ATTORNEY GENERAL MARTHA COAKLEY ISSUES FINAL MORTGAGE BROKER AND LENDER REGULATIONS
RealEstateRama   -   Real Estate   -   Government   -   Nonprofit   -   Web

ATTORNEY GENERAL MARTHA COAKLEY ISSUES FINAL MORTGAGE BROKER AND LENDER REGULATIONS

New Regulations Will Ban Unfair or Deceptive Lending Practices That Contributed to Foreclosure Crisis

BOSTON – Today, Attorney General Martha Coakley filed finalized regulations with the Secretary of State’s Office to expand the scope of the existing mortgage lender and broker regulations prohibiting certain unfair and deceptive advertising practices.  The Massachusetts Consumer Protection Act authorizes the Attorney General to promulgate regulations to identify unfair or deceptive conduct that violates the act.  The regulations previously applied only to home improvement loans.  As amended, the regulations apply to all mortgage loans, including refinancing or purchase money mortgage loans.  The Attorney General anticipates releasing a summary report next week of the statewide public hearings her office held last month on the proposed regulations.

              “It is my hope that by issuing these regulations, which will prohibit a range of unfair and unduly risky lending behaviors, we will be able to combat the rising number of foreclosures in Massachusetts,” said Attorney General Martha Coakley.  “These regulations will give us the ability to more easily bring cases against unscrupulous lenders under The Consumer Protection Law, and should serve as a deterrent for brokers and lenders not to engage is unfair and deceptive practices.” 

              The regulations, which were first proposed in August 2007, amend several current regulations.  Specifically, the regulations:

  • Prohibit mortgage brokers or lenders from making a loan if they do not have a reasonable belief that the borrower is able to repay the loan.
  • Restrict the abuse of no-documentation or “stated income” loans by requiring that the mortgage broker or lender disclose how the interest rates or other charges will increase under a “no-doc” loan, and obtain the borrower’s signed statement of income in order to process those types of loans.
  • Prohibit mortgage brokers from arranging or processing loans that are not in the borrower’s interest, and prohibit brokers from brokering loans if the broker’s financial interest conflicts with the borrower’s interest.
  • Prohibit mortgage lenders from steering borrowers to loan products that are more costly than those that the borrower qualifies for, and prohibits lenders from discriminating between similarly qualified borrowers.

              Attorney General Coakley testified earlier this week at a field hearing of the House Committee on Financial Services, chaired by Congressman Barney Frank, that similar federal regulations are necessary to address financial institutions regulated at the federal level, and recently joined other state Attorneys General in calling for additional consumer protection measures by the Federal Reserve Bank.

              As part of her multi-faceted plan to address the foreclosure rescue crisis in Massachusetts, Attorney General Coakley also issued final regulations on September 1 that ban  unfair and deceptive foreclosure rescue schemes.  That regulation was first issued as an emergency regulation on June 1.  The regulation prohibits predatory, for-profit foreclosure rescue transactions.  Foreclosure rescue transactions between family members or arranged by a non-profit community or housing organization are not banned under this regulation.  

              The new regulations announced today follow a period of extensive review and comment from people who had been impacted by various lending and foreclosure practices, as well as mortgage lenders, brokers, consumer advocates, housing specialists, state, local and federal agencies and consumer bankruptcy experts.  On August 22, 2007, Attorney General Coakley issued proposed regulations and announced a series of public hearings in Boston, Springfield, Worcester and Brockton.  Among the fifty witnesses who testified were homeowners and borrowers, lenders and brokers, city mayors and councilors, state legislators and others.  After considering all of these comments and views, Attorney General Coakley issued the final regulations today.  Mortgage lenders and brokers must comply with the new regulations by November 15, 2007, with the exception of the disclosure provision, which must be implemented by January 2, 2008.

SHARE

Massachusetts RealEstateRama is an Internet based Real Estate News and Press Release distributor chanel of RealEstateRama for Massachusetts Real Estate publishing community.

RealEstateRama staff editor manage to selection and verify the real estate news for State of Massachusetts.

Contact:

Previous articleU.S. Office Market Marches Forward Despite Growing Uncertainty in Q3, According to Colliers International
Next articleIndustrial Real Estate Markets Remained Stable in Q3, but Deceleration is Becoming More Evident, According to Colliers International