SENATE, No. 2296

[Senate, July 23, 2007 - Substituted by amendment by the Senate, on recommendation of the Committee on Ways and Means, for Senate, No. 746.]

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The Commonwealth of Massachusetts

Seal of the Commonwealth of Massachusetts

In the Year Two Thousand and Seven.


AN ACT RELATIVE TO EMPLOYER ASSISTED HOUSING AND RESPONSIBLE LENDING

 

Whereas, The deferred operation of this act would tend to defeat its purpose, which is to establish a program to develop employer assisted housing and to ensure responsible lending practices in the commonwealth, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Chapter 6 of the General Laws, as appearing in the 2006 Official Edition,  is hereby amended by inserting after section 172I the following section:-

Section 172J.  Notwithstanding section 172 of chapter 6 or any other general or special law to the contrary, the commissioner of banks shall obtain all available criminal offender record information from the criminal history systems board prior to accepting any application for a mortgage loan originator license application. Neither the commissioner of banks nor the division of banks shall disseminate any such information obtained for any purpose other than to determine if the applicant is eligible for licensure. 

SECTION 2.  Chapter 121B of the General Laws, as appearing in the 2006 Official Edition, is hereby amended by inserting after section 59 the following section:-

Section 60. (a) The department shall establish a program to help businesses develop employer assisted housing funds. Such business’ employer assisted housing funds shall provide grants or loans for housing located in the state for all employees, including seasonal employees, of the business, or any subsidiary thereof, whose annual household income does not exceed 120 per cent of the area-wide median income as determined by the United States Department of Housing and Urban Development. Not less than 50 per cent of such a business’ employer assisted housing fund shall be for all employees whose annual household income does not exceed 80 per cent of the area-wide median income as determined by the United States Department of Housing and Urban Development. 

(b) Businesses offering an employer assisted housing program may establish requirements for employee participation, including incentives that encourage neighborhood revitalization or encourage employees to locate housing near their place of work and that are not inconsistent with the procedures adopted by the department.  Grants and loans from the business’ employer assisted housing fund shall be spent in the commonwealth and may be used: (i) for the cost to purchase housing that is to be a principal residence, including cooperative housing, and that falls within price guidelines established by the department, including costs for down payments, mortgage interest rate buy-downs, closing costs and other costs determined to be eligible by the department; (ii) for payments for security deposits and advance payments for rental housing; and (iii) to contribute to the production of housing units that fall within price guidelines and that meet other requirements as may be established by the department. 

(c)  The department, subject to appropriation, shall contribute $1 to the business’ employer assisted housing fund for every $2 expended by the business from the employer assisted housing fund as provided in this section.  The assistance granted pursuant to this section to each business shall not exceed $100,000 annually.  The total amount of assistance offered to all businesses under this section shall not exceed 5 million dollars annually.  No assistance shall be granted to any bank, bank and trust company, insurance company, trust company, national bank, savings association, or building and loan association or any other business entity for activities that are a part of its normal course of business, except that such businesses may receive assistance pursuant to this section for employer assisted housing funds for their own employees. 

(d)  The department shall adopt written procedures for the establishment and operation of employer assisted housing funds eligible for the assistance provided in this section.  Such procedures shall include provisions for employee eligibility and shall specify expenses for which grants and loans may be made and provide the documentation and procedures necessary for businesses to qualify for the assistance.  The department shall include employer reporting requirements that will allow the department to determine the effectiveness of the program established herein.

SECTION 3. Section 27 of chapter 183 of the General Laws, as so appearing, is hereby amended by adding the following paragraph:-

The holder of a mortgage of real estate, or the holder’s representatives, shall provide to the mortgagor or the mortgagor’s heirs, successors or assigns a written notice containing an itemized accounting of the disposition of the proceeds arising from a sale under the power of sale including, but not limited to, the sale price, legal fees, auctioneer fees, publication costs and other fees, and any surplus due to the mortgagor or the amount of any deficiency, within 30 days after the date of the sale.

SECTION 4. Said chapter 183 is hereby further amended by adding the following section:-

Section 69. No mortgagee who makes a loan to be secured by a mortgage on owner-occupied residential real property consisting of a dwelling house with accommodations for 4 or less separate households, a condominium or a cooperative unit in the commonwealth shall make the loan at a variable or adjustable rate of interest unless: (i) the loan meets all of the standard underwriting criteria for a conventional mortgage loan as established by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and is rated “A” paper under those criteria; or (ii) the mortgagor affirmatively opts in writing for the variable or adjustable rate loan and receives certification from a counselor with a third-party nonprofit organization approved by the United States Department of Housing and Urban Development, a housing financing agency of the commonwealth, or the regulatory agency which has jurisdiction over the creditor, that the mortgagor has received counseling on the advisability of the loan transaction.

