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Session Law

2007

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Chapter 206 AN ACT PROTECTING AND PRESERVING HOME OWNERSHIP.

Whereas, The deferred operation of this act would tend to defeat its purpose, which is to provide forthwith mortgage protection for existing and new home owners, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.

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. To provide for certain unanticipated obligations of the commonwealth, to provide for an alteration of purpose for current appropriations and to meet certain requirements of law, the sums set forth in this section are hereby appropriated from the General Fund unless specifically designated otherwise in this section for the several purposes and subject to the conditions specified in this section, and subject to the laws regulating the disbursement of public funds for the fiscal year ending June 30, 2008. These sums shall be in addition to any amounts previously appropriated and made available for the purposes of said items.

7006-0011.. For the costs incurred by the division of banks associated with licensure of loan originators pursuant to chapter 255F of the General Laws; provided, that the division may expend revenues in an amount not to exceed $5,000,000 from the revenue received from administrative fees associated with said licensure fees and from civil administrative penalties pursuant to said chapter 255F; provided that, $2,000,000 shall be expended from such revenue as grants for the operation of a pilot program for best lending practices, first-time homeowner counseling for non-traditional loans and 10 or more foreclosure education centers pursuant to section 16 and that the grants shall be awarded through a competitive application process under criteria created by the division and that no funds shall be expended from this item in the AA object class for the compensation of state employees for such program; provided, further, that notwithstanding any general or special law to the contrary, for the purpose of accommodating timing discrepancies between the receipt of revenues and related expenditures, the commissioner may incur expenses and the comptroller may certify for payment the amounts not to exceed the lower of this authorization or the most recent revenue estimate, as reported in the state accounting system....................................................... $5,000,000

SECTION 2. Chapter 6 of the General Laws is hereby amended by inserting after Section 172I the following section:-
Section 172J. Notwithstanding section 172 or any other general or special law to the contrary, the commissioner of the division of banks may obtain all available criminal offender record information and juvenile data as found in the court activity record information from the criminal history systems board of all applicants for licensure pursuant to chapter 255F. Information obtained under this section shall not be disseminated for any purpose other than to provide mortgage protection for home owners.

SECTION 3.
Chapter 183 of the General Laws is hereby amended by inserting after section 6C the following section:-
Section 6D. Every mortgage and assignment of mortgage secured by residential property, as defined in section 1 of chapter 255E, presented for record, in which a mortgage broker, as defined in said section 1 of said chapter 255E, is involved shall contain or have endorsed upon it the name, post office address and license number of the mortgage broker and, if applicable, the mortgage loan originator, as defined in section 1 of chapter 255F, responsible for placing the mortgage loan with the mortgagee. This endorsement, or notation that no mortgage broker or mortgage loan originator was involved in the mortgage, if known, shall be recorded as part of the mortgage or assignment of mortgage. Failure to comply with this section shall not affect the validity of any mortgage or the recording of any mortgage or assignment of mortgage.

SECTION 4. Section 27 of said chapter 183, as appearing in the 2006 Official Edition, is hereby amended by adding the following paragraph:-
The holder of a mortgage of real estate, or the holder’s representatives, shall provide to the mortgagor or the mortgagor’s heirs, successors or assigns a written notice containing an itemized accounting of the disposition of the proceeds arising from a sale under the power of sale including, but not limited to, the sale price, legal fees, auctioneer fees, publication costs and other fees, and any surplus due to the mortgagor, within 60 days after the receipt of such funds provided, that if such sale is subject to further legal proceedings, such accounting shall be stayed until the conclusion of such proceedings.

SECTION 5. Section 63A of said chapter 183, as so appearing, is hereby amended by inserting after the word “interest”, in line 2, the following words:- , change an adjustable or variable rate to a fixed rate.

SECTION 6. Said section 63A of said chapter 183, as so appearing, is hereby further amended by striking out, in line 44, the words “one-half of”.

