| Date: | 11/05/2015 |
|---|---|
| Organization: | Division of Banks |
| Referenced Sources: | M.G.L chapter 167, sections 14A and 14C |
To all interested parties:
The Division of Banks (the Division) has issued this industry letter to provide guidance relative to the operation and procedures of the mortgage review boards and small business loan review boards, which were established pursuant to M.G.L chapter 167, sections 14A and 14C.
The regional Mortgage Review Boards provide an independent review option for an applicant who received a residential mortgage loan denial and who believes his/her application was denied on the basis of the location of the property. For the purpose of reviews conducted by the Mortgage Review Boards, “residential mortgage loan denial” is defined as the denial of an extension of credit to finance or refinance the purchase of a first lien on residential property located in the Commonwealth of four units or less and occupied in whole or in part by the mortgagor.
A mortgagee must include with each residential mortgage loan denial, as defined above, a notice instructing the applicant of the right to appeal the denial to the appropriate mortgage review board. The content of the notice shall conform substantively with the form attached as Appendix A.
The Mortgage Review Board shall review all documentation relative to each appeal to determine whether the loan was denied because the property is located in a specific neighborhood or geographical area. If the Mortgage Review Board determines that the denial was made on the basis of the location of the property, the Mortgage Review Board shall refer the application back to the mortgagee, with a recommendation that the mortgagee reconsider the decision. The Board may also take such other action it deems appropriate including, but not limited to, referring any apparent violation of applicable law or regulation to the appropriate state or federal regulator for further investigation.
The regional Small Business Loan Review Boards provide an independent review option for small businesses that were denied an extension of credit. For the purpose of the reviews conducted by the Small Business Loan Review Boards, a “small business” is defined as a business that had gross revenues of $1,000,000.00 or less in its preceding fiscal year.
A lender must include with each small business loan denial a notice instructing the applicant of the right to appeal the denial to the appropriate Small Business Loan Review Board. The content of the notice shall conform substantively with the form attached as Appendix B.
The Small Business Loan Review Board shall review all documentation relative to each appeal to determine whether the loan was denied on an unreasonable basis. If the Small Business Loan Review Board determines that a loan application was denied on an unreasonable basis, the Small Business Loan Review Board shall refer the application back to the lender, with a recommendation that the application be reconsidered. The Small Business Loan Review Board shall also provide information on its findings to the applicant and the Commissioner of Banks. Additional resources on alternative sources of financing, technical assistance programs, and information on other relevant programs offered by the Commonwealth are available to applicants at the Division’s website.
Guidance for persons who may be interested in filing an appeal of a residential mortgage denial or small business loan denial is available on the Division’s website.
Sincerely,
David J. Cotney
Commissioner of Banks
