Source: https://www.mass.gov/regulations/209-CMR-1800-conduct-of-the-business-of-debt-collectors-and-loan-servicers
Timestamp: 2019-04-18 16:21:49+00:00

Document:
(1) Purpose. The purpose of 209 CMR 18.00 is to establish standards, by defining unfair or deceptive acts or practices, for the collection of debts from persons within the Commonwealth of Massachusetts by debt collectors and third party loan servicers, and to establish procedures and requirements for the licensing and supervision of debt collectors and the registration and supervision of third party loan servicers.
(a) Persons exempt from the licensing and registration provisions pursuant to M.G. L. c. 93, § 24A(c) who conduct the business of a debt collector or third party loan servicer as defined in 209 CMR 18.02, shall be subject to the provisions governing fair debt collection and loan servicing practices at 209 CMR 18.13 through 18.21A, and shall not be subject to the provisions of 209 CMR 18.03 through 209 CMR 18.12.
(b) Any person licensed as a debt collector shall not be required to register as a third party loan servicer. However, any debt collector who engages in third party loan servicing activities must comply with all pertinent state and federal laws and regulations governing third party loan servicers when acting in that capacity, including but not limited to the provisions of 209 CMR 18.21 and 18.21A.(c) Nothing contained in 209 CMR 18.00 shall limit the ability of the Commissioner to consider other information in determining whether or not to approve an application, or to require information in addition to that required by the application form provided to the applicant.
Applicant means any debt collector who is required to be licensed under the provisions of M.G.L. c. 93, § 24A. The term shall include partners or members, if the applicant is a partnership or association, and officers, directors and principal employees, if the applicant is a corporation.
Commissioner means the Commissioner of Banks.
Communication or communicating means conveying information regarding a debt directly or indirectly to any person through any medium.
Consumer means any natural person obligated or allegedly obligated to pay any debt.
Consumer reporting agency means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties under M.G.L. c. 93, §§ 50 through 68.
Creditor means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.
Debt means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not the obligation has been reduced to judgment.
(h) an agent or independent contractor employed for the purpose of collecting a charge or bill owed by a tenant to a landlord or owed by a customer to a corporation subject to the supervision of the Department of Telecommunications and Energy or the Division of Insurance insofar as the person collects charges or bills only for the landlord or supervised corporations.
Licensee means any person who is licensed by the Commissioner as a debt collector under G.L. c. 93, §§ 24 through 28 and 209 CMR 18.00.
Location information means a consumer's place of abode and his telephone number at such place, or his place of employment.
(h) any other intangible asset, as may be determined by the Commissioner.
Person means a natural person or an organization, including a corporation, limited or general partnership, limited liability partnership, limited liability company, joint stock company, trust, business trust, profit and not-for-profit incorporated or unincorporated associations, and any other entity authorized under the laws of any state of the United States or any country.
Principal employee means any person with the power to exercise, directly or indirectly, managerial, supervisory, or policy-making authority or such other controlling influence over the management, policies, or operation of the Licensee.
Register means filing a notice with the Commissioner on a form prescribed by the Commissioner that notifies the Commissioner of the intent to engage in the activities of a third party loan servicer in this state and the payment of a fee required under G.L. c. 93, s. 24C, along with the other documents, proofs, and fees required by the Commissioner.
Servicing means receiving a scheduled periodic payment from a consumer pursuant to the terms of a loan, including amounts for escrow accounts, and making the payments to the owner of the loan or other third party of principal and interest and other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the servicing loan document or servicing contract. In the case of a home equity conversion mortgage or reverse mortgage, servicing includes making payments to the borrower.
Third party loan servicer means a person who uses an instrumentality of interstate commerce or the mails in any business the principal purpose of which is servicing a loan directly or indirectly, owed or due or asserted to be owed or due another.
(1) Application. Each Applicant for a license as a debt collector shall submit a written application on a form prescribed by the Commissioner, signed under the pains and penalties of perjury, containing such information as the Commissioner may from time to time require.
(a) Financial Responsibility. An Applicant for a debt collector license shall demonstrate and provide the Commissioner with evidence of its financial responsibility and submit a sworn statement which states that the Applicant meets the foregoing requirement. For the purposes of 209 CMR 18.03(2)(a), an Applicant shall demonstrate and maintain, a positive net worth. A licensee’s failure to demonstrate a positive net worth at any time in which the debt collector license is in effect may constitute evidence that the licensee has failed to satisfy the financial responsibility requirements of 209 CMR 18.03(2)(a). The Commissioner, in his or her discretion, may require a licensee to furnish a bond, in addition to the requirements pursuant to M.G.L. c. 93, §§ 24A, 25 and 26, in a sum based upon the licensee’s volume of collections, as determined by the Commissioner. The bond shall run to the state treasurer and be executed by the licensee and by a surety company licensed by the Massachusetts Division of Insurance.
