Section 32.34 - Prohibited Acts or Practices in Connection with High Cost Mortgages(1) Prohibited Acts or Practices pursuant to 12 CFR 1026.34 are prohibited under 209 CMR 32.34.(2) It is an unfair act or practice for a creditor to engage in any of the following for any transaction subject to 209 CMR 32.32: (a) Packing high cost home loans; that is, the practice of selling credit life, accident and health, disability or unemployment insurance products or unrelated goods or services in conjunction with a high cost home loan without the informed consent of the borrower under circumstances where: 1. the creditor solicits the sale of such insurance, goods or services;2. the creditor receives direct or indirect compensation for the sale of such insurance, goods or services; and3. the charges for such insurance, goods or services are prepaid with the proceeds of the loan and financed as part of the principal amount of the loan. Provided, however, it shall not constitute the practice of "packing" if the creditor, at least three business days before the loan is closed, makes a separate oral and a separate clear and conspicuous written disclosure in at least 12 point type to the borrower containing the following information: the cost of the credit insurance or other goods and services; the fact that the insurance, goods, or services will be prepaid and financed at the interest rate provided for in the loan; and that the purchase of such insurance, goods or services is not required to obtain the mortgage loan; provided further, that insurance premiums shall not be considered financed as part of the loan transaction if insurance premiums are calculated, earned and paid on a monthly or other regular, periodic basis.
In addition, the written disclosure shall contain a signed and dated acknowledgment by the obligor(s) that the oral disclosure was made and a signed and dated acknowledgment by the creditor that the oral disclosure was made. In addition to the disclosures required under 209 CMR 32.34(2)(b), a creditor shall comply with the requirements of 209 CMR 52.02(1): Written Disclosures and (3): Copy of the Credit Insurance Application as well as 209 CMR 52.03: Readability of the Required Disclosures for credit life insurance or credit accident and health insurance.
(b)Advertising. Advertising that refinancing pre existing debt with a high cost home loan will reduce a borrower's aggregate monthly debt payment without also disclosing, if such are likely the case, that the high cost home loan will increase both: 1. a borrower's aggregate number of monthly debt payments; and2. the aggregate amount paid by a borrower over the term of the high cost mortgage loan.(c)Unconscionable Rates and Terms. 1. Making a high cost home loan with rates or fees that violate 940 CMR 8.06: Prohibited Practices, if applicable, or otherwise charge interest rates or fees in a high cost loan transaction that significantly deviate from industry standards or that are otherwise unconscionable.2. It shall be the creditor's burden to demonstrate that interest rates or fees charged are based upon generally accepted credit worthiness, sound underwriting and other risk related standards or otherwise conform to 209 CMR 32.34(2)(c) l.(d)Unreasonable Charges. Making high cost home loans in which the creditor charges and retains fees paid by the borrower: 1. for services that are not actually performed, or2. for which the fees bear no reasonable relationship to the value of the services actually performed, or3. which are otherwise unconscionable.(e)Oppressive Mandatory Arbitration Clause or Waiver of Participation in Class Action Suits. Requiring a borrower, without regard to whether a borrower is acting individually or on behalf of others similarly situated, to assert any claim or defense in a forum that is less convenient, more costly, or more dilatory for the resolution of a dispute than a judicial forum established in the Commonwealth where the borrower may otherwise properly bring a claim or defense or limits in any way any claim or defense the borrower may have.(f)Failure to Report for Credit Histories. Failing to report both the favorable and unfavorable payment history of the borrower to a nationally recognized consumer credit bureau at least annually if the creditor regularly reports information to a credit bureau.(g)Single Premium Credit Insurance. Notwithstanding the provisions of 209 CMR 32.34(2)(a), making a high cost home loan which contains single premium credit insurance, including credit life, debt cancellation, and debt suspension.Amended by Mass Register Issue 1277, eff. 1/2/2015.Amended by Mass Register Issue 1320, eff. 8/26/2016.