By the Division of Banks

Permissible Fees and Penalties

There is no statute in the Commonwealth which establishes a maximum loan-to-value ratio for mortgage loans originated by Commonwealth-licensed mortgage lenders. Mass. Gen. Laws chapter 183, section 56 establishes the maximum prepayment penalty for owner-occupied, 1-3 family mortgage loans on residential properties in the Commonwealth. M.G.L. c. 183 § 59, which applies only to 1-4 family, owner-occupied residential mortgage loans, permits a mortgagee to assess a late charge, equal to 3% of the overdue principal and interest, on any payment not made within 15 days of its due date. M.G.L. c. 183 § 63 prohibits a lender from charging loan origination fees, or points, in a 1-4 family, owner-occupied residential mortgage transaction unless such fees or points previously have been disclosed, in writing, to the borrower. Other fees related to a mortgage transaction in the Commonwealth, such as those for document preparation, processing, recording, etc., must be reasonable as compared to industry custom and practice. Mortgage lenders governed by 255E of the General Laws also must comply with the regulations of the Commonwealth's Attorney General, found at 940 CMR 8.00 et. seq.