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. Chapter 167E of the General Laws is hereby amended by striking out section 3, as appearing in the 1992 Official Edition, and inserting in place thereof the following section:-

Section 3. 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 installment payments of principal or interest, or both, that will not amortize the outstanding principal amount in full by the maturity of such note; provided, however, that if the term of mortgage securing the note is for a period longer than such note and such loan is secured by a first lien on a dwelling house in the commonwealth of four or fewer separate households occupied or to be occupied in whole or in part by the mortgagor, such loan shall be subject to the conditions and restrictions imposed under the provisions of section sixty of chapter one hundred and eighty-three.

The provisions of this section shall apply to a loan made for personal, family or household purposes.

SECTION 2. Section 60 of chapter 183 of the General Laws, as so appearing, is hereby amended by striking out the first two paragraphs and inserting in place thereof the following three paragraphs:-

Whenever any note made to finance or refinance the purchase of and secured by a first lien on a dwelling house in the commonwealth of four or fewer separate households occupied or to be occupied in whole or in part by the mortgagor provides for installment payments of principal or interest or both that will not amortize the outstanding principal amount in full by the maturity of such note and the term of the mortgage securing the note is for a period longer than such note, such note and its disposition at maturity shall be subject to automatic renewal or extension of the note at the option of the mortgagor and such conditions and restrictions imposed by the commissioner. Such conditions and restrictions shall include, but not be limited to, the following: the minimum term of the note; the method by which the rate of interest on a renewed or extended note may be assigned; the maximum increase in the rate of interest at renewal or extension of note; provisions for decreases in the rate of interest at renewal or extension of the note as may be warranted by market conditions; requirements for advance notification and explanation of adjustment of the rate of interest in connection with renewing or extending the note, provided that such notification and explanation shall occur no less than thirty days prior to the rate adjustment.

Notwithstanding any provision of 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.

The provisions of this section shall apply to a note evidencing a loan given for personal, family or household purposes.