Counseling shall be conducted in-person. The commissioner of banks shall maintain a list of approved counseling programs. At or before closing such a loan, the mortgagee shall obtain evidence that the mortgagor has completed an approved counseling program. If a mortgage loan is made by a mortgagee in violation of this section, the variable or adjustable rate terms of the loan shall not be enforceable and the mortgagee shall only be entitled to collect an interest rate equal to the lesser of the original interest rate, including any discounted rate, or the current adjusted interest rate throughout the remaining term of the loan. The commissioner may issue directives or guidelines or adopt regulations to administer and carry out this section and to further define the terms used in this section.

SECTION 5.  Section 3 of chapter 183C of the General Laws, as so appearing, is hereby amended by striking out the second sentence and inserting in place thereof the following sentence:- Counseling shall be performed in-person and shall include, at a minimum, a review of the mortgagor’s income and expenses, the terms of the proposed loan transaction and the truth in lending and good faith estimate statements provided by the lender. 

SECTION 6.  Said chapter 183C, as so appearing, is hereby further amended by inserting after section 18 the following 2 sections:-

Section 18A.  Any violation of chapters 167A or 167D, or advertising the availability of a mortgage loan, as defined in section 1 of chapter 255E, shall constitute a deceptive act or practice pursuant to chapter 93A unless a consumer warning or sufficient information is provided in the same advertisement to enable the consumer to readily determine whether the advertised financing would result in a variable or adjustable rate loan.

Advertising practices that shall be considered unfair and deceptive practices shall include, but not limited to, the following:-

(a) advertisement that indicates the availability of instant mortgage financing approval or financing for persons with no credit or bad credit without disclosing how the terms of financing available to persons with impaired credit will differ from persons with a standard credit rating;

(b) advertisement that indicates the availability of mortgage financing at a particular interest rate or monthly payment amount that does not also disclose and specify the term of the mortgage, the nature and amount of any change in interest rate and monthly payments during the first 5 years, any prepayment penalty or prohibition, and any negative amortization; or

(c) advertisement of the availability to refinance pre-existing debt that will result in reduction of a borrower’s aggregate monthly payment without also disclosing any increase in the borrower’s aggregate number of monthly debt payments and any increase in the aggregate amount paid by the borrower over the term of the loan.

Section 18B.  Any violation of chapters 167A or 167D, or  the provision of a mortgage loan, as defined in section 1 of chapter 255E, shall constitute a deceptive act or practice pursuant to chapter 93A unless the mortgagee also provided the borrower with a plain language summary of the estimated 10 year costs of the loan in a format proscribed by the commissioner of banks.  This summary shall provide the borrower with a calculation of the maximum monthly required minimum payment the borrower could face under the terms of the loan for each of the first 10 years of the loan in order to keep the loan in good standing and the cost to the buyer to pay off the loan at the end of each of the first 10 years if the borrower makes the minimum required payments to keep the loan in good standing.   If the borrower is receiving more than 1 loan, the summary must provide the same information for each loan separately and for the total of all of the loans together.

SECTION 7.  Chapter 244 of the General Laws, as so appearing,  is hereby amended by inserting after section 14 the following section:-

Section 14A. The commissioner of banks shall maintain a foreclosure database that shall include, but not be limited to, foreclosure activity by mortgage lenders, mortgage holders and mortgage servicers, as well as the mortgage brokers and loan originators who placed these mortgage loans in the commonwealth, including information relative to the original mortgagee and any subsequent assignee. Based on the information received, the commissioner shall produce a report, at least annually, to track developments and trends of mortgage foreclosure on residential property in the commonwealth including, but not limited to, an analysis of the pre-foreclosure notices submitted to the commissioner compared to the final foreclosure notices, and any trends or patterns relative to the geographic location of the residential properties and interest rates. The report shall be available to the public upon request, and the commissioner shall make it available in any other manner that he may choose.

