Massachusetts to seek delays on foreclosures

NEW YORK, April 30 (Reuters) - Massachusetts will seek delays from mortgage lenders to help struggling borrowers keep their homes as the state faces a "foreclosure crisis," Gov. Deval Patrick said on Monday.

The Democratic governor said in a statement the state Division of Banks will approach lenders on a case-by-case basis in response to complaints filed by borrowers to see if some adjustable-rate loans can be refinanced to fixed-rate.

"The action will provide relief to the people who need it most -- the individuals and families who find themselves in the late stages of a personal financial crisis," Patrick said.

In Massachusetts, where housing prices notched double-digit growth between 1995 and 2004, foreclosure filings surged 70 percent last year to a record 19,487 homeowners, as single-family home prices fell for the first time since 1993.

The Federal Reserve Bank of Boston blames subprime loans for much of the problem, saying they accounted for more than two-thirds of the state's foreclosure filings in the third quarter of 2006, even though they made up just 12 percent of all mortgages.

Subprime loans were extended to borrowers with poor credit, who find it difficult to make payments when rates on their adjustable-rate mortgages rise.

As a former top U.S. civil rights enforcer, Patrick has been involved in fighting predatory lending, a practice that is blamed for the surge of property foreclosures. But he has also been criticized for serving as a director of Ameriquest Mortgage, which has been accused of predatory lending.

Last week, he proposed a number of measures to deal with foreclosures, including legislation to make mortgage fraud a criminal offense that would allow for tougher penalties. The current law does not cover loans obtained from non-bank mortgage lenders and is only punishable as a misdemeanor.

(Additional reporting by Jason Szep in Boston)