• This page, Final technical amendments to 209 CMR 32.00, 34.00, and 51.00, is   offered by
  • Division of Banks

Final technical amendments to 209 CMR 32.00, 34.00, and 51.00

Text of final technical amendments to Division of Banks' regulations effective January 3, 2003

Amendments to 209 CMR 32

209 CMR 32.04 (4)(a) 3. is hereby amended by inserting after the first sentence the following sentence:

Any consumer in the transaction may sign or initial the request.

209 CMR 32.04 (4) (c) is hereby amended by striking out Section 209 CMR 32.04 (4)(c) and inserting in place thereof the following:

(c) Voluntary debt cancellation fees. Charges or premiums paid for debt cancellation coverage of the type specified in 209 CMR 32.04 (4)(c) 4. may be excluded from the finance charge, whether or not the coverage is insurance, if the following conditions are met.

209 CMR 32.04 (4) (c) 4. is hereby amended by striking out Section 209 CMR 32.04 (4)(c) 4. and inserting in place thereof the following:

4. 209 CMR 32.04 (4) (c) applies to fees paid for debt cancellation coverage that provides for cancellation of all or part of the debtor's liability for amounts exceeding the value of the collateral securing the obligation, or in the event of the loss of life, health, or income in a case of accident.

209 CMR 32.05A(5)(a)1. is hereby amended by striking out clause 1. and inserting in place thereof the following:

1. The applicable information in 209 CMR 32.05A(2).

Footnote 10 c is hereby amended by striking out the second sentence and inserting the following sentence:

For variable-rate plans, a recent annual percentage rate is the most recent rate provided in the historical example described in 209 CMR 32.05B(4)(l)11. or a rate that has been in effect under the plan since the date of the most recent rate in the table.

Footnote 26 is hereby amended by striking out Footnote 26 and inserting in place thereof the following:

The limitations stated in 209 CMR 32.12(3)(c)2. shall not apply when the person honoring the credit card: (1) is the same person as the card issuer: (2) is controlled by the card issuer directly or indirectly; (3) is under the direct or indirect control of a third person that also directly or indirectly controls the card issuer: (4) controls the card issuer directly or indirectly; (5) is a franchised dealer in the card issuer's products or services; or (6) has obtained the order for the disputed transaction through a mail solicitation made or participated in by the card issuer. The limitations stated in 209 CMR 32.12(3)(c) shall also not apply if the provisions of M.G.L. ch. 255, §12F apply to the transaction.

209 CMR 32.05 B (6)(b) is hereby amended by striking out subsection (b) and inserting the following:

(b) Terminate a plan and demand repayment of the entire outstanding balance in advance of the original term [except for reverse mortgage transactions that are subject to paragraph (d) of 209 CMR 32.04 (6)] unless:

209 CMR 32.05 B (6)(b) is hereby further amended by inserting after clause 3. the following new clause:

4. federal or state law dealing with credit extended by a depository institution to its executive officers specifically requires that credit shall become due and payable on demand, provided that the creditor includes such a provision in its initial agreement.

209 CMR 32.05 B (6) is hereby amended by inserting after paragraph (c) the following paragraph:

(d) for reverse mortgage transactions that are subject to 209 CMR 32.33, terminate a plan and demand repayment of the entire outstanding balance in advance of the original term except

1. in case of default;
2. if the consumer transfers title to the property securing the note;
3. if the consumer ceases using the property securing the note as the primary dwelling; or
4. upon the consumer's death.

209 CMR 32.15(4)(c) is hereby amended by striking out the first sentence and inserting in place thereof the following:

(c) If the creditor has delivered any money or property, the consumer may retain possession until the creditor has met its obligation under 209 CMR 32.15(4)(b).

209 CMR 32.17 is hereby amended by renumbering Footnote 38 a as Footnote 38.

209 CMR 32.17(3)(b)2. is hereby amended by striking out the footnote reference at the end of the clause.

209 CMR 32.17(6) is hereby amended by striking out the first sentence and inserting in place thereof the following:

(6) Early Disclosures. If the disclosures required by 209 CMR 32.17 are given before the date of consummation of a transaction and a subsequent event makes them inaccurate, the creditor shall disclose before consummation: 39

209 CMR 32.17 is hereby amended by renumbering Footnote 38 b as Footnote 39.

209 CMR 32.18(3)(a) is hereby amended by striking out 209 CMR 32.18(3)(a) and inserting in place thereof the following:

(a) A separate written itemization of the amount financed, including: 40

1. The amount of any proceeds distributed directly to the consumer.
2. The amount credited to the consumer's account with the creditor.
3. Any amounts paid to other persons by the creditor on the consumer's behalf. The creditor shall identify those persons. 41
4. The prepaid finance charge.

