By the Division of Banks

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Message From the Commissioner Banks
Credit Unions Mortgages: Lenders & Brokers
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Miscellaneous

Message From the Commissioner

I am pleased to make available this compilation of selected opinions issued by the Division of Banks in 1993 and 1994. Like the quarterly Digests which the Division began publishing in 1995, this Digest contains those opinions deemed to be of particular interest or which were significant at the time they were issued. It is important to note that some opinions have been negated in whole or in part by subsequent statutory or regulatory action. In particular, the opinions concerning the charging of points on mortgage loans are not applicable to the statute as amended and effective in March 1995. Moreover, the charging of certain fiduciary fees by a trust department of a bank was authorized by a 1995 amendment to the statute addressed in two opinions herein. Additionally, a 1994 opinion on non-interest bearing negotiable order of withdrawal (NINOW) accounts reversed the opinion contained in the 1993 Digest. Accordingly, readers of this Digest should recognize that the positions stated herein were based on the facts presented and existing at the time the opinion was released.

The publication of these annual and quarterly Digests is part of the Division's ongoing effort to continue and improve its communication with all those who have a vested interest in the financial services industries. Through these Digests, the Division offers its perspective on current issues and questions in the financial services industry. As always, requests for opinions from the Division must be addressed directly to the Commissioner of Banks, and must include a statement of all relevant facts, cites to applicable statutes and regulatory documents, and an analysis of those materials supporting your position. The Division acknowledges receipt of opinion requests by assigning each a number. Any subsequent inquiries to the Division about an opinion request should refer to this opinion number.

Copies of past opinions may be obtained for a fee from the Division's Public Information Officer at (617) 727-3145 x 344, and must be paid for by check. The Division's Administrative Bulletin Manual and Regulations found in the Code of Massachusetts Regulations (CMR - agency code number 209), are available through the State House Bookstore, State House Room 116, Boston, Massachusetts, 02133. Please contact the Bookstore directly for prices at (617) 727-2834.

The Digests replace the Division's previous system whereby noteworthy opinions were numbered and included in an Administrative Bulletin Manual. Comments or suggestions on improving the Digest would be appreciated.

Thomas J. Curry,

Commissioner of Banks


Banks

See also: Mortgages 93-048, -059(-078)

93-002 State-Chartered Bank Balloon Mortgages

Balloon notes and mortgages written for the same term are not subject to the conditions and restrictions of Mass. Gen. Laws chapter 183 § 60. Therefore, such transactions are not subject to the provisions of Mass. Gen. Laws chapter 167E § 3, regarding mortgage loans evidenced by notes providing for payments that will not amortize outstanding principal in full by maturity.

93-003 Satisfying CRA Obligations By Investing in a Fund Established to Increase Development of Affordable Housing

A state-chartered bank's equity investmentin a project's fund to create affordable housing satisfies the standard for assessing a bank's record of performance in meeting the credit needs of its community under Mass. Gen. Laws chapter 167 § 14(h). With any product, investment or activity that a bank seeks to satisfy its community reinvestment obligations, the financial institution must document with the best available information at the time the extent of any benefit to its delineated community. Further information should always be added to the file for examiner review in following years. A state-chartered bank's equity investment in a fund created to increase development of affordable housing is not authorized by Mass. Gen. Laws chapter 167F § 3. Therefore, a state-chartered bank must rely on the "Leeway Law", Mass. Gen. Laws chapter 167F § 2(8) for its authority to make such an investment.

93-011 Bank Maximum Loan Limitations for Single Borrowers

The Division of Banks calculates the maximum loan limits of a single borrower at the time a loan is made or a binding commitment to make a loan is made under Mass. Gen. Laws chapter 167E § 14. Notwithstanding any change in the bank's lending limits, a state-chartered bank may make advances of funds pursuant to any commitment if the borrower has a legally enforceable right to require the advance to be made and as long as at the date it is made, the commitment complies with the applicable lending limits of Mass. Gen. Laws chapter 167E. The officers and directors of a bank and their legal counsel make the determination whether a legally enforceable commitment exists. New loans must be aggregated in the calculation of the lending limit to a single borrower under Mass. Gen. Laws chapter 167E § 14.

93-014 The "18 - 65" Law Requirements

State-chartered banks are required to offer customers falling within the "18-65" Law, Mass. Gen. Laws chapter 167D § 2(1), one checking account and one savings account free of fees and charges under Administrative Bulletin 24-1. For purposes of the "18-65" Law, savings accounts by definition include passbook, statement and regular NOW accounts. If a bank offers a certain checking or savings account, it cannot refuse to offer this product to a customer covered by the "18-65" Law. However, the bank may place conditions on the account such as requiring adult co-signors.

93-015 Lending Limits Involving Loan Modifications and Workout Provisions

The maximum loan limits to one borrower of Mass. Gen. Laws chapter 167E § 14 do not apply to loan modifications or workout provisions if no new funds are advanced and the lending bank is renewing the loan on market terms for a length of term which the management deems prudent. Exempt transactions include loan extensions, partial forgiveness of obligations, waivers, or extension of release fees which do not entail advancing any new funds, where such extension is for a limited time, the lending bank is satisfied that the extension is prudent and has documented reasons for the extension, and the lending bank has documented the borrower's credit worthiness. State-chartered banks may make advances of funds pursuant to binding written commitments that were within the applicable limits of Mass. Gen. Laws chapter 167E § 14 at the date the commitment was made, notwithstanding any subsequent decline in the bank's capital, surplus and undivided profits accounts, and provided the borrower has a legally enforceable right to require the bank to make the advance. The limitations of Mass. Gen. Laws chapter 167E § 14 are inapplicable in situations where a bank obtains real estate by foreclosure or otherwise if the bank is satisfied that the transaction is prudent, having documented its reasons for the action, and has documented the borrower's credit worthiness. In regard to state-chartered banks subject to the lending limits of Mass. Gen. Laws chapter 167E § 14, compliance with the regulations issued by the Office of the Comptroller of the Currency do not provide such banks with a "safe harbor" because the Division of Banks is not bound by these regulations. Banks may combine loans from both the bank and any of its subsidiaries which may have been originally made in compliance with applicable lending limits into a renewed consolidated loan without being deemed in violation of current lending limits if the loans to be renewed are of the type previously discussed and if in the aggregate no additional monies are advanced.

93-016 Revaluation & Inspection of Real Estate Upon Default of an Interest or Principal Payment

When a default in interest, principal or tax payments occurs on a loan, the initial revaluation or inspection must be made within 90 to 180 days depending on the cause of default with the next subsequent revaluation or inspection occurring within 180 to 360 days of the default, as applicable, and every 90 to 180 days thereafter depending on the cause of default under Mass. Gen. Laws chapter 167E § 6(5)(b).

