By the Division of Banks

Frequently Asked Questions
on Chapter 206 of the Acts of 2007,
An Act Protecting and Preserving Home Ownership,
as Amended by Chapter 224 of the Acts of 2007

Licensure of Loan Originators
(See General Laws chapter 255F;
see SECTIONS 15, 17, 18, 19 and 22 of Chapter 206 of the Acts of 2007)

General

Q. Will I actually be issued a license?

A. Yes. Each approved person will receive a license, which under the law, must be retained by the licensed mortgage broker or mortgage lender for which you will work exclusively.

Q. Am I eligible for a loan originator license if I work as an originator on a part-time basis?

A. Yes. Every person meeting the definition of a "mortgage loan originator" set forth in G. L. c. 255F, §1 must obtain a license from the Division. An individual may be working in such capacity on a full-time or part-time basis and must meet all applicable licensing standards and educational requirements. It is not required that your position as a loan originator be your primary occupation. However, in accordance with the statutory definition of "mortgage loan originator", originators must work exclusively for only one licensed entity at a time.

Licensees are reminded that in instances where they are also engaged in other business activities related to the mortgage loan industry, inherent conflicts of interest may result if individuals are acting in dual capacities with respect to the same mortgage transaction.

Q. Is my status as a licensed loan originator public information, and will such a listing appear anywhere?

A. Yes, to both questions. Your status as a loan originator is public information, as generally is your application filing. Since information relative to all licensees under the Division's jurisdiction generally are public information, a listing of all licensees under the jurisdiction of the Division appears on our website, and can be reviewed and accessed by consumers if an individual is licensed.

Q. Are there regulations relative to the licensure of loan originators?

A. Yes. The Division promulgated regulations to license and supervise mortgage loan originators. The regulations are set out in 209 CMR 41.00 pdf format of Proposed Regulation 209 CMR 41.00 - April 4, 2008
et seq.. Certain related changes were made to 209 CMR 42.00 pdf format of Proposed Amendments to 209 CMR 42.00 - April...
.

Fees Related to Being Licensed as a Loan Originator

Q. Are there fees required in order to be licensed as a loan originator?

A. Yes. There is a license fee. The Executive Office for Administration and Finance and the Division have set the fee at $500. In addition, the annual renewal fee will be $500 per year.

Q. Are there any other fees?

A. Yes. There are two other fees, a one-time investigation fee and a fee if you seek to transfer your license to be employed by another entity.

The Executive Office of Administrative and Finance and the Division have set the one-time investigation fee at $115, consistent with the investigation fee for other licensees under the jurisdiction of the Division.

Another fee will be charged if you seek to transfer your license from one entity to another. The amount of that fee is to be determined, but will likely be $100.

Q. Are fees refundable?

A. No. All fees are non-refundable and are collected through the National Mortgage Licensing System.

90-DAY NOTICE OF RIGHT TO CURE
(See section 35A of General Laws chapter 244;
see SECTION 11 of Chapter 206 and
SECTION 21 Chapter 206, as amended by SECTION 2 of Chapter 224 of the Acts of 2007)

General

Q. Do I now have a statutory right to cure a default on my mortgage loan?

Yes. Chapter 206 establishes a 90-day Right To Cure a default on a residential mortgage loan.

Q. When does my 90-day Right To Cure begin?

A. Under the law, the 90-day Right To Cure begins when you receive a Notice of Default and Right To Cure from your lender or when the lender mails the notice to your last known address.

Q. How often am I entitled to a 90-day Right To Cure on my mortgage loan?

A. Chapter 206 provides that the 90-day Right To Cure a default shall be granted once in any 5 year period regardless of the mortgage holder.

Q. What if I cure my default during the 90-day period?

A. Your loan would be current.

Q. May a mortgage lender charge me a fee for curing the default?

A. Chapter 206 prohibits any charge, fee, or penalty attributable to the Right To Cure from being charged to the borrower.