209 CMR 32.18(4) is hereby amended by striking out the footnote reference at the end of the sentence.

209 CMR 32.19(2)(b) is hereby amended by striking clauses 8., 9., 10., 11., 12. and 13. and inserting in place thereof the following:

8. At the option of the creditor, either of the following:

a. An historical example, based on a $10,000 loan amount, illustrating how payments and the loan balance would have been affected by interest-rate changes implemented according to the terms of the loan-program disclosure. The example shall reflect all significant loan-program terms, such as negative amortization, interest-rate discounts, and interest-rate payment limitations, that would have been affected by the index movement over the period.

b. The maximum interest rate and payment for a $10,000 loan originated at the initial interest rate (index value plus margin, adjusted by the amount of any discount or premium) in effect as of an identified month and year for the loan program disclosure assuming the maximum periodic increases in rates and payments under the program; and the initial interest rate and payment for that loan and a statement that the periodic payment may increase or decrease substantially depending on changes in the rate.

9. An explanation of how the consumer may calculate the payments for the loan amount to be borrowed based on either:

a. the most recent payment shown in the historical example in 209 CMR 32.19(2)(b)8.a.; or

b. the initial interest rate used to calculate the maximum interest rate and payment in 209 CMR 32.19(2)(b)8.b.

10. The fact that the loan program has a demand feature.

11. The type of information that will be provided in notices of adjustments and the timing of such notices.

12. A statement that disclosure forms are available for the creditor's other variable-rate loan programs.

209 CMR 32.23(1)(c) is hereby amended by striking out the first sentence and inserting in place thereof the following:

The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required by 209 CMR 32.23(2), or delivery of all material disclosures 48, whichever occurs last.

Footnote 47 is hereby amended by striking out the third sentence and inserting in place thereof the following:

The creditor shall deliver the notice required by 209 CMR 32.23(2) but need not deliver new material disclosures.

Amendments to 209 CMR 34

209 CMR 34.00 is hereby amended by repealing section 34.04 in its entirety.

209 CMR 34.01 is hereby amended by striking out section 34.01 and inserting in place thereof the following:

34.01: Purpose

The purpose of 209 CMR 34.00 is to set the maximum sums which may be loaned by a state-chartered bank on 90 and 95% of value real estate loans secured by a first or subsequent lien.

Amendments to 209 CMR 38

209 CMR 38.00 is hereby amended by striking out section 38.04 and inserting in place thereof a new section 38.04 as follows:


Massachusetts law requires that the Consumer's Guide be provided to you when you obtain a mortgage loan application, or it may be obtained upon request from any lender at any time. It is designed to help you understand the home mortgage application and approval processes and the practices common to mortgage lending in the Commonwealth of Massachusetts. Words and terms in bold print are defined in the Glossary. The lender will also provide a Real Estate Settlement Procedures Act (RESPA) Booklet entitled "Settlement Costs"; and, if applicable, the "Consumer Handbook on Adjustable Rate Mortgages" (ARMs). If applicable, a good faith estimate of all costs involved in a mortgage transaction will also be provided by the lender.

Filing a Mortgage Application

As a borrower, you will be asked to fill out a mortgage application. In order to determine what best suits your needs and circumstances, you should ask questions and carefully study the various types of mortgages and options available to you. Two of the most common types of mortgages are fixed and adjustable rate; a common option is a rate-lock/interest rate commitment. You must keep in mind that lending practices vary from lender to lender and some terms and procedures may not apply to the refinancing of an existing mortgage.

When filling out an application, it will be helpful for you to have supporting documents and information, such as the signed Purchase and Sale Agreement, account numbers for each of your deposit accounts, information on income, outstanding loans, real estate holdings and any other information the lender may require. An application fee, which is often non-refundable, may be required.

The Mortgage Approval Process

Once the application form has been filled out, the lender will make a decision based upon your creditworthiness and the property's value by considering the following:

Your ability to repay the loan - This is determined by evaluating the information you furnish on your application and verifying your place and length of employment, your deposit accounts and other assets, your income from employment and other sources, and your rental income and expenses, if any.

Your willingness to repay the loan - This is determined by checking your credit history through a credit bureau, your loan references with other creditors, and the history of your residency and mortgage or rental payments.