93-017 Out-of-State Bank Holding Company Subsidiary Mortgage Lenders' and Brokers License Requirements

Subsidiaries of a bank, trust company, savings and loan association, credit union or insurance company organized under the laws of any other state or of a bank holding company established in accordance with state or federal law shall be subject to the mortgage lender licensing and other provisions of Mass. Gen. Laws chapter 255E and 209 CMR 42.00. Subsidiaries of out-of-state federally-chartered banks are exempt from these mortgage lenders' and brokers' license requirements.

93-018 Bank Collateral or Security for Deposits

Except when public funds are involved, no bank shall give collateral or other security for a deposit of money received in its banking department under Mass. Gen. Laws chapter 167D § 21. The term "security" used in the statute includes anything that the Bank may do to assure payment of the deposit. Therefore, a bank cannot obtain a letter of credit to provide assurance of repayment of a deposit without violating the statute.

93-028 Bank Notice Requirements for Changing the Method of Calculating Interest on Savings Accounts

To change the method of calculating interest on savings accounts from a daily balance method to an average daily balance method, banks must review their existing Truth-In-Savings disclosure to determine the proper notice to be given to the consumer when changing the method of determining the balance on which interest is paid. Effective April 9, 1993, an amendment to 209 CMR 36.00 states that a bank's compliance with the federal regulation DD regarding consumer notice will be deemed compliance with 209 CMR 36.00.

93-034 Implementation of General Laws Chapter 167E Section 14

Whether a particular loan meets the criteria of Mass. Gen. Laws chapter 167E § 14 depends on the facts set forth at the time the loan was made notwithstanding any change that may occur in the statute. Chapter 167E § 14 does not apply to loan modifications or workout provisions, such as extensions, partial forgiveness of obligations, waivers or extension fees, which do not entail the advancing of any new funds where: (1) such extension is for a limited time; (2) the bank is satisfied that the extension is prudent and had documented its reasons for the extension; and (3) the bank has documented the borrower's credit worthiness. If banks rewrite loans for an amount higher than originally made, such loans would be viewed by the Division as new loans which must comply with chapter 167E § 14 as currently in effect. If a proposed loan would be in excess of the current limitations of Mass. Gen. Laws chapter 167E § 14, a bank could structure it by making a loan up to the amount of such limitation and arranging for another bank at the same time to make a loan for such excess up to the latter bank's loan limitation.

93-041 Mutual Holding Company Acquisitions of Mutual Banking Institutions

A mutual holding company may acquire and merge a mutual savings bank with a wholly-owned subsidiary bank subject to the filing and approval of an application for such a transaction under Mass. Gen. Laws chapter 167 H § 7(2). Other provisions which may apply to such a transaction include Mass. Gen. Laws chapter 168 § 34 & 34D.

93-054 Bank Refusal to Honor a Durable Power of Attorney on Joint Accounts

The operation of a joint bank account is governed by statute, the by-laws of a bank, bank policy, and the deposit contract between a bank and the account holders. Matters related to a properly executed durable power of attorney are governed by Mass. Gen. Laws chapter 201B. It would be appropriate for a bank to disregard a durable power of attorney if the bank had questions concerning the validity of its execution or the scope of its coverage. Absent such concerns or a definitive disclosed policy or contractual provision, a properly executed durable power of attorney would give the attorney-in-fact the authority to act in the place of the person executing it relative to banking transactions. A bank may establish through its by-laws or deposit contracts a requirement which provides for both signatures to be necessary to make a withdrawal from a joint account. Banks may prohibit such transactions when the power of attorney of only one of the joint account holders is presented. The Division of Banks has no rules or regulations governing this matter. The issue should be discussed with the bank's senior officers or counsel upon review of the terms of the deposit contract.

93-055 The Safekeeping of a Bank's Securities

The safekeeping of a bank's securities is governed by Mass. Gen. Laws chapter 167 § 6 and its implementing regulation, 209 CMR 4.00 et seq. Banks are prohibited from depositing securities with any entity other than a "depository bank" under 209 CMR 4.05. A depository bank is defined as a "commercial bank or trust company chartered by the commonwealth or by another state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States or a national banking institution which has its main office located in any jurisdiction named herein; any Federal Home Loan Bank or any Federal Reserve Bank."

The term "trust company", as used in the definition of a depository bank, does not include entities incorporated in another state as business corporations engaging solely in trust activities, which are not subject to supervision by a bank regulatory agency. Banks are prohibited from entering agreements with entities to provide safekeeping services which allow such entities, at their sole discretion, to designate certain other entities to provide the safekeeping. Such broad authority is inconsistent with a bank's undelegable obligations under 209 CMR 4.04.

93-056 Unclaimed Accounts, Abandoned Property and Security for Public Deposits

Jurisdiction for the enforcement of the law regarding abandoned property lies with the Office of the State Treasurer under Mass. Gen. Laws chapter 200A. The address and telephone number of the Abandoned Property Section are:

State Treasurer
One Ashburton Place, Room 1207
Boston, MA 02108
(617) 367-3900

Unclaimed dividends, and all other funds received from the liquidation of any institution, are governed by Mass. Gen. Laws chapter 167 § 35. Banks are authorized to give acceptable collateral or security for deposits of public funds "as may be required by any public authority making such deposits," under Mass. Gen. Laws chapter 167D § 21.

93-062 Approval for Trust Companies Acquiring Out-of-State Limited Purpose Trust Co's

A bank holding company is defined as a company which controls two or more banking institutions, and a banking institution which controls another banking institution, under Mass. Gen. Laws chapter 167A § 1(d). The provisions of Mass. Gen. Laws chapter 167A would be triggered by the acquisition of a "banking institution" by a Massachusetts-chartered trust company. The definition of a "banking institution" includes a "trust company" chartered by another state, under Mass. Gen. Laws chapter 167A § 1(d). The Division of Banks finds that a "trust company" under chapter 167A means an entity that has the same powers authorized by Mass. Gen. Laws chapter 172. Such powers enable a trust company to engage in the business of a "commercial bank", not only in fiduciary activities. Accordingly, a Massachusetts-chartered trust company, which establishes foreign subsidiaries to engage only in fiduciary activities, would not be subject to the provisions of Mass. Gen. Laws chapter 167A. Nevertheless, a trust company must obtain approval from the Division of Banks to establish each such subsidiary under Mass. Gen. Laws chapter 167F § 2(7). For approval, the Division will likely require a trust company subsidiary to meet the requirements of 12 USCS § 1841(c)(2)(D).

