By the Division of Banks

Permissibility Of Offering Home Equity Loans

Under Mass. Gen. Laws chapter 167E, § 2B(7)(B), a bank may make an open-end first mortgage loan "not exceeding in the aggregate eighty percent of the value of the real estate pursuant to an agreement to make loans to the mortgagor from time to time." In addition, state-chartered banks may make an open-end mortgage loan which is a second or subsequent lien pursuant to Mass. Gen. Laws chapter 167E, § 11. However, such loans would be limited to the greater of either $25,000.00 or "the amount by which the loan limitation applicable to the particular class . . . exceeds the principal balance outstanding on any first mortgage loan secured by a mortgage on the property loaned upon." Such loans may also be made pursuant to Mass. Gen. Laws chapter 167F, § 2(8), subject to the limitations therein. Furthermore, a bank may apply to the Division for approval to make home equity loans on owner-occupied residential property with a loan-to-value ratio in the aggregate of up to one hundred percent pursuant to 209 CMR 47.00 et seq., implementing the parity with national banks statute.