SECTION 7. Chapter 184 of the General Laws is hereby amended by inserting after section 17B the following section:-
Section 17B1/2. No mortgagee who makes a loan to a first-time home loan borrower, to be secured by a mortgage on owner-occupied, 1 to 4 family residential property in the commonwealth, shall make a subprime loan at a variable or adjustable rate of interest unless the mortgagor affirmatively opts in writing for the variable or adjustable rate subprime loan and receives certification from a counselor with a third-party nonprofit organization that the mortgagor has received counseling in person on the advisability of the loan transaction; provided, further that said third party nonprofit organization shall have been approved by: (1) the United States Department of Housing and Urban Development; (2) a housing financing agency of the commonwealth; (3) the Massachusetts Homeownership Collaborative; (4) or the regulatory agency which has jurisdiction over the mortgagee. The commissioner of the division of banks shall maintain a list of approved counseling programs. At or before closing such a loan, the mortgagee shall obtain evidence that the mortgagor has completed an approved counseling program. If such subprime mortgage loan is made by a mortgagee in violation of this section, the variable or adjustable rate terms of the loan shall not be enforceable and the mortgagee shall only be entitled to collect an interest rate equal to the lesser of the original interest rate, including any discounted rate, or the current adjusted interest rate throughout the remaining term of the loan. The commissioner of banks shall issue directives or guidelines or adopt regulations to administer and carry out this section and to further define the terms used in this section.

SECTION 8. The last sentence of section 13 of chapter 186 of the General Laws, as appearing in the 2006 Official Edition, is hereby amended by adding the following words:- or by foreclosure.

SECTION 9. Said chapter 186, is hereby further amended by inserting after section 13 the following section:-

Section 13A. Upon a foreclosure of residential real property pursuant to chapter 244, a tenant, occupying a dwelling unit under an unexpired term for years or a lease for a definite term in effect at the time of the foreclosure by sale, shall be deemed a tenant at will. Foreclosure shall not affect the tenancy agreement of a tenant whose rental payment is subsidized under state or federal law.

SECTION 10. Chapter 244 of the General Laws is hereby amended by inserting after section 14 the following section:-

Section 14A. The commissioner of the division of banks, hereinafter referred to as the commissioner, shall maintain a foreclosure database that shall include, but not be limited to, foreclosure activity by mortgage lenders, mortgage holders and mortgage servicers, as well as the mortgage brokers and loan originators who placed these mortgage loans in the commonwealth, including information relative to the original mortgagee and any subsequent assignee. Based on the information received, the commissioner shall produce a report, at least annually, to track developments and trends of mortgage foreclosures on residential property in the commonwealth including, but not limited to, an analysis of the pre-foreclosure notices submitted to the commissioner compared to the final foreclosure notices, and any trends or patterns relative to the geographic location of the residential properties and interest rates. The report shall be available to the public upon request, and the commissioner shall make it available in any other manner that he may choose.

SECTION 11. Said chapter 244 is hereby further amended by inserting after section 35 the following section:-

Section 35A. (a) Any mortgagor of residential real property located in the commonwealth consisting of a dwelling house with accommodations for 4 or less separate households and occupied in whole or in part by the mortgagor, shall have a 90 day right to cure a default of a required payment as provided in such residential mortgage or note secured by such residential real property by full payment of all amounts that are due without acceleration of the maturity of the unpaid balance of such mortgage. The right to cure a default of a required payment shall be granted once during any 5 year period, regardless of the mortgage holder.

(b) The mortgagee, or anyone holding thereunder, shall not accelerate maturity of the unpaid balance of such mortgage obligation or otherwise enforce the mortgage because of a default consisting of the mortgagor's failure to make any such payment in subsection (a) by any method authorized by this chapter or any other law until at least 90 days after the date a written notice is given by the mortgagee to the mortgagor.
Said notice shall be deemed to be delivered to the mortgagor when delivered to the mortgagor or when mailed to the mortgagor at the mortgagor’s address last known to the mortgagee or anyone holding thereunder.