93-067 State & Federal Time Period Disclosure Requirements of Electronic Fund Transfers

The method of calculating investigation time for complaint notices regarding account errors in electronic funds transfers, differs between federal Regulation E, which calculates the time period based on business days, and Mass. Gen. Laws chapter 167B, which uses calendar days to calculate the time period. In 1983, the Board of Governors of the Federal Reserve System determined that Mass. Gen. Laws chapter 167B was not pre-empted by the federal Electronic Fund Transfer Act or Regulation E. Therefore, both the federal and state notice requirements must be met.

93-073 Permissible Loans for Manufactured Homes

Manufactured homes located on another person's land are by definition considered personal assets, not real estate. Thus, banks are not authorized to extend to owners of such homes conventional mortgages as defined under Mass. Gen. Laws chapter 167E. § 2. For lending purposes, such manufactured homes are treated like automobiles rather than single family homes. As such, banks may provide installment loans but not mortgage loans to finance such property.

93-080 Approval for a Mutual Bank to Stock Form in the Formation of a Holding Company

Because no shares are exchanged in the conversion of a mutual bank to stock form when executed in conjunction with the formation of a holding company, the provisions of Mass. Gen. Laws chapter 167A do not apply in such transactions where depositors, who become subscribers of the stock to be issued, directly receive only shares in the holding company.

93-083 Bank Powers to Invest in Nominee Trusts

State-chartered banks are authorized to invest, subject to the Commissioner's approval, in wholly-owned subsidiary corporations or trusts organized for the purpose of performing functions that the bank itself could perform directly, under Mass. Gen. Laws chapter 167F § 2(7). The statutory language in Mass. Gen. Laws chapter 167F(2)(7) includes all subsidiary trusts to be formed under this section of law. Therefore, a state-chartered bank must obtain the prior written approval of the Division of Banks to form a nominee trust to hold and dispose of its OREO property.

93-085 Bank Holding Company Power to Vote Shares in Banks Under its Control

Bank holding companies do not need the approval of the Board of Bank Incorporation to vote shares they control in banking institutions because Mass. Gen. Laws chapter 167A § 2(5) was repealed by the adoption of Chapter 300 of the Acts of 1993.

93-088 State-Chartered Bank Powers to Sell & Underwrite Mutual Funds

State-chartered banks are authorized to engage in mutual fund activity by Mass. Gen. Laws chapter 167F § 2(25). The statute's language does not refer directly to "mutual funds" but gives banks the authority to act as a financial or other agent for a person in negotiating the "sale, purchase or other disposition or acquisition of securities or other property."

93-089 Deposit Limits for Bank Holding Companies and Banks Located in Foreign Countries

The limitation the Commonwealth of Massachusetts imposes, relative to the amount of total deposits controlled by any single financial institution, applies only to bank holding companies under Mass. Gen. Laws chapter 167A § 2, and banks located in a foreign country under Mass. Gen. Laws chapter 167 § 38. Effective July 19, 1993 the statutory limit on the total deposits controlled in Massachusetts by a holding company or a foreign bank was raised from 15% to 25%.

93-092 Bank Breaches of Private Contracts

The Division of Banks has a policy not to interfere in private contractual matters which involve a bank as one of the parties. This policy allows the parties to pursue their own legal remedies. However, a bank which receives complaints for failing to pay its bills will be scrutinized during the course of a regular bank examination. If failure to pay creditors was shown to be a consistent pattern of conduct, that fact would reflect adversely on the Division's evaluation of bank management.

93-096 Insider Transaction Restrictions of Intercompany Transactions

Intercompany transactions are considered by the Division of Banks to be similar to "covered transactions" as defined in 12 U.S.C. § 371(c). Such transactions between "affiliates" as defined in 12 U.S.C. 371 (c) are not governed by Administrative Bulletin 9-1. Therefore, the provisions of Administrative Bulletin 9-1 also do not apply to intercompany transactions which involve a federal bank holding company which controls 100%of the common stock, directly or indirectly, of all parties to a transaction. This position is limited to the voting, record keeping and other provisions of the Bulletin and not to any other duties that a financial institution and its Board may have under state law including the duty to operate in a safe and sound manner.

93-100 Approval of Securities Programs Involving Banks and Third Persons

The Division of Banks will not approve or pass upon any specific securities program involving state-chartered banks and third persons offering loan products or securities activities. Though state-chartered banks are authorized to "act as financial or other agent for a person...and in their behalf to negotiate loans and the sale, purchase or other disposition or acquisition of securities or other property," under Mass. Gen. Laws chapter 167F § 2(25), there are no regulations or Administrative Bulletins of the Division which currently comment on that provision of law. Therefore, banks and their counsel are responsible for determining the permissibility of implementing such securities programs.

93-103 Trust Company By-Laws Allowing Directors to Participate in Board Meetings By Conference Telephone Call

The Division of Banks' position on whether a trust company's director may participate in board meetings by telephone depends on the circumstances. If a bank is newly established, the Division would not find participation in such manner appropriate until the directors have clearly demonstrated their commitment and ability to manage the bank. However, where commitment and ability have been demonstrated in the management of a bank over a period of time, the Division may not object. Accordingly, directors of a trust company may, following the adoption of an appropriate by-law amendment, participate in board meetings required under Mass. Gen. Laws chapter 172 § 16, by conference telephone call. This position would also be applicable to a savings bank or a co-operative bank in stock form under the provisions of 209 CMR 33.04(11).

93-105 Bank Tax Escrow Collection Requirements for OREO Property

Tax escrows are not required to be collected by state-chartered banks on loans made to finance a portion of the purchase price of a bank's OREO property or other property acquired by the bank, under Mass. Gen. Laws chapter 167E § 6(12).

93-109 Bank Power to Make Mortgage Loans on Unimproved or Unproductive Real Estate

Real estate mortgage loans are described in different ways throughout Mass. Gen. Laws chapter 167E § 2. The statute does not specifically define the terms "real estate" or "unimproved or unproductive real estate". Therefore, a class by class review of each enabling paragraph of the statute is necessary. If a paragraph requires real estate to be improved with a dwelling, that requirement must be met. If a paragraph requires that the real estate be improved, then that provision must be met in some way as well. However, if a class of loan refers to a mortgage on "real estate" only, such real estate can be improved, unimproved and/or unproductive. Therefore, a state-chartered bank is not limited to Mass. Gen. Laws chapter 167E § 2(1)(B) in making loans on unimproved or unproductive real estate. Accordingly, state-chartered banks may make loans using any statutory authority in Mass. Gen. Laws chapter 167E § 2, which refers solely to "real estate".

