Amendment ID: S2625-251-R1

Redraft Amendment 251

Mortgage Licensing Exemptions for Certain Nonprofits

Messrs. Cyr, Eldridge and Welch move to amend the bill by adding the following sections:

SECTION XX. Section 1 of chapter 255E of the General Laws as appearing in the 2016 Official Edition is hereby amended by inserting, after the word “meanings:-” in line 2, the following definition:-

“Bona fide nonprofit affordable homeownership organization”, a Massachusetts nonprofit corporation with a primary purpose of helping qualified low-income individuals build, repair and purchase affordable housing and must meet the definition of   “Bona fide nonprofit organization” set forth in federal Regulation H,SA.F.E. Mortgage Licensing Act –State Compliance and Bureau Registration System, 12 CFR Part 1008.103(e)(7)(ii).;

and after the word “banks” in line 3, the following definition:-

“Instrumentality created by the United States or any state", a Federal, state,  municipal government, or quasi-government entity; or  a nonprofit agency or corporation incorporated under the laws of the Commonwealth which has a tax exempt status granted under the provisions of Section 501(c)(3) of the Internal Revenue Code, which exclusively makes or issues commitments for mortgage loans on residential property to be financed with public funds, or negotiates, places, assists in placement of, finds, or offers to negotiate, place, assist in placement of, or find mortgage loans on residential property to be financed with public funds only under a contract with a federal, state, or municipal government, any instrumentality thereof or any quasi-government entity as determined by the Commissioner. The making of a mortgage loan includes being named as the lender or mortgagee on the note, mortgage, or other loan documents.

SECTION XX. Section 2 of chapter 255E of the General Laws as so appearing is hereby amended by adding the following paragraphs:-

The commissioner may make a determination that a bona fide nonprofit affordable homeownership organization is exempt from the provisions of this chapter upon application for an exemption by such organization.  Such application shall be approved upon the commissioner’s determination that the organization satisfies the following criteria:

(a) The organization is a Massachusetts nonprofit corporation with a primary purpose of helping qualified low-income individuals build, repair and purchase affordable housing;

(b) The organization is exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code;

(c) The organization does not charge loan origination fees;

(d) The organization does not provide residential mortgage loans which do not fully amortize over the term of the loans;

(e) The organization does not compensate any employees based on the number and/or size of mortgage loans originated by the employee, or otherwise incentivize any employees to act other than in the best interests of the borrower;

(f) The organization provides mortgage products that meet the Consumer Financial Protection Bureau's (CFPB's) Ability-to-Repay (ATR) rule and its Qualified Mortgage (QM) standards; and

(g) The organization must determine that a borrower has a reasonable ability to repay a mortgage before consummation. A borrower’s debt-to-income ratio must not exceed 43%.

The division of banks may periodically monitor an exempted bona fide nonprofit affordable homeownership organization and a nonprofit entity that is an instrumentality created by the United States or any state under section 2 of chapter 255F and examine its books and activities to confirm it remains in compliance with the provisions of this chapter.

The commissioner may revoke a bona fide nonprofit affordable homeownership organization’s exempt status if the commissioner determines it no longer meets the criteria of this section.

SECTION XX.  Subsection (b) of section 2 of Chapter 255F of the General Laws as appearing in the 2016 Official Edition is hereby amended by striking out, in line 30, the word “and”, and inserting in place thereof the following:-

; (vii) any person who otherwise meets the definition of a mortgage loan originator, as defined in section 1 of this chapter, but who is employed by an organization determined by the commissioner to be a bona fide nonprofit affordable homeownership organization pursuant to section 2 of chapter 255E; (viii) any person who otherwise meets the definition of a mortgage loan originator, as defined in section 1 of this chapter, but who is employed by, or is operating on behalf of, an instrumentality created by the United States or any state as defined in section 1 of chapter 255E; and (ix) any person solely involved in extensions of credit relating to timeshare plans, as that term is defined in 11 U.S.C. section 101(53D).