AN ACT RELATIVE TO CERTAIN SHORT TERM MORTGAGE LOANS.
Be it enacted by the Senate and House of Representatives
in General Court assembled, and by the authority of the same,
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
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.