Whether the value of the property is sufficient to secure the loan - This is determined by obtaining an appraisal of the property; by confirming that loan-to-value ratio requirements are met; and, in the case of a construction loan, by approving the plans. You may request a copy of the appraiser's report.

In addition, a lender may require that the terms and conditions of the loan satisfy secondary mortgage marketrequirements. As further conditions for approval, the lender may require that you obtain private mortgage insurance and title insurance. You may also be required to pay your taxes, betterments and/or insurance into an escrow account.

When the lender has a completed application, you may be sent a letter offering you a mortgage loan on the terms you requested or on somewhat different terms. The latter is known as a counter-offer. If the application is approved and you find the terms of the commitment letter acceptable, you must accept those terms in writing. However, the lender may send you a letter denying the mortgage loan. If the application is denied, the lender must give you a specific and accurate reason(s) for denial.

Time Periods for Notices and Disclosures

In general, the overall time period from date of application to closing is approximately four to eight weeks. Certain other factors, however, may cause delays. During this time several notices and disclosures must be provided to you.

Within three business days of application, you will be given the Truth-In-Lending credit disclosure, and, if applicable, a good faith estimate of settlement costs and a book entitled "Settlement Costs".

The lender must inform you of the status of your application no later than 21 business days from the date of application. By that time the lender must either:

(1) approve or deny your application. In this case, you will be given no further notices on the status of your application; or,

(2) mail or deliver to you an oral or written statement that your application is not substantially complete and indicate the following: what verification information it requires to make a decision on your application; what information has been received but is not complete; and what information has not yet been received. If you receive this type of notice, then, after the lender receives the missing or incomplete information, you will receive a notice that your application is complete or be informed of the lender's decision on your application. This may be an approval, a denial, or a counter-offer; or,

(3) give your written notice informing you that your application is substantially complete but that more information may be required by certain third parties. If you are sent this type of notice, you will receive within 30 days a letter informing you of the lender's decision on your application. This may be an approval, a denial, or a counter-offer.

If the application is denied, the Equal Credit Opportunity Act requires an adverse action notice to be sent within 30 days of a completed application stating a specific and accurate reason(s) for the action taken. A counter-offer that is not accepted by the borrower extends the notice period to 90 days. You will also be notified upon denial as to whether you may appeal the decision to a Mortgage Review Board.

Other Notices

Additional notices or disclosures you may receive during the application process are: Notice of Right of Rescission, Urea Formaldehyde Foam Insulation (UFFI) Notice, and the availability of the appraisal without an additional charge.

The Closing

The closing represents the final step in the mortgage application process. An attorney will do a title search on the property, prepare the legal documents necessary for the closing of the loan, and provide you and/or your attorney with the exact closing costs. The closing attorney may be hired directly by the lender or the lender may permit you to select the attorney. Massachusetts law requires that you be notified at the time of application that the lender's attorney represents the lender and that you may want to hire your own attorney to represent you. You will, however, most likely have to pay for the services of both lender's attorney and your own attorney.


Adjustable or Variable Rate Mortgage (ARM or VRM) - a mortgage loan in which the interest rate varies in accordance with changes in a specified index, and may result in changed monthly payments. For further information, refer to the "Consumer Handbook on Adjustable Rate Mortgages".

Adverse Action - a denial of a loan in an amount and on terms acceptable to the borrower.

Annual Percentage Rate (APR) - the actual cost of credit to the borrower, including interest and certain other charges, expressed as a yearly rate and calculated over the life of the loan. A guide to compare the cost of loans.

Application - an oral or written request for an extension of credit. Usually a printed form on which the lender collects credit, income and debt information about a prospective borrower, plus facts about the property being used to secure the loan. A fee may be charged at the time of application.

Appraisal - an inspection of the property to assure that its market value exceeds the amount of the loan. A fee may be charged for the appraisal.

Borrower - the person, sometimes referred to as the mortgagor, who obtains a mortgage loan.

Closing - the time and date set for the transfer of the property from seller to buyer and/or for the signing of the loan documents.

Closing or Settlement Costs - fees, in addition to the purchase price of the property, charged at closing which include but are not limited to lawyer's fees, title search and insurance, survey charges and fees to record the deed, mortgage and other documents.

Commitment Letter - a lender's written offer to grant a mortgage loan outlining the terms, the amount of the loan, the interest rate and any other conditions. It can also serve as a communication of the lender's decision on the borrower's application.

Counter-offer - an offer made by the lender to grant credit other than in the amount of terms requested by the applicant.