93-114 Savings Bank Approval to Purchase Currently Leased Branches

The Commissioner of Banks' approval is necessary if a savings bank seeks to purchase currently leased real estate which would exceed the applicable investment limitation of Mass. Gen. Laws chapter 167F § 2(9). The amount which can be invested by a mutual institution, including the cost of alterations and additions in the nature of permanent fixtures, is one hundred percent of surplus. To make an investment exceeding the statutory limitation, the bank must send a letter requesting approval directly to the Commissioner of Banks which states the amount in excess of the limitation.

93-115 Waiver of Limitations on Fiduciary Fees

The limitations set forth in Mass. Gen. Laws chapter 167G § 3(11) specifically restrict a fiduciary's ability to "double-dip" by collecting fees for managing a trust or fiduciary account and collecting fees from the investment company or trust in which it invests fiduciary assets. A plain reading of the statute does not show any provision which would allow a fiduciary customer to waive this prohibition on double-dipping. Therefore, the fee limitations set forth in Mass. Gen. Laws chapter 167G § 3(11) may not be waived.

93-116 Permissible Investments for State-Chartered Banks

A state-chartered bank cannot invest in mutual funds pursuant to Mass. Gen. Laws chapter 167F § 3(5). However, state-chartered banks may invest in mutual funds which are composed solely of those investments on the Legal List of Investments established under Mass. Gen. Laws chapter 167 § 15A. Any state-chartered bank purchases of mutual fund shares not on the Legal List of Investments must be made under the so-called "Leeway Law" found at Mass. Gen. Laws chapter 167F § 2(8). In addition, any mutual fund purchases made under the Leeway Law will be calculated in the aggregate limitations set forth by Mass. Gen. Laws chapter 167F § 2(8).

93-119 Bank Fiduciary Fee Restrictions

Fees to be received by a bank as a trustee cannot be reduced by only that part of the fee paid to the bank as adviser that relates to the assets represented by investment company shares purchased by the trust. Such fees must be reduced by the entire fee paid to the bank as adviser, under Mass. Gen. Laws chapter 167G § 3(11). The statute's fee or commission reductions apply to bank affiliates as well. Under the statute, the required reduction applies to only that part of the fee the bank receives as trustee that relates to investment management and not to the part received that relates to trust administration. However, a bank would have the burden of proving any such allocation with evidence of consistent, if not contractual, references to past assessments for both administration and investment management. If such terms are not contained in a trust agreement or past charges, establishing a distinction now could be viewed as an attempt to circumvent the new statute. Moreover, no proration of the investment management fee is provided by the statute.


Credit Unions

93-044 Permissible Investments for Credit Unions

A credit union may invest in shares of the Central Credit Union Fund, authorized by the Acts of 1932 chapter 216 § 3, under Mass. Gen. Laws chapter 171 § 67(a). Thus, the Central Fund may issue Membership Capital Share Deposits which are established, at a minimum, as a 12-month notice account; are limited to members; are not subject to insurance coverage, and in the event of liquidation of the corporate credit union, i.e. Central Fund is payable only after the satisfaction of all liabilities of the liquidation estate. State-chartered credit unions purchasing such shares are subject to the limitation that the value of shares that a credit union may purchase cannot exceed twenty-five percent of the credit union's total assets.

93-046 Use of Pneumatic Tube Systems to Conduct Transactions from a Credit Unions' Main Office to a Contiguous Drive-Up Facility

Credit unions may operate, through a pneumatic tube system from the main office, contiguous loan center drive-up facilities without filing any application with the Division of Banks, under Mass. Gen. Laws chapter 171 § 8. Also, the utilization of such a pneumatic-tube system between buildings as an inter-office conduit for the movement of reports, documents and other information does not present any issue with respect to a loan center being a branch and does not need prior approval from the Division, subject to the implementation of any necessary procedures for the safety of the documents.

93-070 Credit Union NINOW Accounts

Unlike a demand deposit account, the technical term for a regular checking account on which interest cannot be paid, a negotiable order of withdrawal (NOW) account is legally a savings account. Mass. Gen. Laws does not authorize state-chartered credit unions to accept demand deposits. Credit unions are only authorized to provide savings accounts, whether accepted as shares or deposits, under Mass. Gen. Laws chapter 171. In addition, interest or dividends must be paid on all such accounts, under Mass. Gen. Laws chapter 171 § 29. The only exception allows credit unions not to pay interest on accounts which contain less than one full share. Therefore, credit unions must pay interest or dividends on all NOW accounts and the Division of Banks cannot approve a credit union's application to offer non-interest bearing NOW (NINOW) accounts, under Mass. Gen. Laws chapter 171 § 31.

93-071 Credit Union Charitable Contributions

Credit unions may contribute such sums as their Boards of Directors may determine to be reasonable to any private non-profit organization organized for the purpose of improving the social and economic conditions in the community, under Mass. Gen. Laws chapter 171 § 67(t). The word "sums" refers most commonly to money. Therefore, credit unions are prohibited from donating any asset, other than money, to a private non-profit organization.

93-093 Credit Union Investment in Corporate Credit Unions

State-chartered credit unions may invest in the "shares of any federally chartered corporate credit union provided, however, that not more than twenty-five percent of the assets of a credit union shall be invested in such shares," under Mass. Gen. Laws chapter 171 § 67(b). The Division finds that such specific authority governs all share products offered by a corporate credit union, including those with a maturity date. Therefore, a credit union's investment in a share product with a term would be calculated against the 25% aggregate statutory limitation. Moreover, in relation to certificates of deposit in "banking corporations," Mass. Gen. Laws chapter 171 § 67(q) does not apply to investments in shares of a corporate credit unions.

93-101 Credit Union Powers to Offer Mutual Fund Products

State-chartered credit unions have no authority to offer mutual fund products under Mass. Gen. Laws chapter 171. State-chartered banks may make mutual fund investments available to their customers under Mass. Gen. Laws chapter 167F

§ 2(25).

93-102 Credit Union Quorum Requirements to Fill Board Vacancies

In a case of multiple board resignations, a majority of a state-chartered credit union's remaining directors constitutes a valid quorum for the purpose of filling vacancies of directors under Mass. Gen. Laws chapter 171 § 13.

93-107 Credit Union Power to Provide Life Insurance Coverage to Honorary Directors

Though state-chartered credit unions are authorized to establish honorary directors, "no such honorary director shall be deemed to be an officer or member of the board of directors of such corporation," under Mas. Gen Laws chapter 171 § 12.

