Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 114B of chapter 140 of the General Laws, as appearing in the 1984 Official Edition, is hereby amended by striking out, in line 25, the words "section one" and inserting in place thereof the words:- sections ninety A, one.

SECTION 2. Subsection B of section 2 of chapter 167E of the General Laws, as so appearing, is hereby amended by inserting after paragraph 7 the following paragraph:-

7A. Open-End Mortgage Loans. - Mortgage loans not exceeding in the aggregate eighty per cent of the value of the real estate, pursuant to an agreement to make loans to the mortgagor from time to time. The aggregate outstanding loans of this class pursuant to a single such agreement shall not exceed one and one-quarter per cent of the deposits of such corporation or fifty thousand dollars, whichever is the greater. An agreement pursuant to this paragraph shall be deemed a note for purposes of this section.

SECTION 3. Said subsection B of said section 2 of said chapter 167E, as so appearing, is hereby further amended by striking out paragraph 10 and inserting in place thereof the following paragraph:-

10. Variable Rate Mortgage. - Any bank may make or acquire mortgage loans of the several classes or types specified in this chapter evidenced by a note which provides for variation in the rate of interest over the term of the note; provided, however, that such a loan made to finance or refinance the purchase of and secured by a first lien on a dwelling house of four or fewer separate households occupied in whole or in part by the mortgagor shall be subject to but not limited to the following conditions and restrictions imposed by the commissioner:-

(1) the method by which the rate of interest may be adjusted;

(2) the frequency with which the rate of interest may be adjusted, provided that successive rate adjustments shall be no less than six months apart;

(3) the maximum increase in the rate of interest allowed for any such adjustment;

(4) provisions for decreases in the rate of interest as may be warranted by market conditions;

(5) requirements for advance notification and explanation of adjustments in the rate of interest, provided that such notification and explanation shall occur no less than thirty days prior to such adjustments; and

(6) methods of disclosure to the mortgagor of the terms and conditions of the loan as required under the provisions of chapter one hundred and forty D.

Notwithstanding any provision of the law to the contrary, the commissioner may by further conditions and restrictions provide that the rate of amortization may be varied, including utilizing a period of negative amortization, in order to adjust the rate of interest.

SECTION 4. Section 11 of said chapter 167E, as so appearing, is hereby amended by striking out, in line 4, the words "and 7" and inserting in place thereof the words:- 7 and 7A.

SECTION 5. Section 37 of chapter 171 of the General Laws, as so appearing, is hereby amended by striking out, in line 5, the word "paragraph" and inserting in place thereof the words:- paragraphs 7A and.

SECTION 6. Section 60 of chapter 183 of the General Laws, as so appearing, is hereby amended by inserting after the word "note", in line 1, the words:- made to finance or refinance the purchase of and.