(c) The notice required in subsection (b) shall inform the mortgagor of the following:-

(1) the nature of the default claimed on such mortgage of residential real property and of the mortgagor's right to cure the default by paying the sum of money required to cure the default;
(2) the date by which the mortgagor shall cure the default to avoid acceleration, a foreclosure or other action to seize the home, which date shall not be less than 90 days after service of the notice and the name, address and local or toll free telephone number of a person to whom the payment or tender shall be made;
(3) that, if the mortgagor does not cure the default by the date specified, the mortgagee, or anyone holding thereunder, may take steps to terminate the mortgagor's ownership in the property by a foreclosure proceeding or other action to seize the home;
(4) the name and address of the mortgagee, or anyone holding thereunder, and the telephone number of a representative of the mortgagee whom the mortgagor may contact if the mortgagor disagrees with the mortgagee's assertion that a default has occurred or the correctness of the mortgagee's calculation of the amount required to cure the default;
(5) the name of any current and former mortgage broker or mortgage loan originator for such mortgage or note securing the residential property; and
(6) that the mortgagor may be eligible for assistance from the Massachusetts Housing Finance Agency and the division of banks and the local or toll free telephone numbers the mortgagor may call to request this assistance.

(d) To cure a default prior to acceleration under this section, a mortgagor shall not be required to pay any charge, fee, or penalty attributable to the exercise of the right to cure a default. The mortgagor shall pay late fees as allowed pursuant to section 59 of chapter 183 and per-diem interest to cure such default. The mortgagor shall not be liable for any attorneys' fees relating to the mortgagor's default that are incurred by the mortgagee or anyone holding thereunder prior to or during the period set forth in the notice required by this section. The mortgagee, or anyone holding thereunder, may also provide for reinstatement of the note after the 90 day notice to cure has ended.

(e) A copy of the notice required by this section and an affidavit demonstrating compliance with this section shall be filed by the mortgagee, or anyone holding thereunder, in any action or proceeding to foreclose on such residential real property.

(f) A copy of the notice required by this section shall also be filed by the mortgagee, or anyone holding thereunder, with the commissioner of the division of banks. Additionally, if the residential property securing the mortgage loan is sold at a foreclosure sale, the mortgagee, or anyone holding thereunder, shall notify the commissioner of the division of banks, in writing, of the date of the foreclosure sale and the purchase price obtained at the sale.

SECTION 12. Section 2 of chapter 255E of the General Laws, as appearing in the 2006 Official Edition, is hereby amended by striking out, in lines 34 to 39, inclusive, the words “, or to any nonprofit agency or corporation incorporated under the laws of the commonwealth for the purpose of assisting low to moderate income households in the purchase or rehabilitation of family residences of four units or less and which holds tax-exempt status granted under the provisions of Section 501(c)(3) or 501(c)4 of the Internal Revenue Code”.

SECTION 13. Section 8 of said chapter 255E, as so appearing, is hereby amended by striking out the third paragraph and inserting in place thereof the following 8 paragraphs:-

The commissioner shall inspect a licensee’s relevant records and evidence of compliance with the provisions of this chapter or any rule or regulation issued hereunder and with any other law, rule or regulation applicable to the conduct of the business for which it is licensed under this chapter. For the purposes of such inspection, the commissioner or a representative of the commissioner shall have access to the offices and place of business, books, accounts, papers, records and files of all such licensees. The commissioner, and any person designated by him, may require the attendance and testimony of any person whom the commissioner deems necessary relative to the conduct and operation of such business. The total cost for any such inspection, which shall be paid by the licensee within 30 days after the receipt of an invoice therefore, shall be in accordance with fees determined annually by the commissioner of administration pursuant to section 3B of chapter 7, including expenses for necessary travel outside the commonwealth for the purposes of conducting such inspections.

