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August 12, 2010; Source: The Gov Monitor | Massachusetts just enacted one of the most comprehensive state-level initiatives to provide aid to homeowners facing foreclosure and to protect tenants in foreclosed buildings. The bill extends the right-to-cure period on foreclosures to 150 days and requires lenders to make good faith efforts to work with homeowners so that they can stay in their homes.

Recognizing how many homeowners got into subprime trouble with reverse mortgages, despite the assuring TV commercials of former senator and new pitchman Fred Thompson (R-TN), the Massachusetts law creates new reverse mortgage consumer protections. The legislation extends Community Reinvestment Act-type investment standards to non-bank mortgage loan originators, as many have advocated at the national level. And tenants get additional protection in the bill, protecting them from the summary evictions that have typically occurred during foreclosures.

Where is the nonprofit news here? One provision of the bill encourages nonprofit redevelopment of foreclosed properties by exempting nonprofits from property taxes while the nonprofit is engaged in the rehab and sale of the home for affordable uses. That should induce lots of nonprofit Community Development Corporations (CDCs) to take the plunge into acquiring and rehabbing foreclosed properties since their carrying costs will be reduced.

The bigger news for nonprofits is what can be done at the state level. This is just one more example of a state taking the onus for addressing a problem because of the political paralysis (or worse) with Congress and the White House at the federal level. Sometimes the lack of federal action spurs questionable and counterproductive state actions, like Arizona’s SB1070 immigration law, sometimes the state actions like this one from Massachusetts on foreclosures look pretty good. In both cases, the message to Washington is, get off the stick and do something.—Rick Cohen