The Massachusetts Division of Banks has adopted new regulations regarding the predatory mortgage lending law.

The Massachusetts Division of Banks has adopted new regulations designed to implement various provisions of the Commonwealth's new predatory lending law, Chapter 268 of the Laws of 2004. The new law, titled "An Act Prohibiting Certain Practices in Home Mortgage Lending," makes a number of revisions to Chapter 183 of the General Laws ("Alienation of Land"), and adds a new Chapter 255D to the statutes, titled "Predatory Home Loan Practices."

The regulations, 209 CMR 53.00: "Determination and Documentation of Borrower's Interest," address one of the more controversial provisions of the new law, a prohibition on the refinancing of a borrower's mortgage loan unless the refinancing is in the borrower's "best interests." The regulations provide guidance to lenders in complying with this provision, setting forth a number of factors which a lender may consider in determining whether a prospective refinancing of a loan is in fact in the borrower's best interests. The regulations also contain a number of definitions for various terms used in the new law.

In a related action, the Division of Banks has issued an "Industry Advisory Letter," relative to the termination of open-end home equity lines of credit. The Letter sets forth the Division's conclusion that an early termination fee imposed as to such a line of credit does not constitute a "prepayment" under the provisions of the new act.

For further information on the new law, see the Mass. Div. of Banks website at www.mass.gov

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