During the course of such inspection, a mortgage lender that has made 50 or more home mortgage loans in the last calendar year shall be examined for its compliance with fair lending laws including, but not limited to, the requirements of the federal Equal Credit Opportunity Act, Home Mortgage Disclosure Act, and the Predatory Home Loan Practices Act. Such examination shall also include an evaluation of such mortgage lender’s: (a) origination of loans and other efforts to assist low and moderate income residents, without distinction, to be able to acquire or to remain in affordable housing at rates and terms that are reasonable considering the lender's history with similarly situated borrowers, the availability of mortgage loan products suitable for such borrowers, and consistency with safe and sound business practices; (b) origination of loans and other efforts to assist low and moderate income residents’ ability to acquire or to remain in affordable housing; (c) origination of loans that show an undue concentration and a systematic pattern of lending resulting in the loss of affordable housing units; (d) efforts working with delinquent residential mortgage customers to facilitate a resolution of the delinquency; and (e) other efforts, including public notice of the scheduling of examinations and the right of interested parties to submit written comments relative to any such examination to the commissioner, as, in the judgment of the commissioner, reasonably bear upon the extent to which a mortgage lender is complying with the requirements of fair lending laws and helping to meet the mortgage loan credit needs of communities in the commonwealth.

Upon the completion of such examination, the commissioner shall prepare a written evaluation of such lender’s rec
ord of performance, which shall be open to public inspection upon request, and said written evaluation shall include: (a) the assessment factors utilized to determine the mortgage lender’s descriptive rating; (b) the commissioner’s conclusions with respect to each such assessment factor; (c) a discussion of the facts supporting such conclusions; and (d) the mortgage lender’s descriptive rating and the basis therefor.

Based upon such examination, the mortgage lender shall be assigned 1 of the following descriptive ratings: (a) outstanding record of performance in meeting the mortgage loan credit needs of communities in the commonwealth; (b) high satisfactory record of performance in meeting the mortgage loan credit needs of communities in the commonwealth; (c) satisfactory record of performance in meeting the mortgage loan credit needs of communities in the commonwealth; (d) needs to improve record of performance in meeting the mortgage loan credit needs of communities in the commonwealth; or (e) substantial noncompliance in meeting the mortgage loan credit needs of communities in the commonwealth.

Notwithstanding the foregoing, the commissioner may establish an alternative examination procedure for any mortgage lender, which, as of the most recent examination, has been assigned a rating of outstanding or high satisfactory for its record of performance in meeting its community mortgage loan credit needs.
In considering an application from a licensed mortgage lender for a renewal of a license issued pursuant to this chapter, the commissioner shall consider, but not be limited to, the record of performance of any such lender in accordance with this section. Said record of performance may provide the basis for the denial of any such renewal application.

For the purposes of this section, no mortgage lender may include a loan origination or loan purchase for consideration as part of its examination under this section if another mortgage lender claims the same loan origination or purchase for its review under this section or under section 14 of chapter 167.
The commissioner shall adopt regulations implementing the requirements of this section.

SECTION 14. Section 10 of said chapter 255E, as so appearing, is hereby amended by striking out the first sentence and inserting in place thereof the following sentence:- Whoever violates section 2 or any rule or regulation promulgated thereunder shall be punished by a fine of not more than $2,000 or by imprisonment in the house of correction for not more than 2 ½ years or by imprisonment in state prison for not more than 5 years, or both such fine and imprisonment.
SECTION 15. The General Laws are hereby amended by inserting after chapter 255E the following chapter:-

CHAPTER 255F.
LICENSING OF MORTGAGE LOAN ORIGINATORS.

Section 1. As used in this chapter, the following words shall, unless the context otherwise requires, have the following meanings:-

“Commissioner”, the commissioner of banks.
“Division”, the division of banks.
“Entity”, a person or entity that is a licensee under chapter 255E, as regulated by the division.
“Mortgage loan originator”, a natural person who:- (a) is employed by or associated with 1 and not more than 1 entity; and (b) negotiates, solicits, arranges, provides or accepts residential mortgage loan applications, or assists consumers in completing such applications, except that employees whose responsibilities are limited to clerical and administrative tasks and who do not solicit borrowers, accept applications or negotiate the terms of residential mortgage loans on behalf of the employer shall not be considered mortgage loan originators and do not require licenses.
“Mortgage loan”, a loan or an extension of credit including, but not limited to, an extension of credit pursuant to a contract or an assigned contract for the sale of goods or services, made to a natural person, the proceeds of which are to be used primarily for personal, family or household purposes, and which is secured wholly or partially by a mortgage on residential property.
“Residential property”, real property located in the commonwealth having thereon a dwelling house with accommodations for 4 or less separate households and occupied, or to be occupied, in whole or in part by the obligor on the mortgage debt.