Therefore, the authority for a state-chartered credit union to provide life insurance to "employees, officers, and directors," does not extend to honorary directors, under Mass. Gen. Laws chapter 171 § 25.


Mortgages: Lenders & Brokers

See also: Banks 93-002, -011, -015, -016, -017, -034, -073

93-001 Mortgage Broker Referrals to Lenders

Licensed mortgage brokers are prohibited from acting as lenders in the same transaction under Mass. Gen. Laws chapter 255E and the provisions of 209 CMR 42.00 et seq. When there is no formal agreement that a broker refer all its clients to a specific lender and the broker is free to refer clients to anyone it chooses, the relationship between the broker and lender would not prevent the broker from referring all its clients to the lender under 209 CMR 42.04(4) and 42.07(4). However, the broker must be operating its business independently of the lender to the extent that the lender does not receive any fees, directly or indirectly from the broker.

93-004 Out-of-State Commercial Lender License Requirements

The provisions of Mass. Gen. Laws chapter 140 and 255E apply only to consumer transactions, not commercial loans. Also, the Division of Banks finds the lending of money in and of itself does not constitute banking business and thus, Mass. Gen. Laws chapter 167 § 37 is not triggered by such activity. Therefore, there are no licensing statutes for commercial loans within the Commonwealth and no license is necessary for an out-of-state entity to conduct such activity. However, out-of-state entities may wish to consult the Office of the Secretary of State for other possible registration requirements.

93-005 & 93-006 License Requirements for Purchasing Existing Notes and Mortgages as an Investment or for Subsequent Sale

The acquisition of existing mortgages is not governed by Mass. Gen. Laws chapter 255E. Thus, entities conducting such activity, as well as those assisting such activity for a fee, are not subject to any licensing requirements except those applicable to the collection of debt under 940 CMR 7.00 et seq.

93-007 License Requirements for Disbursing Mortgage Payments for a Fee

Entities making timely mortgage payment disbursements for a fee are not required to be licensed as collection agencies, if all mortgage payments received are timely (less than thirty days past due). Timely payments do not trigger the definition of debt collection set forth in 209 CMR 18.03(4).

93-008 Modification of Delinquent Mortgage Loans to Include Back Interest Owed in the New Loan Amount

Mortgagees are authorized to revise the rate of interest, extend the term or change the amount of periodic payments of principal or interest or both under Mass. Gen. Laws chapter 183 § 63A added by Chapter 272 of the Acts of 1992. However, a mortgagee may not revise a mortgage loan to add earned but unpaid interest. A bank or lender could , however, offer to refinance a loan to include such interest in the new amount.

93-010 Mortgagees' Insurance Binder Acceptance

Under insurance law, even if a binder issues as of the date of the closing naming a different first mortgagee, the coverage would not take effect until the named mortgagee has an insurable interest in the property, which would be upon the recording of the mortgage. Under Mass. Gen. Laws chapter 183 § 65, any mortgagee in the Commonwealth, which makes in excess of five mortgage loans per year, shall accept a written memorandum of a preliminary contract of insurance provided an insurance contract is issued within thirty days of the memorandum. The issuance and acceptance of insurance binders is not a regulatory issue under the jurisdiction of the Division of Banks. It is a matter between the customer and the insurance agency to work out as a condition of obtaining the loan on the property.

93-012 Simultaneous Mortgage Lender and Small Loan License Requirements

Absent an express statutory exemption, an entity must obtain a license under the applicable law for each type of business it seeks to conduct. Thus, a licensed mortgage lender making loans of $6,000.00 or less, even if secured by a mortgage or a subsequent lien on property with an assessed value of $40,000.00 or more, must obtain a small loans license under Mass. Gen. Laws chapter 140 § 96 - 114A. Though small loan agencies are exempt from the mortgage lender's license requirements under Mass. Gen. Laws chapter 255E, only the Legislature can establish parity in the future by exempting mortgage lenders from the small loans license requirements.

93-019 Mortgage Lender License Requirements for Entities and Subsidiaries Accepting Notes Secured By Time-Share Unit Mortgages

Because time-share units are used as residences, even if temporary, they are categorized as dwellings. Thus, to accept notes secured by mortgages in the sale of such units, notwithstanding that the obligor only occupies the unit for one or two weeks per year and that the selling entity or its subsidiary would not be involved in any other form of mortgage lending, a mortgage lender's license is required under Mass. Gen. Laws chapter 255E and its implementing regulations 209 CMR 42.00 et seq.

93-024 Mortgage Lender Commitment Letters

The mortgage lender evidenced by the closing documents is the only party that may issue the letter of commitment under Mass. Gen. Laws chapter 255E.

93-032 Lender License Requirements for Consumer Recreational Vehicle and Boat Loans Exceeding $25,000

Recreational vehicle and boat loans to consumers exceeding $25,000, and secured by the vehicles or boats themselves, do not trigger the requirements of Mass. Gen. Laws chapter 183 or chapter 184. Although it is possible that some borrowers will choose to live on their boats or in their vehicles as their principal residence for some period of time, the Division of Banks does not recognize such loans as mortgage loans. However, loans which are secured by a boat or recreational vehicle that is to be used as a residence do trigger the consumer credit cost disclosure requirements of Mass. Gen. Laws chapter 140D and 209 CMR 32.00 et seq.

93-033 Out-of-State Loan License Requirements

Out-of-state entities intending to make five or more residential mortgage loans in Massachusetts over the period of one calendar year must obtain a mortgage lender's license under Mass. Gen. Laws chapter 255E.

93-037 Mortgage Lenders' Record-Keeping Responsibilities

A licensed mortgage lender must keep and use within Massachusetts its books, records and accounts in a manner enabling the Commissioner of Banks to determine whether the mortgage lender is complying with all applicable state and federal laws and regulations, under 209 CMR 42.09(1), a regulation authorized by Mass. Gen. Laws chapter 255E § 2. The entity designated as an out-of-state lender's resident agent under 209 CMR 42.09(2), must maintain at its office, copies of all papers relating to the loan, closing documents including employment verification, verification of deposit, credit report, appraisal, underwriting documents, and other papers and documents.

93-040 Mortgage Servicer License Requirements

The servicing of loans owned by others in the nature of collecting principal and interest payments that are current does not constitute conducting the business of collecting debts. However, if an entity collects principal and interest payments that are more than 30 days past due, from Massachusetts residents on mortgage loans it services, such entity would be subject to the licensing and other requirements of Mass. Gen. Laws chapter 93 §§ 24 - 28, and regulations 209 CMR 18.00 et seq.