SECTION 8.  Said chapter 244, as so appearing, is hereby further amended by inserting after section 35 the following section:-

Section 35A.  (a) A mortgagor of residential real property consisting of a dwelling house with accommodations for 4 or less separate households, a condominium or a cooperative unit, and occupied in whole or in part by the mortgagor, shall have the right to cure a default or breach of the security instrument and reinstate the loan.  The mortgagor may exercise this right at any time after the default or breach of a security agreement until the property is sold at auction or otherwise transferred.  The right to cure a default or breach of a security agreement shall be granted once during any 5 year period, regardless of the mortgage holder.

(b) Following a mortgagor’s breach of the security instrument, and prior to acceleration, a notice of the right to cure the default shall be delivered to the mortgagor informing the mortgagor of the following:

(1) the nature of the default claimed on the home loan and of the mortgagor's right to cure the default by paying the sum of money required to cure the default, including the limitation that the right to cure is allowed only once during any 5 year period. If the amount necessary to cure the default will change during the 30 day period after the effective date of the notice due to the application of a daily interest rate or the addition of late fees, the notice shall give sufficient information to enable the mortgagor to calculate the amount due at any point during the 30 day period;

(2) the date by which the mortgagor shall cure the default to avoid acceleration and initiation of a foreclosure or other action to seize the home, which date shall not be less than 90 days after the date the notice is mailed and the name, address and local or toll-free phone number of a person to whom the payment or tender shall be made;

(3) that the mortgagee or servicer may take steps to terminate the mortgagor's ownership in the property by commencing a foreclosure proceeding or other action to seize the home, if the mortgagor does not cure the default by the date specified; 

(4) the name and address of the mortgagee or servicer and the toll-free telephone number of a representative of the mortgagee or servicer whom the mortgagor may contact if the mortgagor disagrees with the mortgagee's or servicer's assertion that a default has occurred or the accuracy of the mortgagee's or servicer's calculation of the amount required to cure the default; and

(5) that a repayment plan, forbearance, loan modification, or other workout tool may be available to help the mortgagor repay the arrears and the name, address and local or toll-free telephone number of the creditor or servicer whom the mortgagor may contact to request this assistance.

(c) To cure a default prior to acceleration, a mortgagor shall not be required to pay any charge, fee or penalty attributable to the exercise of the right to cure a default. The mortgagor shall not be liable for any attorneys' fees relating to the mortgagor's default that are incurred by the mortgagee or servicer prior to or during the period set forth in the notice required by this section.

(d) If a creditor or servicer asserts that grounds for acceleration of a home loan exist and requires the payment in full of all sums secured by the security instrument, the mortgagor, or anyone authorized to act on the mortgagor's behalf, shall have the right at any time, up to the time title is transferred by means of a sale or otherwise, to cure the default and reinstate the home loan by tendering the total amount of principal, interest, late fees, escrow deposits in arrears, reasonable and necessary expenses incurred by the mortgagee or servicer, and reasonable attorney fees.  Cure of default, as provided in this paragraph, shall reinstate the mortgagor to the same position as if the default had not occurred and shall nullify as of the date of the cure any acceleration of any obligation under the security instrument or note arising from the default.  The cure shall constitute payment in full satisfaction of all delinquent principal, interest, late fees, escrow shortages, legal fees, and costs of any kind which may be imposed as a result of the default.

(e) After the mortgagee or servicer initiates a foreclosure action or takes other action to seize or transfer ownership of the home, the mortgagor shall only be liable for a reasonable attorney fee actually incurred by the mortgagee or servicer based on a reasonable hourly rate and a reasonable number of hours plus any other reasonable and necessary expenses incurred by the creditor or servicer.

(f) If a default is cured after the initiation of any action to foreclose, the creditor or servicer shall take such steps as are necessary to terminate the foreclosure proceeding. 

(g) A copy of the notice required by subsection (b) and an affidavit demonstrating compliance with said subsection (b) shall be filed in any action or proceeding to foreclose on a home loan.  

(h) Any person who fails to comply with any requirement imposed under this section with respect to a mortgagor shall be liable to the mortgagor in an amount equal to the actual damages sustained by the mortgagor as a result of the failure, but in no event less than $1,000.

Any action filed pursuant to this section shall be brought in any court of competent jurisdiction within 3 years from the date of the occurrence.  This paragraph does not bar a person from asserting a violation of this chapter in an action to collect the debt, or foreclose upon the home, or to stop a foreclosure upon the home, which was brought more than 3 years from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action. 

An action to enforce a violation of this section may also be brought in any court of competent jurisdiction by the attorney general within 3 years of the violation. 