Section 2. No natural person shall act as a mortgage loan originator unless such person has first obtained a mortgage loan originator license from the commissioner. An entity shall not knowingly employ or retain a mortgage loan originator unless the mortgage loan originator is licensed under this chapter.

Section 3. (a) The application for a mortgage loan originator license shall be in the form prescribed by the commissioner and shall contain the name, address and license number of the entity with whom a mortgage loan originator is or will be employed or associated with and other information as the commissioner may require, including evidence of compliance with subsection (b). The application shall also include a description of the activities of the applicant, in such detail and for such periods as the commissioner may require, and such further information as the commissioner may require. The commissioner may obtain, pursuant to section 172J of chapter 6 all available criminal offender record information from the criminal history systems board on an applicant for a mortgage loan originator license by means of fingerprint checks, and from the Federal Bureau of Investigation for a national criminal history records check. The information obtained thereby may be used by the commissioner to determine the applicant’s eligibility for licensing under this chapter. Receipt of criminal history record information by a private entity is prohibited. Each application for a license shall be accompanied by an investigation fee. Investigation and license fees shall be determined annually by the secretary of administration under section 3B of chapter 7, but such total annual fees shall be not less than $500; provided, that such investigation and license fees shall not apply to any community development corporation as defined in section 1 of chapter 40F and organized under the General Laws.

(b) An applicant shall have completed a residential mortgage lending course, approved by the division, not later than the 2 year period immediately preceding the date of the application.

Section 4. If the commissioner finds that the financial responsibility, character, reputation, integrity and general fitness of the applicant is such as to warrant belief that the applicant will act honestly, fairly, soundly and efficiently in the public interest, consistent with the purposes of this chapter, the commissioner shall issue the applicant a license to engage in the business of a mortgage loan originator upon payment of the required fees. If the commissioner shall not so find, or if the applicant’s criminal history demonstrates any felony convictions or other convictions or admissions to sufficient facts involving fraud or if the applicant has had any adverse civil judgments involving fraudulent dealings, the commissioner shall not issue a license and shall notify the applicant of the denial. Within 20 days thereafter, the commissioner shall enter upon the division’s records a written decision and findings containing the reasons supporting the denial and shall forthwith give written notice thereof by registered mail to the applicant. Within 30 days after receipt of such notice, the applicant may seek judicial review of the denial in accordance with section 14 of chapter 30A.

Section 5. A mortgage loan originator may transact business only for an employing entity. Each original license issued to a mortgage loan originator must be provided to and maintained by the employing entity at the entity’s main office. If the employment of a mortgage loan originator is terminated, the employing entity shall return the mortgage loan originator’s license to the division within 5 business days after termination. The reason for termination shall be given in a format determined by rules and regulations of the commissioner. For a period of 1 year after the termination of employment, the mortgage loan originator may request the re-assignment of the license to another entity by submitting an application to the division, along with a fee established by the division by rule. The return of the license of any mortgage loan originator to the division that is not re-assigned to another entity terminates the right of the mortgage loan originator to engage in any residential mortgage loan origination activity until division procedures have been followed to reactivate such license. The license of any mortgage loan originator that has been returned to the division and not re-assigned to another entity within 1 year of termination of employment shall be cancelled.
Each license shall state the name of the mortgage loan originator licensee and the name and main office address of the entity employing such mortgage loan originator.

The commissioner may establish an expedited re-assignment process of a mortgage loan originator’s license to another entity if the reason for such re-assignment is directly related to increased responsibilities or compensation.