1. Contents. The financial statements required by 209 CMR 18.00 shall include, but are not limited to, a Balance Sheet, Income Statement, Statement of Cash Flows, Statement of Stockholder’s Equity, and all relevant notes thereto.
2. Initial Application. An Applicant for a debt collector license shall submit financial statements audited by an independent certified public accountant. If audited financial statements of an applicant were not prepared, the Applicant shall submit financial statements reviewed by an independent certified public accountant. If an Applicant has not conducted any business, it shall submit an initial Balance Sheet which has been audited or reviewed by an independent certified public accountant. At the discretion of the Commissioner and under such conditions as he or she may impose, an Applicant’s unaudited financial statements may be submitted with audited consolidated financial statements of its parent.
3. Renewal Applications. Each license shall expire annually on a date determined by the Commissioner. An Applicant for license renewal shall submit financial statements which have been either audited or reviewed by an independent Certified Public Accountant within 90 days of the close of its fiscal year. At the discretion of the Commissioner and under such conditions as he may impose, a Licensee may submit unaudited entity-only financial statements with its parent’s audited consolidated financial statements.
4. Audit Scope. An applicant's audited financial statements shall be performed in accordance with generally accepted auditing standards and reviewed financial statements shall be performed in accordance with Statements of Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants.
(c) Character and Fitness. An Applicant shall submit information demonstrating that the Applicant possesses the character, reputation, integrity and fitness to engage in the business of a debt collector in an honest, fair, sound, and efficient manner.
(d) Other Information. An Applicant shall submit such other information as the Commissioner may deem necessary to properly evaluate an application.
(1) A license to engage in the business of a debt collector will be issued to an Applicant if the Commissioner, upon review of the application and all other relevant information, determines that all of the requirements of M.G.L. c. 93, §§ 24 through 28 and 209 CMR 18.03 have been met.
(j) failed to respond to a written notification of a deficiency in the application, or in any other relevant information required by the Commissioner to be submitted with the application, within thirty (30) days of the date of such written notice from the Division.
(3) An Applicant whose application has been denied under 209 CMR 18.04(2) may appeal the Commissioner’s action under G.L. c. 93, § 24G.
(4) Waiver of Prohibition on Reapplication for a License. Notwithstanding the provisions of 18.04(2)(i), the Commissioner may consider an application for a debt collector license within 24 months of the date of an order from the Commissioner denying, suspending, or revoking that person’s license as a debt collector, if the Commissioner finds sufficient evidence to support a belief that the condition(s) which resulted in an order denying, suspending, or revoking the license of the Applicant or licensee are not likely to recur and that all of the requirements of M.G.L. c. 93 §§24 through 28, inclusive, and 209 CMR 18.00 have been satisfied.
(1) Registration. Each Applicant for registration as a third party loan servicer shall submit a written registration on a form prescribed by the Commissioner, signed under the pains and penalties of perjury, containing such information as the Commissioner may from time to time require including, but not limited to, a description of the activities of the Applicant.
(2) Renewal of Registration. Each registration shall expire annually on a date determined by the Commissioner. An Applicant for a renewal of its registration shall submit such information as the Commissioner may deem necessary.
(1) A registration as a third party loan servicer will be issued to an Applicant if the Commissioner, upon review of the registration and all other relevant information, determines that all of the requirements of M.G.L. c.93, §§ 24 through 24G and 209 CMR 18.05 have been met.
(1) Branch Offices. A Licensee who intends to carry on its business at any location in addition to the address on its original license shall submit an application to the Commissioner, in writing, at least thirty days prior to the opening of the branch location. Such application shall contain the address of any such place and such other information as the Commissioner may require.
(2) Relocations and Closings. A Licensee or registered third party loan servicer shall provide thirty days prior written notice of any change or closing of a location to the Commissioner and shall contain such other information as the Commissioner may require.
(a) Filing for bankruptcy or reorganization of the Licensee or registered third party loan servicer, any partner, member, officer, director, or equivalent, or principal employee.
(b) The filing of a criminal indictment any way related to the activities of the debt collector or registered third party loan servicer, any partner, member, officer, director, or equivalent, or principal employee, including, but not limited to, the handling and/or reporting of moneys received and/or instruments sold.