An action filed pursuant to this section does not create an independent basis for removal of an action to a court.

The prevailing party in an action brought pursuant to this section shall be awarded the costs of the action and reasonable attorney’s fees as determined by the court.

SECTION 9.  Chapter 255E, as so appearing, is hereby further amended by adding the following section:-

Section 13.  It shall be the continuing and affirmative obligation of each mortgage lender, who is licensed pursuant to this chapter and who, directly or indirectly, makes more than 50 residential real property mortgage loans in the commonwealth in any calendar year, as reported under the Home Mortgage Disclosure Act, 12 U.S.C. section 1801 et seq., to help meet the housing credit needs of the communities in the commonwealth, including low and moderate income neighborhoods and residents, consistent with laws, rules and regulations of the commonwealth and the federal government relative thereto, and with safe and sound business practices.

The commissioner of banks shall assess the record of each such lender in satisfying this continuing and affirmative obligation. To assist in carrying out this section, the commissioner shall adopt regulations which shall include, but need not be limited to, a consideration of such mortgage lender’s: (a) origination of loans and other efforts to assist low and moderate income residents, without distinction, to be able to acquire or to remain in affordable housing in their neighborhoods; (b) origination of loans that show an undue concentration and a systematic pattern of lending resulting in the loss of affordable housing units; and (c) such other considerations, including notice of the schedule of  examinations and the right of interested parties to submit written comments relative to any such examination to the commissioner as, in the judgment of the commissioner, reasonably bear upon the extent to which a mortgage lender is helping to meet the housing needs of communities in the commonwealth.

In considering an application from a licensed mortgage lender for a renewal of a license under this chapter, the commissioner shall consider, but shall not be limited to, the record of performance of any such lender relative to this section. This record of performance may be the basis for the denial of any such renewal application.

Upon the completion of the examination of a mortgage lender pursuant to this section, the commissioner shall prepare a written evaluation of such lender’s record of performance which shall be open to public inspection upon request.  The written evaluation shall include:-

(1)   the assessment factors utilized to determine the mortgage lender’s descriptive rating;

(2)   the commissioner’s conclusions with respect to each such assessment factor;

(3)   a discussion of the facts supporting such conclusions; and

(4)   the mortgage lender’s descriptive rating and the basis therefore.

Based upon such examination, the mortgage lender shall be assigned one of the following ratings:

(a)  outstanding record of performance in meeting the housing credit needs of communities in the commonwealth;

(b)  high satisfactory record of performance in meeting the housing credit needs of communities in the commonwealth;

(c)  satisfactory record of performance in meeting the housing credit needs of communities in the commonwealth;

(d)  needs to improve record of performance in meeting the housing credit needs of communities in the commonwealth; or

(e)  substantial noncompliance in meeting the housing credit needs of communities in the commonwealth.

Notwithstanding the foregoing, the commissioner shall establish an alternative examination procedure for any mortgage lender, who, as of the most recent examination, has been assigned a rating of “outstanding” or “high satisfactory” for its record of performance in meeting its community housing credit needs.

For the purposes of this section, no mortgage lender may include a loan origination or loan purchase for consideration as part of its review under this section if another mortgage lender claims the same loan origination or purchase for its review under this section or any other section of the General Laws.  

Annually, on or before March 1, the commissioner shall provide a written report of the division of banks’ assessment of each lender’s record of performance under this section to the house and senate chairs of the joint committee on housing and the house and senate chairs of the joint committee on financial services.

SECTION 10.  The General Laws are hereby amended by inserting after chapter 255E the following chapter:-

CHAPTER 255F.

LICENSING OF MORTGAGE LOAN ORIGINATORS.

Section 1.  As used in this chapter, the following words shall, unless the context otherwise requires, have the following meanings:-

“Division”, the division of banks.

“Commissioner”, the commissioner of the division of banks.

“Entity”, a person or entity that is a licensee under chapter 255E, as regulated by the division.

“Mortgage loan originator”, a natural person who:  (a)  is employed by or associated with 1 and not more than 1 entity; and (b) negotiates, solicits, arranges, provides or accepts residential mortgage loan applications, or assists consumers in completing such applications, except that employees whose responsibilities are limited to clerical and administrative tasks and who do not solicit borrowers, accept applications, or negotiate the terms of residential mortgage loans on behalf of the employer shall not be considered mortgage loan originators and do not require licenses. 

