Massachusetts Predatory Home Loan Practices Act and Other Amendments to Massachusetts Law

Abstract

In August 2004, Massachusetts enacted the Predatory Home Loan Practices Act, replacing previous regulations applicable to high-cost home mortgages. With poorly defined provisions and indeterminate assignee liability, the Act follows in the footsteps of the ill-conceived anti-predatory lending laws in Georgia and New Jersey, which upended the secondary mortgage markets in those states. Although it is too soon to tell whether the Massachusetts Act will prompt a similar response, the Act will certainly have a major impact on the structured finance industry. The Act significantly expands the list of penalty provisions and alters the scope of several substantive prohibitions contained in previous regulations, including the limitations on lending without regard to repayment ability, financing points and fees, prepayment penalties, modification and deferral fees, and mandatory arbitration clauses. Any person who purchases or is otherwise assigned a Massachusetts high-cost home mortgage loan will be subject to this legislation.