“This shows what clinical education is about – because it involved research, lobbying and advocacy – and it had a real effect,” says Goldstein.

Adds Grossman, “This nearly three-year-long effort has not only taught the students who’ve worked on the bill how to draft legislation, but, maybe more importantly, it has given them a hands-on understanding of the complex process of getting legislation enacted, including all of the strategizing, collaborating, coalition-building and deal-making necessary for that to happen.” HLAB and the WilmerHale Legal Services Center are among the more than 28 in-house legal clinics at Harvard Law School, which has the largest and most extensive clinical education program in the world.

Click here for more information on Harvard Law School’s Clinical and Pro Bono programs.

Grossman says the banking industry was taken aback by how quickly the bill passed, and so, frankly, were the proponents at HLAB. “We too were kind of surprised,” he says. “We were starting to get kind of concerned because, with the session coming to an end [at the end of July], the legislature has been obsessed with the issue of casinos, when the bill suddenly popped out of committee and onto the floor. We got a phone call on Tuesday [July 27] that it was coming up in a few hours for a vote in the House, which then passed it unanimously, and within one day, the Senate concurred.”

The anti-foreclosure work of HLAB, the WilmerHale Legal Services Center, and Project No One Leaves continues on many fronts. Other legislation they advocate includes requiring that banks go to court before foreclosing on a property; currently, Massachusetts is among a minority of states that does not have judicial foreclosure.

—Elaine McArdle