93-047 Consumer Mortgage Loan Rescission Rights

The right of rescission is governed by Mass. Gen. Laws chapter 140D and its implementing regulation 209 CMR 32.23(f). Consumers may rescind anytime up until midnight of the third business day following either the day of consummation, delivery of the notice required by 209 CMR 32.23(b), or delivery of all material disclosures. Upon rescission, creditors must return any money or property that has been given to anyone in connection with the transaction. The law does not require the consumer to establish any grounds or articulate any reasons for the rescission. Also, the consumer is not restricted in the number of separate transactions in which the right to rescind may be exercised.

93-048 Bank Relationships with Mortgage Brokers

Bank relationships with mortgage brokers are entirely voluntary in nature. Banks are not required to accept applications from any or all mortgage brokers. Because of the recent law which requires all mortgage lenders and brokers to be licensed, most lenders will only do business with a licensed entity.

93-050 Mortgage Lender and Broker License Requirements of Instrumentalities Created by the U.S. or Any State

Any instrumentality created by the United States or any state is exempt from the mortgage lender and broker licensing requirements of Mass. Gen. Laws chapter 255E § 2. A body politic created under Mass. Gen. Laws is an instrumentality created by the Commonwealth and is therefore exempt from the requirements of Mass. Gen. Laws chapter 255E.

93-051 Hidden Second Mortgages

If the second mortgage part of the transaction is not disclosed or information in the first mortgage application was made up to cover the source of the final 20% or more of the transaction, the transaction may involve fraud. In situations where fraud has occurred and a bank is involved, the United States Attorney's Office takes the lead because banks are insured by the Federal Deposit Insurance Corporation. The Division of Banks would review any specific facts presented concerning an operating state-chartered bank. The District Attorney for the area where the lender gave fraudulent information would be the law enforcement agency for the Commonwealth on such a matter. If a scheme to commit fraud also involved the appraisal of the units, then the Massachusetts Board of Registration of Real Estate Brokers and Salesmen could be contacted at (617) 727-2373.

95-053 Mortgage Lender Record Retention Requirements

Every mortgage lender required to be licensed "shall retain for a minimum of three years after the final payment is made on any mortgage loan or the mortgage is sold, whichever occurs first, copies of the note, settlement statement, truth-in-lending disclosure, correspondence, papers or records relating to the loan," under 209 CMR 42.09(1)(a) (Emphasis added). Therefore, licensed mortgage lenders who sell the loan servicing rights to other lenders must still retain the required records for three years after the mortgage is sold. In addition, the regulations governing the licensing of collection agencies found at 209 CMR 18.00 et seq., do not provide for a waiver of 209 CMR 18.05 nor 18.09.

93-059 & 93-078 Mortgage Lender License Exemptions for Wholly-Owned Subsidiaries of Wholly-Owned Subsidiaries of Federal Savings & Loan Associations

Any subsidiary of a federal savings and loan association is not subject to the provisions of Mass. Gen. Laws chapter 255E under the exemptions set forth in § 2 of chapter 255E. Accordingly, the subsidiary of a subsidiary of a federal savings and loan association is exempt from the mortgage lender and broker requirements set forth in Mass. Gen. Laws chapter 255E.

93-063 Interest on Refinanced Mortgage Loans

Creditors are prohibited from charging consumers interest during the rescission period of the refinanced mortgage loan under Mass. Gen. Laws chapter 140D § 10(a) as amended by chapter 573 of the Acts of 1987. The Legislature's intent was to prevent consumers from being charged interest on both the existing loan and the new loan while the funds representing the new loan are not available for the benefit of the consumer. In refinancing situations, the Division recognizes that mortgage lenders and servicers represent a national clientele, and that the consumer has the benefit of the proceeds of the new loan although some time delay in discharging the existing loan is to be expected. Accordingly, it is the position of the Division that refinancing mortgage lenders may begin charging interest at the end of the rescission period provided for in 209 CMR 32.23. Because the Massachusetts Legislature has acted to minimize the interest payments of a borrower covered by the right of rescission, a lender should act to discharge any existing indebtedness in a timely manner.

93-064 Mortgage Origination Fees - "Points"

Mortgage Lenders may charge mortgage origination fees in the form of points only to the extent that such points constitute reimbursement for reasonable originating or underwriting expenses, as determined by the Commissioner, under Mass. Gen. Laws chapter 183 § 63. This restriction, however, does not apply to loans guaranteed in whole or in part by the Veterans Administration (the V.A.), loans insured by the Federal Housing Administration (F.H.A.), or other loans subject to government imposed interest rate ceilings. Although the V.A. and the F.H.A. no longer impose interest rate ceilings, the language of Mass. Gen. Laws chapter 183 § 63 provides an explicit exception to the limitation on the charging of points in mortgage transactions for V.A. and F.H.A. loans.

When mortgagees issue a letter of commitment or denial on a mortgage loan for a 1-4 family, owner-occupied property, they are required to provide the applicant with a statement explaining that the applicant has 30 days from the date of the letter to request a copy of the appraisal report from the mortgagee, under Mass. Gen. Laws chapter 184 § 17C. A mortgage lender who provides such a statement at the time the application is made, would be violating the statute. In addition, the mortgage lender in whose name the mortgage is to be closed is responsible for providing a prospective mortgage borrower with the Uniform Mortgage Loan Cost Worksheet and the Uniform Mortgage Information Disclosure Statement, either before, or at the time the application is made, under Mass. Gen. Laws chapter 184 § 17D and 209 CMR 38.03.

93-074 Mortgage Loans to Trusts

The definition of the term "natural person" as used in Mass. Gen. Laws chapter 255E does not include trusts. Therefore, mortgage loans made to trusts cannot be considered loans to natural persons under Mass. Gen. Laws chapter 255E.

93-075 Mortgage Broker License Requirements of Independent Contractors

Individuals, employed by or associated with licensed mortgage brokers, are exempt from the licensing provisions of Mass. Gen. Laws chapter 255E if their activities are conducted under the direction of such licensed mortgage broker. Individuals, however, acting as independent contractors for various licensed mortgage brokers, must be licensed to engage in such activity.

93-077 Mortgage Lender License Requirements of Subsequent Purchasers of Mortgage Loans

Investors which do not originate mortgage loans, but rather purchase existing mortgage loans from companies that originate them, are not subject to the licensing provisions of Mass. Gen. Laws chapter 255E because they are not included in the statute's definition of a mortgage lender.

93-091 Mortgage Lender Record Retention Requirements

Licensed mortgage lenders are required to retain within the Commonwealth, "copies of the note, settlement statement, truth-in-lending disclosure, correspondence, [and] papers or records relating to the loan," under 209 CMR 42.09(1)(a). Therefore, retention of quarterly microfiche copies of a loan's history only complies with the regulation in regard to those loans requiring quarterly payments.