“Mortgage loan”, a loan or an extension of credit including, but not limited to, an extension of credit pursuant to a contract or an assigned contract for the sale of goods or services made to a natural person, the proceeds of which are to be used primarily for personal, family or household purposes, and which is secured wholly or partially by a mortgage on residential property.

“Residential property”, real property located in the commonwealth having thereon a dwelling house with accommodations for 4 or less separate households and occupied, or to be occupied, in whole or in part by the obligor on the mortgage debt. 

Section 2.  No natural person shall act as a mortgage loan originator unless such person has first obtained a mortgage loan originator license from the commissioner.  An entity shall not knowingly employ or retain a mortgage loan originator unless the mortgage loan originator is licensed under this chapter.

Section 3.  (a) The application for a mortgage loan originator license shall be in writing and in the form prescribed by the commissioner, signed under the pains and penalties of perjury, and shall contain the name, address and license number of the entity with whom a mortgage loan originator is employed or associated and other information as the commissioner may require, including evidence of compliance with subsection (b).  The application shall also include a description of the activities of the applicant, in such detail and for such periods as the commissioner may require, and such further information as the commissioner may require.  The division shall investigate each applicant and such investigation shall a request for criminal offender record information, authorized by section X of chapter 6 and such request shall include the fingerprints of the applicant.  The division shall require each applicant to submit to fingerprinting by a law enforcement agency, which agency shall be determined by the division. The division shall also submit a request and such fingerprints to the Criminal Investigation Bureau of the Department of Justice and the Federal Bureau of Investigation for federal processing of a nationwide criminal offender record check.   Investigation and license fees, to be paid by the mortgage loan originator license applicant, shall be determined annually by the secretary of administration pursuant to the provisions of section 3B of chapter 7. 

(b)  An applicant shall: (i) have completed a residential mortgage lending course, accredited by the Commonwealth’s division of professional licensure, and managed by the board of mortgage lending, during the 2 year period immediately preceding the date of the application; and (ii) provide evidence that the applicant has received a passing grade on the residential mortgage lending course examination administered by the board of residential mortgage lending within such 2 year period.

Section 4.  If the commissioner finds that the financial responsibility, character, reputation, integrity and general fitness of the applicant is such as to warrant belief that the applicant will act honestly, fairly, soundly and efficiently in the public interest, consistent with the purposes of this chapter, the commissioner shall issue the applicant a license to engage in the business of a mortgage loan originator upon payment of the required fees.  If the commissioner shall not so find, or if the applicant’s criminal history demonstrates any felony criminal convictions or other convictions involving fraud or if the applicant has had any adverse civil judgments involving fraudulent dealings, the commissioner shall not issue a license and shall notify the applicant of the denial.  Within 20 days thereafter, the commissioner shall enter upon the division’s records a written decision and findings containing the reasons supporting the denial and shall forthwith give written notice thereof by registered mail to the applicant.  Within 30 days after receipt of such notice, the applicant may seek judicial review of the denial in accordance with section 14 of chapter 30A.

Section 5.  A loan originator may transact business only for an employing entity.  Each original license issued to a loan originator must be provided to and maintained by the employing entity at the entity’s main office.  If the employment of a loan originator is terminated, the entity shall return the loan originator’s license to the division within 5 business days after termination.  The reason for termination shall be given in a format determined by rules or regulations of the commissioner.   For a period of 1 year after the termination of employment, the loan originator may request the transfer of the license to another entity by submitting a relocation application to the division, along with a fee established by the division by rule or regulation.  The return of the license of any loan originator to the division, that is not transferred to another entity, terminates the right of the loan originator to engage in any residential mortgage loan origination activity until division procedures have been followed to reinstate such license.  The license of any loan originator that has been returned to the division and not transferred to another entity within 1 year of termination of employment shall be cancelled.

Each license shall state the name and address of the mortgage loan originator licensee. 

The commissioner may establish an expedited transfer process of a loan originator’s license to another entity if the reason for such transfer is directly related to increased responsibilities or compensation.

The commissioner may adopt, amend or repeal rules and regulations to aid in the administration and enforcement of this chapter.

