As Berkshire County shows early signs of joining the foreclosure trend, the Massachusetts Senate in Pittsfield is preparing to debate a new bill aimed at shielding renters and borrowers from the chaos emanating from the foreclosure crisis.

While many Senators are still studying the draft, State Senator Benjamin Downing, who already broadly supports the new measures, agrees that its time to react the latest spike, especially where it affects reverse mortgages taken out by older Americans.

Reverse mortgages enable retirees to re-access the capital tied up in their homes – but what’s supposed to happen when their investments go sour and no longer provide the income to service the increased debt?

“People look for ways to try and get through difficult times,” Downing said. “They have to make sure they aren’t sacrificing short-term gains for long-term losses by agreeing to risky deals on their homes.”

The new legislation seeks to protect renters who find their homes foreclosed under them, and also tightens consumer protection for senior citizens. It will do this by encouraging modified loans, criminalizing mortgage fraud, and establishing a foreclosed / abandoned property register.

“(The national foreclosure rate) has to impact values and it has to impact everybody – there’s no getting away from it,” says Jay Anderson, president of the Pittsfield Cooperative Bank. “We’re not immune.”

Although Berkshire County, like many other parts of Massachusetts has been benefiting from solid local lending institutions with less risky lending policies, it now seems likely that national tends could be catching up with it too.

Brad Gordon, Executive Director, Berkshire Regional Housing Authority, is concerned about how effective the proposed foreclosure relief bill is likely to be. “It’s been really challenging because as much as on the federal side they’ve tried to come up with legislation that will provide a wide range of remedies for people who are at risk or are in foreclosure, they’ve been inadequate,” he said. “It creates some real steep challenges for keeping people in their current living situation.”

Moreover, he adds, what’s to stop bankers resisting the new bill like they’re doing everywhere else in the States? Politicians may have the best will in the world, but as long as the incentives are so low, there’s no business sense in lenders voluntarily complying. Besides, what’s the point in intervening in cases where borrowers are going to default anyway?

Are these the wise words of a prophet crying in the wilderness, or just another sign that some agencies are getting tired? It’s really time for Washington to finally get tough, wade in, and sort out those less than responsible lenders who contributed to the foreclosure wave, and still think that they should be allowed to make good money out of it too.

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