93-095 License Requirements for Commercial Loans

Entities seeking to establish a credit card program in which accounts would be used solely for commercial purposes are not required to obtain a license from the Commonwealth. If any of these credit accounts were to be used for personal, family or household purposes, such entities may be required to obtain a license. Such entities should review the provisions of Mass. Gen. Laws chapter 255 § 12H.

93-097 License Requirements of Computerized Loan Origination

A computerized loan origination operator who has no contact with a consumer except for indirectly making available through others the terms of various mortgage loan products would not be required to obtain a license as a mortgage broker under Mass. Gen. Laws chapter 255E. However, subscribers to a computerized loan origination system would be subject to the licensing requirements of Mass. Gen. Laws chapter 255E and its implementing regulation 209 CMR 42.00 et seq., unless otherwise exempted.

Implementing a computerized loan origination system would also trigger the Massachusetts Attorney General's regulations governing mortgage lenders and brokers at 209 CMR 8.00 et seq.

93-098 Regulations Applicable to Non-Bank Mortgagee, Open-End Home Equity Credit Loan and Open-End Credit Card Regulations

Administrative Bulletin 13-2C applies to non-bank mortgagees to the extent that such entities make mortgage loans subject to the provisions of Mass. Gen. Laws chapter 183 § 60. In addition, the provisions of Administrative Bulletin 13-5 apply to any mortgagee. Open-end home equity credit loans and open-end credit card arrangements are both subject to the provisions of Mass. Gen. Laws chapter 140 § 114B.

93-099 & 93-111 License Requirements of Subsequent Purchasers of Mortgage Loans

Entities which close mortgage loans onresidential property in the Commonwealth in their name must be licensed under the provisions of Mass. Gen. Laws chapter 255E, unless otherwise exempted. Entities, purchasing such loans after they have been closed, are not subject to the licensing provisions of Mass. Gen. Laws chapter 255E. However, such entities which anticipate collecting amounts owed under the purchased notes, should review the Attorney General's regulations governing the collection of debts at 209 CMR 7.00 et seq., as well as Mass. Gen. Laws chapter 93 § 24, governing the collection of debts for others.

93-104 Mortgage Lender License Requirements

Mortgage loans are defined as loans "to a natural person made primarily for personal, family or household purposes secured wholly or partially by a mortgage loan or residential property", under Mass. Gen. Laws chapter 255E § 1. Therefore, non-bank corporations making mortgage loans to corporate or other business entities, and not to natural persons, are not required to obtain a mortgage lending license under Mass. Gen. Laws chapter 255E.

93-108 Open-End Credit Plan Late Charge Restrictions

Creditors may, pursuant to an open-end credit plan, charge, receive and collect a delinquency charge on any payment not paid in full within fifteen days of its due date in an amount equal to ten percent of the outstanding balance or ten dollars, whichever is less..."(emphasis added), under Mass. Gen. Laws chapter 140 § 114B. The statute clearly allows the late charge to be applied to the entire outstanding balance of the line of credit, subject only to a maximum limit of ten dollars and any other conditions contained in Mass. Gen. Laws chapter 140 § 114B.

93-113 Multiple Name Restrictions for Mortgage Lenders of Conforming & Non-Conforming Loans

The statutory framework of Mass. Gen. Laws chapter 255E recognizes that a mortgage lender may have more than one address. However, no authority exists for a mortgage lender to maintain multiple licenses for a single legal entity or conduct business under an existing license using a trade name for part of its business. The statute and the Attorney General's regulations at 209 CMR 8.04(2) intend to ensure that consumers know with whom they are doing business. Therefore, mortgage lenders cannot make non-conforming loans under a trade name while conducting other lending business under their corporate name.

93-117 Mortgage Broker License Requirements of Real Estate Brokers

Real estate brokers, receiving advances from mortgage lenders five or more times in any period of twelve consecutive months, must obtain a mortgage broker's license under Mass. Gen. Laws chapter 255E.

93-118 Usury in Bank Interest Charges & Late Fees

There are no applicable usury statutes in the Commonwealth regarding late charges imposed on a business loan. Late charges imposed on business loans are solely a contractual matter between the parties. Late charges imposed on consumer loans are limited by statute depending on the type of loan. For credit card and other revolving credit loans, a late charge in the amount of ten percent of the outstanding balance or ten dollars, whichever is less, may be assessed under Mass. Gen. Laws chapter 140 § 114B and chapter 255D § 27(B). For mortgage loans, a late charge in the amount of three percent of the principal and interest overdue may be assessed under Mass. Gen. Laws chapter 183 § 59. For motor vehicle installment sales and other retail installment sales and services, a late charge may be assessed in the amount of five percent of each installment or five dollars, whicever is less, under Mass. Gen. Laws chapter 255B § 11 and chapter 255D § 20. The Commonwealth does have a criminal usury law at Mass. Gen. Laws chapter 271 § 49. However, such law does not apply to any bank or other lender subject to the "control, regulation or examination by any state or federal regulatory agency."


Sales Finance & Insurance Premium Finance Agencies

93-023 Sales Finance Company License Requirements

Out-of-state finance companies which purchase retail installment contracts from buyers clubs located in Massachusetts must obtain a sales finance company license under Mass. Gen. Laws chapter 255D. Such finance companies must keep and use in the Commonwealth such books, accounts and records which will allow the Commissioner of Banks, through his examiners, to determine compliance with applicable laws and regulation under Mass. Gen. Laws chapter 255D § 3. Also, retail agreements must be kept at the licensee's place of business or another place where the Commissioner may approve.

93-030 Premium Finance Agency Powers

Insurance premium finance agencies are prohibited from paying insurance agents a fee for business generated by the agent under Mass. Gen. Laws chapter 255C § 12.

93-066 Sales Finance Company Record Retention Requirements

Sales finance companies licensed under Mass. Gen. Laws chapter 255B or 255D must comply with the record keeping requirements of the regulations found at 209 CMR 20.00 and 22.00 respectively.

93-081 Motor Vehicle Leases & Retail Installment Contracts

A motor vehicle lease in which the lessee does not contract to pay a sum substantially equivalent to or in excess of the vehicle's value does not fall under the definition of a retail installment contract as found in Mass. Gen. laws chapter 255B § 1. Retail installment contracts include motor vehicle leases where the "lessee contracts to pay as compensation for its use a sum substantially equivalent to or in excess of its value and by which it is agreed that...the lessee is bound to become, or has the option of becoming , the owner of the motor vehicle upon full compliance with the terms of the contract, under Mass. Gen. Laws chapter 255B § 1.