Q. Can I be charged attorneys' fees relating to my default during the 90-day Right To Cure?

A. No. The law prohibits attorneys' fees from being charged to the borrower during the 90- day Right To Cure.

Loan Modification

Q. Can a mortgage lender charge a fee for a loan modification during the 90-day Right To Cure period?

A. Please see attached the Division's Industry letter, Opinion No., O08016, dated June 25, 2008.

Preservation of Lien Status

Q. May a mortgage lender expend funds during the 90-day Right To Cure to preserve its lien status on the mortgage property and charge the borrower for these expenditures during said 90 day period?

A. Please see attached the Division's industry letter, Opinion No., O08016 , dated June 25, 2008.

Sending and Filing of Notice

Q. When may a mortgagee or mortgage servicer send the 90-day Notice of Right to Cure to a borrower in default?

A. It is a business decision of the mortgagee or mortgage servicer when to send the notice after a default by the borrower. The Division would expect the industry to establish best practices governing the timing for sending the notice.

Q. What is the toll-free telephone number of the Division of Banks to be included in the 90-day Notice of Right to Cure?

A. By a directive of Governor Patrick, the Massachusetts Division of Banks is working in conjunction with NeighborWorks, Inc. to assist consumers who are facing foreclosure on their homes. If a borrower has received a 90-day Notice of Right to Cure, he/she should contact Neighborworks' HOPE hotline at (888) 995-4673 for assistance. If the borrower is unable to reach a loan counselor at that number, he/she should call the Division of Banks at (800) 495-2265, extension 1501. Both numbers are to appear on the 90-day Notice.

Q. Should a copy of the 90-day Notice of Right to Cure be filed with the Division of Banks when it is sent to the borrower?

A. No. Not every 90-day Notice of Right to Cure needs to be filed with the Division. See the following question.

Q. When must the 90-day Notice of Right to Cure be filed with the Division of Banks?

A. Chapter 206 of the Acts of 2007 mandates that a copy of the 90-day Notice of Right to Cure be filed by the mortgagee in any action or proceeding to foreclose, i.e. filing of a petition, on residential property. It is the position of the Division that the reference to "an action or proceeding" to foreclosure refers to an action brought by the mortgagee under the Soldiers' and Sailors' Civil Relief Act. Upon filing such an action under this Act, a copy of the 90-day Notice of Right to Cure must be filed with the Division.

Q. How should the information on the 90-day Notice of Right to Cure be filed with the Division?

A. The information must be filed electronically with the Division. The Division has developed an on-line foreclosure database with required fields of information which will enable the electronic submission of the required filing. The database is accessible from the Division's website www.mass.gov/dob.

Q. What is the timing requirement which the information required under General Laws chapter 244, section 14A and 35A must be submitted electronically to the Division?

A. The information in the 90-day Notice of Right to Cure must be electronically submitted to the Division within five business days of filing the petition under the Soldiers' and Sailors' Civil Relief Act in the Land Court. This will allow for the database to be a current source.

Q. Will non-public information relating to the borrower or the underlying mortgage loan be redacted in the Division's on-line database in accordance with General Laws chapter 244, sections 14A and 35A?

A. The electronic database will contain only fields which capture public information.

Q. Will the Division of Banks accept hard or mailed copies of the 90-day Notice of Right to Cure?

A. No. The Division will not accept copies sent via facsimile, or mailed. All information must be submitted electronically through the on-line database.

COUNSELING REQUIREMENT FOR BORROWERS
WITH SUBPRIME ADJUSTABLE RATE MORTGAGES
(See section 17B1/2 of General Laws chapter 184;
see SECTIONS 7 and 20 of Chapter 206)

Q. When does the requirement that a first-time home loan borrower of a subprime mortgage loan with a variable or adjustable interest rate receive counseling go into effect?

A. The requirement that a first-time home loan borrower of a subprime mortgage loan with a variable or adjustable interest rate receive counseling went into effect on January 31, 2008.

Q. To what loans does the in-person counseling requirement apply?

A. In-person counseling is required for all subprime adjustable rate loan applications submitted on or after January 31, 2008. This requirement applies to loans of first-time homebuyers.

Q. For those subprime, adjustable rate mortgage loans which require in-person counseling, when must this counseling take place?

A. In-person counseling for a first-time homebuyer seeking a subprime adjustable rate mortgage loan must occur prior to the borrower accepting or opting to obtain this type of subprime loan. See Regulatory Bulletin 1.3-104 .