(c) Notification of the institution of license denial, cease and desist, suspension, or revocation procedures, or other formal or informal regulatory action, in any state against the debt collector or registered third party loan servicer, and the reasons thereof.
(d) Receiving notification of the initiation of any action by the Attorney General of the Commonwealth or of any other state, pursuant to M.G.L. c. 93A, or any other comparable consumer protection statute, and the reasons thereof.
(e) Receiving notification of the initiation of a class action lawsuit on behalf of consumers against the Licensee or registered third party loan servicer that is substantially related to the operation of the licensed business.
(f) Any partner, member, officer, director, or equivalent, or principal employee being convicted of a misdemeanor that is in any way related to debt collector or loan servicing activities; or of any felony whatsoever.
(g) Any change to net worth resulting from market valuation or future loss liability or any other change which causes the net worth of the debt collector to fall below the requirements of 209 CMR 18.03(2)(a).
(h) Closing or shortage of any trust account where funds of clients paid to a debt collector are deposited.
(2) (a) 15 days prior to any proposed change in control in the ownership of a Licensee, or among the officers, partners or directors of a Licensee, a notice shall forthwith be filed with the Commissioner who may thereupon cause such investigation to be made as he deems necessary, as if it were a new license. In the case of a corporation, control is defined as a change of ownership by a person or group acting in concert to acquire 10% of the stock, or the ability of a person or group acting in concert to elect a majority of the directors or otherwise effect a change in policy of the corporation.
Annually, on a date determined by the Commissioner, each debt collector or registered third party loan servicer shall file an annual report with the Commissioner in such form as the Commissioner shall prescribe for the preceding year. The annual report shall be in writing, subscribed by the debt collector or registered third party loan servicer under the pains and penalties of perjury.
(a) Debt Collector. Each debt collector shall retain for a minimum of two years after final remittance is made on any account placed with the debt collector for collection or after any account has been returned to the creditor whether or not payments have been made. Books and records shall conform to generally accepted accounting principles. A debt collector shall comply with the provisions of the Abandoned Property Act, M.G.L. c. 200A.
(b) Third Party Loan Servicer. Each registered third party loan servicer shall retain for a minimum of two years after the conclusion of its fiscal year the records, books, accounts, and documents pertaining to the registered third party loan servicer’s business.
(2) A Licensee who does not maintain an office in the Commonwealth and whose principal place of business is located outside of the Commonwealth may designate a resident agent within the Commonwealth for the purpose of complying with 209 CMR 18.10(1). The appointment of a resident agent shall require the prior approval of the Commissioner and shall be subject to such terms and conditions as the Commissioner may require from time to time.
(3) The Commissioner may also prescribe the extent to which such books, records and accounts shall be audited. Additional audits by independent certified public accountants shall be conducted whenever the Commissioner deems it expedient. Said audits shall be submitted to the Commissioner immediately upon completion. The cost of all such audits shall be borne by the Licensee or registered third party loan servicer.
(4) In addition to the reports required by law, a Licensee or registered third party loan servicer shall make such other statements and reports to the Commissioner as he or she may require. The Commissioner may require regular quarterly reports and may furnish blank forms for all such statements or reports, required by 209 CMR 18.10.
No debt collector shall commingle money collected for a creditor with the debt collector’s own funds or use any part of a creditor's money in the conduct of the debt collector’s business.
(1) All funds of clients paid to a debt collector shall be deposited in one or more trust accounts maintained at a federally insured bank.
(2) The gross amount of monies collected from consumers by the debt collector shall be deposited into the trust account(s).
(3) In remitting to clients, a debt collector may offset funds in the trust account(s) against commissions to which it is entitled for payments made by consumers directly to clients. All offsets shall be accounted for through written documentation evidencing the amount of offset.
(4) A debt collector shall maintain complete and accurate trust account records. A debt collector shall produce, upon request, all documents pertaining to trust account activity, including, but not limited to: bank settlements, check stubs, canceled, voided or unused checks, deposit tickets, and reconciliations or other comparable account records.
(7) after the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney's name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to communication from the debt collector.
(2) Communication with third parties. Except as provided in 209 CMR 18.13, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.
(c) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.
(4) For the purpose of 209 CMR 18.14, the term “consumer” includes the consumer's spouse, parent (if the consumer is a minor), guardian, executor, or administrator.
(3) The advertisement for sale of any debt to coerce payment of the debt.
(4) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.
(5) Except as provided in 209 CMR 18.13, the placement of telephone calls without meaningful disclosure of the caller's identity.