Small Loan Agencies

See also: Mortgages 93-012

93-038 Small Loan Finance Company License Requirements for Dental Marketers

An entity seeking to market to certain dentists a financing option for their patients which would be provided directly by a bank which pays such entity for finding such clients, must obtain a small loans license under Mass. Gen. Laws chapter 140 § 96. Such an entity would be directly or indirectly assisting a bank in procuring small loans while receiving a fee from the bank for such activity. Thus, such an entity would be subject to the applicable provisions of Mass. Gen. Laws chapter 140 § 96 - 114B, as well as regulation 209 CMR 12.03 which requires a net worth of at least seventy-five thousand dollars.

93-043 Small Loan Flat Fees in Lieu of Interest

A financial institution offering small loans may not charge a flat fee in lieu of interest under Mass. Gen. Laws chapter 140 § 90.

93-057 Small Loan Record Retention Requirements

Small loans licensees headquartered in the State of Rhode Island, which are exempt from the provisions of Mass. Gen. Laws chapter 255E in making mortgage loans, may maintain original documentation of such loans in their Rhode Island home office if duplicate copies are maintained in a Massachusetts office. The original documentation, however, must be made available to examiners in Massachusetts on an overnight basis. In addition, examiners from the Division of Banks must be able to utilize the electronic facilities in any of the entity's offices located in Massachusetts.

93-058 Small Loans License Exemption for Marketers of Dental Financing

An individual or entity indirectly assisting in the making of a small loan, through a licensee or an exempt institution, will not be required to be licensed if the indirect assistance does not involve contact or communication with the consumer/borrower in regard to dental financing provided that the dentists involved do not receive any fees in connection with such loans.

93-076 Small Loan Agency Record Retention Requirements

Small loan agencies are not required to retain cancelled checks used with revolving credit accounts under Mass. Gen. Laws chapter 140, §§ 96-114A and 209 CMR 12.00. Therefore, Massachusetts law does not prohibit the retention of such cancelled checks on microfilm.

93-094 Small Loan License Requirements for Schools of Cosmetology

Schools of cosmetology are not "post-secondary" schools under Mass. Gen. Laws chapter 140 § 96, the statutory exemption to the small loans licensing statute, because they have no requirement that students earn a high school diploma prior to commencing their studies. Therefore, such schools seeking to offer loans under $6,000.00 to finance tuition must obtain a small loan license to charge interest on such loans in excess of 12% per annum.


Collection Agencies

93-025 Collection Agency License Requirements

Collection fees and funds, owed to retailers by consumers, for small loans or retail installment contracts as a result of check payments not clearing due to insufficient funds may only be collected if specifically authorized in the agreement authorizing the debt, and then only if the collection agency is specifically authorized in writing by the retailer. The maximum amount chargeable to a consumer of a small loan or retail installment contract for a returned or dishonored check, draft or order is $10.00 under Mass. Gen. Laws chapter 140 § 100, chapter 255B § 11 and chapter 255D § 20, if the agreement was entered into on or after March 14, 1991.

93-068 Collection Agency License and Disclosure Requirements

Any person engaging in the business of collecting or receiving payment for others of any account, bill or other indebtedness is required to obtain a license from the Commissioner of Banks, under Mass. Gen. Laws chapter 93 § 24. Subsidiaries of national financial service providers are not exempt from the licensing requirement, even to the extent that debts are being collected for the benefit of affiliated companies because the subsidiary would have a separate legal existence. In addition, collection agencies principally engaged in the business of collecting consumer indebtedness must maintain an office within the Commonwealth, under 209 CMR 18.05. However, there is no prohibition from locating a collection agency on the same physical premises as those of an affiliated company, though all persons engaged in the collection activities must be employees of the collection agency. Any other affiliated company engaged in collection activities would also be required to obtain a license unless otherwise exempted.

All client funds paid to a collection agency must be deposited in one or more trust accounts maintained at a federally insured bank which must contain only those funds collected on behalf of Massachusetts creditors, under 209 CMR 18.10A(a). In addition, collection agencies are prohibited from "operating under a name or in a manner which implies that such agency is an attorney, or is a branch of or associated with any department of the Federal Government or of any state or municipal government, or use any seal, insignia, envelope or other format which simulates that of any government department or agency," under 209 CMR 18.07.

93-106 Collection Agency License Requirements

A "debt" is defined as money more than 30 days past due and owing, under 209 CMR 18.03(4). Thus, a collection agency license is required if an individual or entity anticipates collecting such a debt, under Mass. Gen. Laws chapter 93 § 24. Therefore, servicers of insurance premium finance contracts must obtain a collection agency license if they collect debts.


Consumer Credit Cost Disclosure

93-084 Time Requirements for the Mailing of Periodic Statements

Creditors may only be excused for non-compliance with the time requirements for the mailing of periodic statements set forth in Mass. Gen. Laws chapter 140D § 19(a), if they are prevented from doing so by an "act of God, war, natural disaster, strike or other excusable or justifiable cause, as determined by the commissioner," under Mass. Gen. Laws chapter 140D § 19(b). Any party, except for the U.S. Post Office, which helps a financial institution compile and mail periodic statements, is an agent of the institution. Financial institutions must take responsibility for the failure of any such agent to perform such duties necessary to comply with Mass. Gen. Laws chapter 140D § 19(a). Therefore, any finance charges collected by a financial institution, in connection with a failure to comply with the time requirements of periodic statements, must be remitted to the account holders under Mass. Gen. Laws chapter 140D § 19(a).


Miscellaneous

93-027 License Exemptions for Entities Conducting Multiple Regulated Activities

When a business is engaged in more than one regulated activity, it must be licensed to conduct each activity unless the applicable statute provides a specific exemption. Therefore, such entities must comply with the laws governing each of its business activities.

93-031 License Exemptions for Entities Conducting Multiple Regulated Activities

Mortgage lenders, acting as loan servicers for loans they have originated and sold, must obtain a collection agency license to collect payments which are at least 30 days past due, under Mass. Gen. Laws chapter 93 § 24. Due to the various types of businesses regulated by the Division of Banks, exemptions vary and are inconsistent among the statutes under the Division's jurisdiction. Therefore, the Division only recognizes licensing exemptions specifically provided for by statute.

93-052 Repeal of the Report of Lobbying Activities

The Report of Lobbying Activities was an annual report individual banks were required to submit under Administrative Bulletin 9-2. In February of 1993, this report was repealed from the Division of Bank's Administrative Bulletin Manual. Thus, banks are no longer required to file a report of lobbying activities with the Division.