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The committee on Senate committee on Ways and Means to whom was referred the bill (accompanied by bill, House, No. 4306 ) relative to protecting and preserving home ownership, reported, recommending that the same ought to pass, with an amendment substituting a new draft entitled "An Act relative to employer assisted houseing and responsible lending" (Senate, No.2382 ). Steven C. Panagiotakos, |
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,
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 so appearing,
is hereby amended by adding 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 commonwealth 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 employment and
that are consistent 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) Subject to appropriation, 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 to allow the department to determine the effectiveness
of the program established herein.
SECTION 2A. Chapter 36 of the General Laws, as so appearing,
is hereby amended by inserting after section 12A the following section:-
SECTION 3. Section 27 of chapter 183 of
the General Laws, as so appearing, is hereby amended by adding the following
paragraph:-
SECTION 4. Said chapter 183, as so
appearing, 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 a subprime loan at a variable or adjustable rate of interest
unless: 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 differs 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 reduces 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 7. Chapter 244 of
the General Laws, as so appearing, is hereby amended by inserting after section
14 the following 2 sections:—
(b) The notice shall be in writing and shall be mailed, postage
prepaid, by certified mail with return receipt requested, to the mortgagor at
his last address then known to the mortgagee, at least 90 days before
exercising any rights under a power of sale.
(c) The notice shall conspicuously state the rights of the
mortgagor upon default in substantially the following form: The heading shall
read: “Notice of Intent To Foreclose and Right To Cure.” The body of the notice
shall read: “You are now in default on a mortgage loan transaction dated ______.
This mortgage loan is secured by property located at ______. This loan was
originated by (name of mortgagee), assigned to ______ (if applicable) and is
being serviced by ______ (if applicable). The mortgage broker/mortgage
originator for this mortgage loan transaction was ______. You may cure your
default by paying all sums due on the mortgage loan on or before (a date which
is at least 90 days after the notice has been mailed). If you pay this amount
within the time allowed, you shall no longer be in default and may continue on
with the transaction as though the default had not occurred. You may contact
the mortgagee or the mortgagee’s agent at (telephone number of mortgagee or
mortgagee’s agent) in order to obtain the amount due to cure the default on
your mortgage loan. If you do not cure your default by the date stated above,
(name of mortgagee) may begin foreclosure proceedings against you, and you may
lose your property.”
(d) A copy of this notice shall be filed with the commissioner
of banks and shall include the rate of interest on the loan and whether it is a
variable or fixed rate of interest. The filing fee for the notice shall be
determined annually by the secretary of administration and finance under
section 3B of chapter 7.
(e) No attorney’s fees or other fees or charges other than per
diem interest may be charged to the mortgagor during the mortgagor’s 90-day
right to cure. If the residential
property securing the mortgage loan is sold at a foreclosure sale, the
mortgagee shall notify the commissioner of banks, in writing, of the date of
the foreclosure sale and the purchase price obtained at the sale, and shall
include a copy of the notice required under this section.
Section 14B.
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 foreclosures 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 may be required to pay any charge, fee or
penalty attributable to the exercise of the right to cure a default that is
deemed reasonable by the division of banks.
(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’s
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’s fees 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 relative 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 shall 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 shall 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 of the General Laws, as so appearing, is hereby 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 working 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 in accordance with this
section. This record of performance may provide 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 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 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 an employer shall not be
considered mortgage loan originators and do not require a mortgage loan
originator license.
“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 shall file a request for criminal offender record
information, as authorized by section 172J 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 and finance pursuant to section 3B of chapter 7. Criminal history record information
provided to the division under this section shall be confidential and the
division may use such records only to determine if the applicant is eligible
for licensure.
(b) An applicant shall:
(i) have completed a residential mortgage lending course, as determined by the commissioner,
during the 2 year period immediately preceding the date of the application; (ii)
provide evidence that the applicant has received a passing grade on such
residential mortgage lending course examination within such 2 year period; and
(iii) if requested by the commissioner, provide all documentation related to
any mortgage transaction or mortgage application sought or processed within the
2 years prior to such application.
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 the amount of which
shall be 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 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. Nothing
herein shall be construed so as to allow any justice of any court in the
commonwealth to suspend or revoke a license issued under this chapter or bar
the renewal thereof.
Section 10. Whoever violates section 2 or any rule or
regulation made thereunder by the commissioner, shall
be punished by imprisonment in the house of correction for not more than 180
days and may by a fine not to exceed $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 orders
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 to exist
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 10A. Chapter 266 of the General Laws is hereby amended by striking out section 33, as so appearing, and inserting in place thereof the following section:-
Section 33. (1) Whoever, with intent to defraud, obtains for himself or for another by a false pretence the making, acceptance or endorsement of a bill of exchange or promissory note, the release or substitution of collateral or other security, an extension of time for the payment of an obligation, or the release or alteration of the obligation of a written contract, or (2) whoever, with intent to defraud, by a false statement in writing respecting the financial condition, or means or ability to pay, of himself or of any other person, obtains credit from any bank or trust company or any banking institution or any mortgage lender as defined in section 1 of chapter 255E or any retail seller of goods or services accustomed to give credit in any form whatsoever shall be guilty of larceny and, if the value of the benefit described in clause (1) or the dollar amount of credit obtained exceeds $250, shall be punished as if he had stolen property of a value exceeding $250 as provided in clause (1) of section 30.
SECTION 10B. Said chapter 266 is hereby further amended by striking out section 34, as so appearing, and inserting in place thereof the following section:-
Section 34. Whoever, with intent to defraud and by a false pretence, induces another to part with property of any kind or with any of the benefits described in section 33 shall be guilty of larceny and, if the dollar amount of the credit obtained or the value of the benefit lost exceeds $250, shall be punished as if he had stolen property of a value exceeding $250 as provided in clause (1) of section 30.
SECTION 11. Chapter 266 of
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 interrelated
by distinguishing characteristics;
“Person”, a
natural person, corporation, company, limited liability company, partnership,
real estate trust, association or any other entity.
(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
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 13. Said section 2 of 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 and
from filing fees collected under section 14A of chapter 244 of the General Laws; 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 14A. Notwithstanding any general or special law to the contrary, a tenancy of property occupied for dwelling
purposes shall not be terminated by operation of law by foreclosure of the
owner's mortgage.
SECTION 14B: The
commissioner of banks shall adopt rules and regulations relative to the lending
practices relative to reverse mortgages. The commissioner shall adopt such regulations on or before
SECTION 15. Sections 1 to
9, inclusive, and sections 11 and 14 shall take effect on