Section 6.  Each application for a license shall be accompanied by an investigation fee. Investigation and license fees shall be determined annually by the secretary of administration under section 3B of chapter 7.  The license of a mortgage loan originator shall expire annually.  Each licensee, shall annually, on or before a date to be determined by the commissioner, submit a license renewal application.  The license renewal application shall be on a form prescribed by the commissioner, signed under the pains and penalties of perjury, contain such information as the commissioner may require, including evidence satisfactory to the commissioner that the licensee has completed at least 8 hours of  residential mortgage lending continuing education courses accredited by the division of professional licensure and the board of mortgage lending during the year immediately preceding the filing of an application for license renewal.  Failure of the licensee to satisfy the continuing education requirement shall render the mortgage loan originator ineligible for renewal and his license shall be deemed inactive.   The license of a mortgage loan originator who fails to file such application or fails to amend the same within 15 days of receipt of notice from the commissioner directing the mortgage loan originator to so file or amend shall be deemed inactive.  A mortgage loan originator holding an inactive license shall be prohibited from engaging in business as a mortgage loan originator.

Section 7.  The commissioner may suspend, revoke or refuse to renew any license issued pursuant to this chapter if the commissioner finds that:  (1) the licensee has violated this chapter or any rule or regulation adopted hereunder, or any other law applicable to the conduct of its business; (2) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner in refusing to issue such license; or (3) the licensee has committed any fraud, misappropriated funds or misrepresented made a material misrepresentation during a mortgage loan transaction.

Except as provided in section 7, no license shall be revoked or suspended except after notice and a hearing thereon pursuant to chapter 30A.  Any order issued pursuant to this section shall be subject to judicial review in accordance with section 14 of chapter 30A.

A licensee may surrender a license by delivering to the commissioner written notice that he thereby surrenders such license, but such surrender shall not affect the civil or criminal liability of the licensee for acts committed before such surrender.

Section 8.  (a)  If the commissioner determines, after giving notice of and opportunity for a hearing, that a licensee has engaged in or is about to engage in an act or practice constituting a violation of this chapter or a rule, regulation or order hereunder, the commissioner may order such licensee to cease and desist from such unlawful act or practice and take such affirmative action as, in his judgment, will effect the purposes of this chapter. 

(b)  If the commissioner makes written findings of fact that the public interest will be irreparably harmed by delay in issuing an order under subsection (a), the commissioner may issue a temporary cease and desist order.  Upon the entry of a temporary cease and desist order, the commissioner shall promptly notify, in writing, the licensee and the employing entity affected thereby that such order has been so entered, the reasons therefore, and that, within 20 days after the receipt of a written request from such licensee, the matter will be scheduled for hearing to determine whether such temporary order shall become permanent and final.  If no such hearing is requested and none is ordered by the commissioner, the order shall remain in effect until it is modified or vacated by the commissioner.  If a hearing is requested or ordered, the commissioner, after giving notice of and opportunity for a hearing to the licensee and the employing entity subject to said order, shall, by written findings of fact and conclusions of law, vacate, modify or make permanent the order.

(c)  No order under this section, except an order issued pursuant to subsection (b), may be entered without prior notice of and opportunity for a hearing.  The commissioner may vacate or modify an order under this section upon finding that the conditions which required such an order have changed and that it is in the public interest to so vacate or modify.

Any order issued pursuant to this section shall be subject to judicial review in accordance with section 14 of chapter 30A.

Section 9.  The commissioner may enforce this chapter, or restrain any violations thereof, by filing a civil action in any court of competent jurisdiction. 

Section 10.   Whoever violates section 2 or any rule or regulation made thereunder by the commissioner, shall be imprisoned in the house of correction for not more than 180 days and may be fined not more than $1,000, or by both such fine and imprisonment.  Each day such violation occurs or continues shall be deemed a separate offense.

Section 11.  (a) Whenever the commissioner finds that any licensee has violated this chapter or any rule or regulation adopted thereunder, or any other law of the commonwealth applicable to the conduct of a mortgage loan originator on residential property in the commonwealth, the commissioner may, by order, impose a civil assessment not to exceed $5,000 for each violation, the aggregate of which shall not exceed $100,000 plus the costs of investigation.  The commissioner may impose a civil assessment on a person other than a licensee which shall not exceed $5,000 for each violation of this chapter, or any rule or regulation adopted thereunder, plus the costs of investigation.

(b) Nothing in this section shall limit the right of any individual or entity who has been injured as a result of any violation of this chapter by a licensee, or any person other than a licensee, to bring an action to recover damages or to seek restitution in a court of competent jurisdiction.

(c) Any findings or order issued by the commissioner pursuant to this section shall be subject to review as provided in chapter 30A.