The commissioner may adopt, amend or repeal rules and regulations to aid in the administration and enforcement of this chapter.

Section 6. Each application for a license shall be accompanied by an investigation fee. Investigation and license fees shall be determined annually by the secretary of administration under section 3B of chapter 7 provided that such total annual fees shall be not less than $500; provided further, that such investigation and license fees shall not apply to any community development corporation as defined in section 1 of chapter 40F and organized under the General Laws. The license of a mortgage loan originator shall expire annually. Each licensee, shall annually, on or before a date to be determined by the commissioner, submit a license renewal application. The license renewal application shall be on a form prescribed by the commissioner, signed under the pains and penalties of perjury, containing such information as the commissioner may require.

As determined by the commissioner, licensees shall complete at least 8 hours of residential mortgage lending continuing education courses every 3 years. Failure of the licensee to satisfy the continuing education requirement shall render the mortgage loan originator ineligible for renewal and such license shall be deemed to be inactive. A mortgage loan originator who neglects to file an application or fails to amend the same within 15 days of notice from the commissioner directing that the application be amended shall be deemed inactive. Inactive mortgage loan originators shall be prohibited from engaging in business as a mortgage loan originator.

Section 7. The commissioner may suspend, revoke or refuse to renew any license issued pursuant to this chapter if the commissioner finds that:- (1) the licensee has violated this chapter or any rule or regulation adopted hereunder, or any other law applicable to the conduct of its business; (2) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner in refusing to issue such license; or (3) the licensee has committed any fraud, misappropriated funds or misrepresented any of the material particulars of a mortgage loan transaction.
Except as provided in section 8, no license shall be revoked or suspended except after notice and a hearing thereon pursuant to chapter 30A. Any order issued pursuant to this section shall be subject to judicial review in accordance with section 14 of said chapter 30A.

A licensee may surrender his license by delivering to the commissioner written notice that he hereby surrenders such license, but such surrender shall not affect the civil or criminal liability of the licensee for acts committed before such surrender.

Section 8. (a) If the commissioner determines, after giving notice of and opportunity for a hearing, that a licensee has engaged in an act or practice constituting a violation of this chapter or a rule, regulation or order promulgated hereunder, the commissioner may order such licensee to cease and desist from such unlawful act or practice and take such affirmative action as in the commissioner’s judgment will affect the purposes of this chapter.

(b) If the commissioner makes written findings of fact that the public interest will be irreparably harmed by delay in issuing an order under subsection (a), the commissioner may issue a temporary cease and desist order. Upon the entry of a temporary cease and desist order, the commissioner shall promptly notify, in writing, the licensee and the employing entity affected thereby that such order has been so entered, the reasons therefore, and that, within 20 days after the receipt of a written request from such licensee, the matter will be scheduled for hearing to determine whether such temporary order shall become permanent and final. If no such hearing is requested and none is ordered by the commissioner, the order shall remain in effect until it is modified or vacated by the commissioner. If a hearing is requested or ordered, the commissioner, after giving notice of and opportunity for a hearing to the licensee and the employing entity subject to said order shall, by written findings of fact and conclusions of law, vacate, modify or make permanent the order.

(c) No order issued pursuant to this section, except an order issued pursuant to subsection (b), may be entered without prior notice of and opportunity for a hearing. The commissioner may vacate or modify an order under this section upon finding that the conditions which required such an order have changed and that it is in the public interest to so vacate or modify.

Any order issued pursuant to this section shall be subject to judicial review in accordance with section 14 of chapter 30A.

Section 9. The commissioner may enforce this chapter, or restrain any violations thereof, by filing a civil action in any court of competent jurisdiction.
Section 10. Whoever violates section 2 or any rule or regulation promulgated thereunder shall be punished by a fine of not more than $2,000 or by imprisonment in the house of correction for not more than 2 ½ or by imprisonment in state prison for not more than 5 years, or by both such fine and imprisonment. Each day such violation occurs or continues shall be deemed a separate offense. The penalty provision of this section shall be in addition to any other law applicable to a licensee or other person for violating section 2 or any rule or regulation made thereunder.

