Hudson-based Avidia Bank, Country Bank for Savings, Eastern Bank, Hometown Bank, North Brookfield Savings Bank, Rollstone Bank & Trust, and Southbridge Savings Bank have filed suit in federal court in an attempt to stop new ordinances in the city of Worcester designed to force banks into mediation with homeowners before launching foreclosure proceedings.  The banks claim the new ordinances violate Massachusetts state law and impair their rights, and are demanding that Worcester be prevented from enforcing them until a lawsuit over similar laws in Springfield is settled.

Worcester is the fourth city in Massachusetts to adopt the new mediation laws, which are intended to help people remain in their homes by forcing banks to negotiate rather than default to foreclosure.  The Worcester program would require banks to obtain a mediation certificate from a professional Neutral stating they had negotiated in good faith before they would be allowed to initiate foreclosure.  Currently there are 716 properties under foreclosure in Worcester city limits, though these are administered through 49 banks, most of which are uninvolved in the lawsuit.

The banks are also protesting a law passed in Worcester several years ago requiring that banks post a $5,000 bond for the maintenance of foreclosed-upon properties, claiming this is essentially a tax, thus violating laws that require approval of the state legislature on all new taxes.  The city of Worcester has dismissed this additional claim, pointing out that it has been on the books for several years without incident and stating it is necessary in a city that has so many foreclosed properties, many of which are allowed to fall into disrepair.