Section 12.  (a) Whenever the commissioner determines that any person has, directly or indirectly, violated this chapter or any rule or regulation adopted thereunder, applicable to the conduct of a mortgage loan originator on residential property in the commonwealth, or any order issued by the commissioner under this chapter or any written agreement entered between the licensee and the commissioner, the commissioner may serve upon that person a written notice of intention:

(1) to prohibit the person from performing in the capacity of a principal employee on behalf of any licensee for a period of time that the commissioner considers necessary;

(2) to prohibit the person from applying for or obtaining a license from the commissioner for a period up to 36 months following the effective date of an order issued under subsection (b) or (c); or

(3) to prohibit the person from any further participation, in any manner, as a mortgage loan originator in the commonwealth or to prohibit the person from being employed by, an agent of, or operating on behalf of a licensee under this chapter or any other business which requires a license from the commissioner.

(b) A written notice issued under subsection (a) shall contain a written statement of the facts that support the prohibition and shall give notice of an opportunity for a hearing to be held thereon. If the person fails to submit a request for a hearing within 20 days of service of notice under subsection (a), or otherwise fails to appear in person or by a duly authorized representative, the party shall be considered to have consented to the issuance of an order of prohibition in accordance with the notice.  If  the person requests a hearing, within 20 days of receipt of the commissioner’s notice pursuant to subsection (a), the hearing shall be fixed for a date not more than 30 days after filing of such request. 

(c) In the event that consent is granted as provided in subsection (b), or if, after a hearing the commissioner finds that any of the grounds specified in the notice have been established, the commissioner may issue an order of prohibition in accordance with subsection (a) as the commissioner finds appropriate.

(d) An order issued pursuant to subsection (b) or (c) shall be effective upon service on the person. The commissioner shall also serve a copy of the order upon the licensee of which the person is an employee or on whose behalf the person is performing. The order shall remain in effect and enforceable until it is modified, terminated, suspended or set aside by the commissioner or a court of competent jurisdiction.

(e) Except as consented to in writing by the commissioner, any person who, pursuant to an order issued under subsection (b) or (c) has been prohibited from participating in whole or in part as a mortgage loan originator, shall not, while the order is in effect, continue or commence to perform in the capacity of a mortgage loan originator, or otherwise participate in any manner, if so prohibited by order of the commissioner, to act  as:

(1) a licensee under this chapter;

(2) a person engaged in any other business which requires a license from the commissioner; or

(3) a bank, as defined under section 1 of chapter 167, or any subsidiary thereof.

Section 13.  The commissioner may suspend, revoke or refuse to renew the license of an entity employing any licensed mortgage originator if the commissioner finds that: (a) the entity knew or should have known that the mortgage loan originator violated  this chapter or any rule or regulation adopted hereunder, or any other law applicable to the conduct of its business; (b) the entity knew of any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner in refusing to issue such license; or (c) the mortgage loan originator  committed any fraud, misappropriated funds or made a material misrepresentation in a mortgage loan transaction approved by the entity.

Section 14.  Each licensee shall, when directed by the commissioner, permit the commissioner or his duly authorized representative to inspect its relevant records and evidence of compliance with this chapter or any rule or regulation issued hereunder and with any other law, rule and regulation applicable to the conduct of a mortgage loan originator licensed under this chapter.

SECTION 11. Chapter 266of the General Laws, as so appearing, is hereby amended by inserting after section 35 the following section:-

Section 35A. (a) For the purposes of this section the following terms shall have the following meanings:-

“Funds”, shall include, but not be limited to, a commission, fee, yield spread premium,, or compensation in any form.

“Material omission”, the omission or concealment of a material fact, without which, in the light of the circumstances under which a statement is made, renders the statement misleading.

“Mortgage lending process”, the process through which a person seeks or obtains a residential mortgage loan including, but not limited to, solicitation, application, or origination, negotiation of terms, third-party provider services, underwriting, signing and closing, and funding of the loan. Documents involved in the mortgage lending process include, but are not limited to: uniform residential loan applications or other loan applications; appraisal reports; HUD-1 settlement statements; supporting personal documentation for loan applications such as W-2 forms, verifications of income and employment, bank statements, tax returns and payroll stubs; and any required disclosures.