Section 11. (a) Whenever the commissioner finds that any licensee has violated this chapter or any rule or regulation promulgated thereunder, or any other law of the commonwealth applicable to the conduct of a mortgage loan originator on residential property in the commonwealth, the commissioner may, by order, in addition to any other action authorized under this chapter or any rule or regulation made thereunder, impose a penalty upon the person which shall not exceed $5,000 for each violation up to a maximum of $100,000 for such violation plus the costs of investigation. The commissioner may impose a penalty which shall not exceed $5,000 for each violation of this chapter, or any rule or regulation promulgated hereunder, by a person other than a licensee, plus the costs of investigation.

(b) Nothing in this section shall limit the right of any individual or entity who has been injured as a result of any violation of this chapter by a licensee, or any person other than a licensee, to bring an action to recover damages or restitution in a court of competent jurisdiction.

(c) Any findings or orders issued by the commissioner pursuant to this section shall be subject to review as provided in chapter 30A.

Section 12. (a) Whenever the commissioner determines that any person has, directly or indirectly, violated this chapter or any rule or regulation promulgated hereunder, applicable to the conduct of a mortgage loan originator on residential property in the commonwealth, any order issued by the commissioner pursuant to this chapter or any written agreement entered between the licensee and the commissioner, the commissioner may serve upon that person a written notice of intention:-

(1) to prohibit the person from performing in the capacity of a principal employee on behalf of any licensee for a period of time that the commissioner considers necessary;

(2) to prohibit the person from applying for or obtaining a license from the commissioner for a period up to 36 months following the effective date of an order issued under subsection (b) or (c); or

(3) to prohibit the person from any further participation, in any manner, as a mortgage loan originator in the commonwealth or to prohibit the person from being employed by, as agent of, or operating on behalf of a licensee under this chapter or any other business which requires a license from the commissioner.

(b) A written notice issued under subsection (a) shall contain a written statement of the facts that support the prohibition and shall give notice of an opportunity for a hearing to be held thereon. The hearing shall be fixed for a date not more than 30 days after the date of service upon the commissioner of the request for a hearing. If the person fails to submit a request for a hearing within 20 days of service of notice under subsection (a), or otherwise fails to appear in person or by a duly authorized representative, the party shall be considered to have consented to the issuance of an order of prohibition in accordance with the notice.

(c) In the event that consent is granted by operation of subsection (b), or if after a hearing the commissioner finds that any of the grounds specified in the notice have been established, the commissioner may issue an order of prohibition in accordance with subsection (a) as the commissioner finds appropriate.

(d) An order issued under subsection (b) or (c) shall be effective upon service upon the person. The commissioner shall also serve a copy of the order upon the licensee of which the person is an employee or on whose behalf the person is performing. The order shall remain in effect and enforceable until it is modified, terminated, suspended or set aside by the commissioner or a court of competent jurisdiction.

(e) Except as consented to in writing by the commissioner, any person who, pursuant to an order issued under subsection (b) or (c), has been prohibited from participating in whole or in part as a mortgage loan originator may not, while the order is in effect, continue or commence to perform in the capacity of a mortgage loan originator, or otherwise participate in any manner, if so prohibited by order of the commissioner, in the conduct of the affairs of:-

(1) any licensee under this chapter;
(2) any other business which requires a license from the commissioner; or
(3) any bank as defined under section 1 of chapter 167 or any subsidiary thereof.

Section 13. The commissioner may suspend, revoke or refuse to renew the license of the entity employing any licensed mortgage originator if the commissioner finds that: (a) the entity knew or should have known that the mortgage loan originator violated this chapter or any rule or regulation promulgated hereunder, or any other law applicable to the conduct of its business; (b) the entity knew of any fact or condition to exist which, if it had existed at the time of the original application for such license, would have warranted the commissioner in refusing to issue such license; (c) the mortgage loan originator committed any fraud, misappropriated funds or misrepresented any of the material particulars of a mortgage loan transaction approved by the entity; or (d) The entity has failed to comply with the reporting requirements set forth in section 15.