(6) Visiting the household of a consumer at times other than the normal waking hours of such consumer, or if normal waking hours are not known, at any time other than between 8:00 A.M. and 9:00 P.M., provided however that in no event shall such visits, initiated by the debt collector, exceed one in any 30-day period for each debt, excluding visits where no person is contacted in the household, unless a consumer consents in writing to more frequent visits, provided, further, that at all times the creditor must remain outside the household unless expressly invited inside by such consumer; and provided further, that visits to the household of a consumer which are solely for the purpose of repossessing any collateral or property of the creditor (including but not limited to credit cards, drafts, notes or the like), are not limited under 209 CMR 18.15(7).
(7) Visiting the place of employment of a consumer, unless requested by the consumer excluding visits which are solely for the purpose of repossessing any collateral or property of the creditor, or confrontations with a consumer regarding the collection of a debt initiated by a debt collector in a public place excluding courthouses, the debt collector's place of business, other places agreed to by a consumer, offices of any attorney for the consumer, or places where the conversation between persons representing the debt collector and a consumer cannot be reasonably overheard by any other person not authorized by the consumer.
(9) The use of distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval.
(16) Communicating by telephone without disclosure of the name of the debt collector and without disclosure of the personal name of the individual making such communication provided, however, that any such individual utilizing an alias shall use only one such alias at all times and provided that a mechanism is established by the debt collector to identify the person using such alias; the debt collector shall submit a list of all such aliases and the persons using same to the Commissioner.
(17) The false representation or implication that a debt collector operates or is employed by a consumer reporting agency.
(2) A debt collector shall not publish or cause to be published for general circulation the name of a consumer or any lists of consumers or threaten to do so.
(3) The request or demand from a consumer of a postdated check, draft, order for withdrawal or other similar instrument in payment for the debt or any portion thereof, or a debt collector to negotiate such instrument before the due date, of the instrument.
(5) Causing charges to be made to any person for communications by concealment of the true purpose of the communication. Such charges include, but are not limited to, collect telephone calls, text messaging, and telegram fees. However, 209 CMR 18.17(5) shall not prohibit a debt collector from communicating with a consumer by way of a consumer’s cellular telephone.
(d) the debt collector knows or has reason to know that demands for payment and/or legal notices were not directed to the consumer’s last known address.
(9) Any representation that an existing obligation of a consumer may be increased by the addition of attorney's fees, investigation fees, service fees, or any other fees or charges, if in fact such fees or charges may not legally be added to the existing obligation.
(10) Any solicitation or obtaining of any written statement or acknowledgment in any form containing an affirmation of any obligation by a consumer who has been adjudicated bankrupt, without clearly and conspicuously disclosing the nature and consequences of such affirmation.
(d) Demand or obtain in any manner a share of the compensation for services performed by a lawyer in collection of a claim.
(13) Failing to disclose the telephone number and office hours of the debt collector on all written communication to the consumer.
(14) Causing expense to any consumer in the form of collect telephone calls, text messaging, download fees, data usage fees, or similar charges, without the express permission of the consumer to communicate in that manner. However, a debt collector may place non-collect telephone calls to the consumer’s cellular telephone, or other telephone number provided by the consumer as his/her personal telephone number.
(e) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.
(2) If the consumer notifies the debt collector in writing within the 30 day period described in 209 CMR 18.18(1) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.
(b) A ledger, account card, or similar record in the possession of a debt collector, whether paper or electronic, which reflects the date and amount of payments, credits, and charges concerning the debt.
(4) The failure of a consumer to dispute the validity of a debt under 209 CMR 18.18 may not be construed by any court as an admission of liability by the consumer.
It is unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating.
(a) Knowingly misapplying or recklessly applying loan payments to the outstanding balance of a loan.
(b) Knowingly misapplying or recklessly applying payments to escrow accounts.
(c) Requiring the unnecessary forced placement of insurance, when adequate insurance is currently in place.
(d) Failing to provide loan payoff information within five business days of a receipt of a written request.
(e) Charging excessive or unreasonable fees to provide loan payoff information.
(f) Knowingly or recklessly providing inaccurate information to a credit bureau, thereby harming a consumer’s creditworthiness.
(g) Failing to report both the favorable and unfavorable payment history of the consumer to a nationally recognized consumer credit bureau at least annually if the servicer regularly reports information to a credit bureau.
(h) Knowingly or recklessly facilitating the illegal repossession of chattel collateral.
(i) Misrepresenting any material information in connection with the servicing of the loan, including, but not limited to, misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a loan, the terms and conditions of the servicing contract or the borrower’s obligations under the loan.