Equal Credit Opportunity Act - federal and state laws that prohibit discrimination in the granting of credit based on race, color, religion, national origin, sex, marital status, age, or whether a person is receiving public assistance or alimony.

Escrow Account - money collected in advance by the lender, usually on a monthly basis, for the payment of real estate taxes, betterments and/or insurance.

Fixed Rate Mortgage - a conventional mortgage loan with a set interest rate and equal monthly payments for the entire term of the loan.

Lender - the entity or person, sometimes referred to as the mortgagee, who offers the mortgage loan.

Lien - a legal claim, granted by contract or by a court, against property. A mortgage is one kind of lien.

Loan-to-Value Ratio - The percentage comparison between the unpaid principal balance of the mortgage and the sales price or the appraised value of the property, whichever is lower.

Mortgage - a lien placed by the lender on the borrower's property to secure payment of a mortgage loan and removed when the note has been paid in full. If the borrower defaults on the note, the lender can sell the property to satisfy the debt.

Mortgage Review Board - a regional board consisting of an equal number of lenders and community representatives who will review the residential mortgage loans denied by lenders where the applicants believe the denial was based on the location of the property.

Note - the borrower's legally binding written promise to repay a debt to a lender on a specified date.

Point - an often non-refundable sum of money, equal to 1% of the principal amount of a mortgage, charged by the lender to cover certain costs of making a loan. The number of points that may be charged must be disclosed to the borrower in writing prior to closing.

Private Mortgage Insurance - protection for lenders against borrower default. Paid for by the borrower and usually required when the down payment is less than 20% of the purchase price.

Rate-Lock Agreement/Interest Rate Commitment - a written agreement by which a lender will hold an interest rate on a mortgage for a specified period of time. The terms and conditions of a rate lock agreement vary from lender to lender.

(RESPA) Real Estate Settlement Procedures Act - a federal law that requires a good faith estimate of closing costs to be given to a consumer on certain first mortgages and a settlement statement to be provided at the closing itemizing all costs to the borrower in connection with the mortgage loan. For further information refer to the booklet entitled "Settlement Costs."

Right of Rescission - state and federal laws that allow consumers who refinance first mortgages and certain second mortgages to cancel their contract and receive a refund of all fees if the mortgage or security interest is granted on the consumer's principal residence. This must take place within three business days following the closing, or following the delivery of the required information and rescission forms and disclosures, whichever occurs last.

Secondary Mortgage Market - investors who purchase residential mortgages originated by lenders.

Title Insurance - protection against loss due to defects in the title that were not uncovered in the title search and not listed in the title report. Both the lender and the borrower may purchase title insurance to protect their own interests.

Title Search - an examination of legal records to check the validity and completeness of the title to the property. The title search should uncover any liens, overdue assessments or other claims against the property.

Truth-in-Lending - federal and state laws that require lenders to provide borrowers with full disclosure of the true cost of a loan and easy-to-understand information about the annual percentage rate and terms of the loan.

Urea Formaldehyde Foam Insulation (UFFI) Notice - a state law requiring a borrower or seller to disclose to a lender the absence or presence of UFFI and the formaldehyde level in a dwelling. A UFFI Certificate is signed at the closing.

Uniform mortgage loan cost worksheet

Closing and settlement costs may vary among mortgage lenders. You may wish to compare these charges in considering the total cost of your mortgage. 


Application Fee


Origination Fee


= Loan Amount X .01 X (Number of Points) =


Appraisal Fee


Credit Report


Title Insurance:


= Loan Amount X [ Estimated Rate]=


Abstract or Title Search


Title Exemption


Documentation Preparation


Attorney's Fees


Private Mortgage
Insurance (PMI)


If 5% down payment:
Loan amount X [ Estimated PMI Rate]

Or =

If 10% down payment:
Loan Amount X [ Estimated PMI Rate]


Recording/Transfer Fees


Survey or Plot Plan







There may be additional substantial charges payable Real Estate Taxes    
at closing such as deposits in escrow for real estate Property Insurance    
taxes and insurance and prepaid interest which Interest paid in advance    
could range from 0 to 30 times the daily rate, depending on the date of closing. Inquire as to the Owners Title Insurance Coverage    
amounts of these items. Other Charges    
  Total estimated closing costs $    

*Example based on $100,000 fixed rate loan with a 20% down payment and a sales price of $125,000.

209 CMR 51.00

209 CMR 51.00: Year 2000 operational safety and soundness standards is hereby repealed in its entirety.

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