The Division of Banks has established new regulations that will prevent national and state lenders from foreclosing on a property if an application for a loan modification is already in progress.

 "This is another step in the right direction to further strengthen protections provided to Massachusetts borrowers and homeowners," Consumer Affairs and Business Regulation Undersecretary Barbara Anthony said in a statement. "These new rules complement the recently adopted foreclosure prevention regulations that require lenders and servicers to modify certain mortgage loans if the cost of modification is less than the cost of foreclosure."

The new regulations were established as a result of the law signed by Governor Deval Patrick in August 2012. Under the new rules, mortgage servicers will be required to explore more options to avoid foreclosure and third-party mortgage servicers will be prohibited from initiating a foreclosure when an application for a loan modification is in process.

Third-party loan servicers will also have to provide a single point of contact for the borrower, follow detailed loan modification procedures, and communicate with borrowers in a timely manner to comply with the new regulations.

These new regulations include many provisions of the Attorneys General’s 2012 mortgage settlement with the five largest national mortgage servicers. The division also considered the recently published CFPB rules which go into effect in January 2014.

The proposed regulations also amend the definition of "debt collector" to include active debt buyers who purchase loans in default and then directly collect that debt.