Section 14. Each licensee shall, when directed by the commissioner, permit the commissioner or a duly authorized representative to inspect its relevant records and evidence of compliance with this chapter or any rule or regulation issued hereunder and with any other law, rule and regulation applicable to the conduct of a mortgage loan originator licensed under this chapter.

Section 15. An entity employing any licensed mortgage originator shall annually report the following to the commissioner of banks:- (1) the total number of loans originated by all such licensees; (2) the geographic distribution of such loans; (3) the number of defaults of such loans; and (4) any such other information the commissioner may require consistent with this chapter.

SECTION 16. The division of banks, in consultation with the city of Boston, the department of housing and community development, the Massachusetts Housing Finance Agency and the Massachusetts Bankers Association, shall develop a pilot program to identify best practices for financial institutions to provide first time homebuyer loans, to provide for foreclosure prevention for at-risk homeowners, and to assist approved counseling programs with in-person counseling pursuant to section 17B1/2 of chapter 184 of the General Laws, as provided for in item 7006-0011 in section 1.
Such pilot program, shall also provide for best lending and borrowing practices for consumers and mortgagees in cities or towns with: (1) housing units within low or moderate income census tracts as defined by the United States census bureau; or (2) high foreclosure activity as measured by residential foreclosure petitions filed over the total number of 1 to 4 family housing units within such city or town. Such guidelines and counseling shall provide for best practices that: (a) attain a minimal risk of high cost lending; (b) have a demonstrated ability to avoid foreclosures; (c) have a demonstrated record of pricing that ensures uniformity of lending; (d) avoid a disparity of pricing in low and moderate income census tracts; and (e) maintain foreclosure prevention practices that meet or exceed standards met by government sponsored enterprises.

Such pilot program shall also provide for foreclosure training to 10 or more foreclosure education centers for counseling and assistance to owner-occupied 1 to 4 family dwellings in such geographic areas.

On or before December 31, 2008, the division of banks shall report the results of such pilot program to the general court.

SECTION 17. Notwithstanding any general or special law to the contrary, the division of banks shall open an investigation and study relative to a residential mortgage lending course examination process pursuant to subsection (b) of section 3 of chapter 255F of the General Laws. The division shall report to the general court the results of its investigation and study and its recommendations by filing the same with the clerks of the house of representatives and the senate, who shall forward the same to the chairmen of the joint committees on financial services and housing on or before December 1, 2008.
The commissioner of the division of banks shall adopt rules and regulations to produce an examination to be administered to mortgage loan originators upon completion of a residential mortgage lending course as provided under said chapter 255F. Such rules or regulations shall require that, after December 1, 2009, the commissioner shall administer such examination in the manner he deems appropriate for any applicant for a mortgage loan originator license who shall first pass such examination to be eligible to apply for a license under said chapter 255F.

SECTION 18. The commissioner of the division of banks shall adopt the initial rules and regulations required under section 17 not later than December 1, 2009.

SECTION 19. A natural person who meets the definition of a mortgage loan originator under section 1 of chapter 255F of the General Laws before the effective date of this act may obtain a mortgage loan originator license from the commissioner of banks pursuant to said chapter 255F within 180 days after said effective date, notwithstanding the requirements of subsection (b) of section 3 of said chapter 255F, if he submits an application therefor and otherwise complies with the requirements of said chapter 255F.

SECTION 20. Section 7 shall take effect on January 31, 2008.

SECTION 21. Section 11 shall take effect on May 1, 2008 and apply to all mortgages of residential real property located in the commonwealth consisting of a dwelling house with accommodations for 4 or less separate households and occupied in whole or in part by the mortgagor and which secures a loan before, on or after the effective date of this act. Said section 11 shall not apply to such mortgages accelerated or whose statutory condition has been voided under the terms of the mortgage to secure the note, prior to the effective date of this act.

SECTION 22. Section 15 shall take effect on July 1, 2008.

Approved November 29, 2007.

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