Q. Will the Division establish a definition of the term subprime loan?

A. Yes. The Division issued Regulatory Bulletin 1.3-104 entitled Counseling And Opt-in Requirements For Subprime Adjustable Rate Mortgage Loans Made To First Time Home Loan Borrowers. The method for determining whether a loan is subprime is set out in this Bulletin.

Q. Where can I find information on approved counselors?

A. The Division has posted approved counselor information list of approved counselors on its website.

CRA FOR MORTGAGE LENDERS
(See section 8 of General Laws chapter 255E;
see SECTION 13 of Chapter 206)

Q. Are there regulations establishing requirements for mortgage lenders making more than 50 loans?

A. Yes. The Division has promulgated regulations codified at 209 CMR 54.00 et seq.

Q. When will the Division begin to conduct examinations for compliance with these regulations?

A. The Division has commenced examinations and publishes an examination schedule on its website at CRA for Mortgage Lenders - Examination Schedule .

REVISION OF TERMS
(See section 63A of General Laws chapter 183;
see SECTION 5 of Chapter 206)

Q. Can a lender revise the terms of a mortgage (without a consumer applying for a new loan) from an adjustable rate mortgage ("ARM") to a fixed rate if the new fixed rate is higher than the current rate under the terms of the ARM but lower than the rate would be after the adjustment under the ARM?

A. Yes. A lender can revise the terms of a mortgage from an ARM to a fixed rate as long as the new fixed rate is not above the rate that would be in effect after the next adjustment on the ARM.

FORECLOSURE ACCOUNTING
(See section 27 of General Laws chapter 183;
see SECTION 4 of Chapter 206 of the Acts of 2007)

Q. When does the requirement for the holder of a mortgage to provide the mortgagor a written notice with an itemized accounting of the disposition of the proceeds of a foreclosure sale go into effect?

A. The requirement for an itemized accounting of the proceeds of a foreclosure sale to the mortgagor went into effect on November 29, 2007.

Q. When does the requirement for the mortgagee or anyone holding thereunder, to notify the Division of Banks of the date of the foreclosure sale and the purchase price at the sale?

A. The notice of sale and purchase price is tied by statute to the foreclosure database which will maintain information of 90-day right to cure notices. Accordingly, notice of sale and purchase price are only to be provided to the Division in conjunction with a previously filed 90-day Notice of Right to Cure.

Q. Is the holder of the mortgage or its representatives required to provide an itemized accounting of the disposition of the proceeds of a foreclosure sale to the mortgagor if there is no surplus owed to the mortgagor from the foreclosure sale?

A. Yes. A mortgage holder or its representatives must provide an itemized accounting on all foreclosure sales to the mortgagor whether the sale results in a surplus or a deficiency.

MORTGAGE RECORDING INFORMATION
(See section 6D of General Laws chapter 183;
see SECTION 3 of Chapter 206)

Q. If a mortgage (including an assigned mortgage) is recorded before July 1, 2008, is it required to include information about a licensed mortgage loan originator?

No. Since the law requiring mortgage loan originators does not take effect until July 1, 2008, any mortgage loan closed before that date is not required to include this information. Mortgage loans closed before July 1, 2008 but assigned after that date would also not be required to include this information.

Q. If a mortgage (including an assigned mortgage) is recorded before July 1, 2008, is it required to include information about a licensed mortgage broker?

A. Yes. However, only mortgage loans closed after November 29, 2007, the date the new law went into effect, are required to include the name, address, and license number of the mortgage broker, if applicable, on the mortgage or subsequent assignment of the mortgage.

SUMMARY OF EFFECTIVE DATES

  • Subprime counseling required for adjustable rate mortgage loans: Effective January 31, 2008 (See SECTION 20 of Chapter 206)

  • Right To Cure provision: Effective May 1, 2008 (See SECTION 21 of Chapter 206, as amended by SECTION 2 of Chapter 224 of the Acts of 2007)

  • Licensing of loan originators not included in the grandfathering provision: Effective July 1, 2008 (See SECTION 22 of Chapter 206)