“Pattern of  residential mortgage fraud”, a violation of subsection (b), in connection with 3 or more residential properties within a 5 year period, and which violations have the same or similar purposes, results, participants, victims, or methods of commission or are otherwise are interrelated by distinguishing characteristics;

“Person”, a natural person, corporation, company, limited liability company, partnership, real estate trust, association or any other entity.

“Residential mortgage loan”, a loan or agreement to extend credit made to a person, which loan is secured by a mortgage, security interest, deed to secure debt, deed of trust, or other document representing a security interest or lien upon any interest in real property located in the commonwealth containing a dwelling home with accommodations for 4 or fewer separate households, a condominium or a cooperative unit and occupied in whole or in part by the mortgagor, including the renewal or refinancing of any such loan.

(b) Any person who knowingly:

(1) makes or causes to be made any material statement that is false or any statement that contains a material omission, knowing the same to be false or to contain a material omission, during or in connection with the mortgage lending process, with the intention that it be relied on by a mortgage lender, borrower or any other party to the mortgage lending process; 

(2)  uses or facilitates the use of any material statement that is false or any statement that contains a material omission, knowing the same to be false or to contain a material omission, during or in connection with the mortgage lending process with the intent that the statement be relied upon by a mortgage lender, borrower or any other party to the mortgage lending process;

(3)  receives any  proceeds or any other funds in connection with a residential mortgage closing knowing such proceeds or funds to have resulted from a violation of paragraph (1) or (2);

(4)  files, or causes to be filed, with the registrar of deeds of any county in the commonwealth any document that contains a material statement that is false or a material omission;

(5)  coerces or induces a real estate appraiser to inflate the value of real property used as collateral for a residential mortgage loan;

(6) represents or implies that a real estate appraiser will not be selected to conduct an appraisal of the real property or selected for future appraisal work unless the appraiser agrees in advance to a value, range of values or minimum value for the real property; or

(7) represents or implies that a real estate appraiser will not be paid for an appraisal unless the appraiser agrees in advance to a value, range of values or a minimum value for the real property shall be punished by imprisonment in the state prison for not more than 5 years or by imprisonment in the house of correction for not more than 2 1/2 years or by a fine of not more than $10,000 in the case of a natural person or not more than $100,000 in the case of any other person, or by both such fine and imprisonment.

Any person who engages in a pattern of residential mortgage fraud shall be punished by imprisonment in the state prison for not less than 10 nor more than 15 years or by a fine of not more than $50,000 in the case of a natural person or not more than $500,000 in the case of any other person, or by both such fine and imprisonment. 

Each residential property transaction that is a violation of this section shall constitute a separate offense and shall not merge with any other offenses prohibited in this section.

(c)  Any criminal violation of this section may be prosecuted and punished: in the county in which the residential property for which a mortgage loan is being sought is located; in any county in which any act was performed in furtherance of the violation; in any county in which any person alleged to have violated this section had control or possession of any proceeds of or other funds received as a result of the violation; in any county in which a closing on the mortgage loan occurred; or in any county in which a document is filed and know to contain a material statement that is false or a material omission with a registrar of deeds.

SECTION 12.  Item 7006-0010, in section 2 of chapter 61 of the acts of 2007 is hereby amended by striking out the figure “$12,240,355” each time it appears and inserting in place, in each instance, the following figure:- “$13,240,355”

SECTION 13.  Said chapter 61 is hereby further amended by inserting after item 7006-0010 the following item:-

“7006-0011  For costs incurred by the division of banks pursuant to chapter 255F of the General Laws; provided, that the division may expend revenues in an amount not to exceed $3,000,000 from the revenue received from investigation and licensing fees under chapter 255F; provided further, that not more than $500,000 shall be expended on grants to approved third-party nonprofit organizations in order to provide counseling on the advisability of loan transactions to mortgagees who are considering variable or adjustable rate loans; provided further, that funds may be expended on the maintenance of the state-wide foreclosure database; and provided further, that funds may be expended on the division’s responsibilities regarding oversight and monitoring as provided in section 13 of chapter 255E of the General Laws…. $3,000,000

SECTION 14.  The commissioner of banks shall grant an application for a mortgage loan originator license to a natural person who, on the effective date of this act, is a mortgage loan originator, as defined in section 1 of chapter 255F of the General Laws, and who files such an application within 180 days of said effective date, notwithstanding such applicant’s noncompliance with subsection (b) of section 3 of said chapter 255F if such applicant is otherwise qualified.

SECTION 15.  Sections 1 through 11, inclusive, and section 14 shall take effect on January 1, 2008.