(j) Failing to maintain procedures to ensure accuracy and timely updating of borrower’s account information, including posting of payments and imposition of fees.
(k) Requiring funds to be remitted by means more costly to the consumer than a bank or certified check or attorney’s check from an attorney’s account.
(l)Refusing to communicate with an authorized representative of the borrower who provides a written authorization signed by the borrower, provided that the third party loan servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the borrower.
(m) Failing to establish and implement policies and procedures to ensure effective monitoring and oversight of law firms, subservicers, foreclosure firms, foreclosure trustees and other third party providers, agents or affiliates retained by or on behalf of the third party loan servicer to ensure that such third parties are complying with the pertinent state and federal laws and regulations governing third party loan servicers, including but not limited to the provisions of 209 CMR 18.00.
(a) Failing to comply with the provisions of M.G.L. c. 183, § 54D regarding providing loan payoff information to a consumer.
(b) Collecting private mortgage insurance beyond the date for which private mortgage insurance is no longer required.
(c) Failing to comply with the provisions of M.G.L. chapter 244, §§ 35A, 35B or 35C regarding the right to cure a mortgage loan default and other requirements.(d) Knowingly or recklessly facilitating the illegal foreclosure of real property collateral.
(e) Failing to comply with the provisions of 12 CFR 1024.38(b)(2), or other applicable provision of 12 CFR Part 1024, regarding the evaluation of borrowers for loss mitigation options.
(f) Failing to comply with the provisions of 12 CFR 1024.41(b)(2), or other applicable provision of 12 CFR Part 1024, regarding providing borrowers with written acknowledgment of receipt of loan modification documentation and required follow up.
(g) Failing to comply with the provisions of 12 CFR 1024.41(g), or other applicable provision of 12 CFR Part 1024, regarding the process of concluding the modification process prior to initiating a foreclosure.
(h) Failing to comply with the provisions of 12 CFR 1024.40, or other applicable provision of 12 CFR Part 1024, regarding providing borrowers with contact information for a designated individual.
(i) Nothing in 209 CMR 18.21A shall be construed to prevent a third party loan servicer from offering or accepting alternative loss mitigation options, including other modification programs offered by the third party loan servicer, a short sale, a deed-in-lieu of foreclosure or forbearance, if the borrower requests such an alternative, is not eligible for or does not qualify for a loan modification under a government sponsored mortgage loan modification program or proprietary modification program, or rejects the third party loan servicer’s loss mitigation proposal.
(j) 209 CMR 18.21A(2) contains requirements that are in addition to those contained in M.G.L. c. 244, § 35B and 209 CMR 56.00 regarding “certain mortgage loans”, as that term is defined pursuant to 209 CMR 56.02.
(a) A third party loan servicer shall ensure that all foreclosure affidavits or sworn statements are based on personal knowledge.
(b) A third party loan servicer shall ensure that foreclosure affidavits or sworn statements shall set forth a detailed description of the basis of affiant’s claimed personal knowledge of information contained in the affidavit or sworn statement, including sources of all information recited and a statement as to why the sources are accurate and reliable.
(c) A third party loan servicer shall certify in writing the basis for asserting that the foreclosing party has the right to foreclose, including but not limited to, certification of the chain of title and ownership of the note and mortgage from the date of the recording of the mortgage being foreclosed upon. The third party loan servicer shall provide such certification to the borrower with the notice of foreclosure provided pursuant to M.G.L. ch. 244, § 14, and shall also include a copy of the note with all required endorsements.
(d) A third party loan servicer shall comply with all applicable state and federal laws governing the rights of tenants living in foreclosed residential properties.
(1) A violation of the provisions of 209 CMR 18.00 shall be considered an unfair or deceptive act or practice under M.G.L. c. 93A, § 2 and subject to the penalties contained in M.G.L. c. 93A.
(2) 209 CMR 18.00 does not exempt any person from complying with existing laws or canons of ethics with respect to debt collection practices. To the extent that any provision of 209 CMR 18.00 is specifically inconsistent with the Canons of Ethics and Disciplinary Rules Regulating the Practice of Law in Massachusetts, and then only to the extent of the inconsistency, 209 CMR 18.00 is not applicable.
In the event any inconsistency exists between the provisions of 209 CMR 18.00 and the provisions of federal statutes or regulations relating to the collection of debts or third party loan servicing, such federal law shall control but only to the extent that such federal law provides greater consumer protections than those provided in 209 CMR 18.00.

References: § 24
 § 24
 § 24
 § 54
 § 35
 § 14
 § 2