Code of Massachusetts Regulations › 940 CMR - OFFICE OF THE ATTORNEY GENERAL › Title 940 CMR 8.00 - Mortgage Brokers And Mortgage Lenders › Section 8.03 - Definitions

Current through Register 1525, July 5, 2024
Advertisement
(including the terms
				"advertise" and "advertising") shall be defined in a manner which is consistent
				with the definition in
				940 CMR
				6.00: Retail Advertising, and means any oral, written,
				graphic, or pictorial statement made by a mortgage broker or lender in any
				manner in the course of the solicitation of business. Advertisement includes
				any representation made in a newspaper, magazine, or other publication or on
				the internet, radio or television or contained in any notice, handbill, sign,
				billboard, banner, poster, display, circular, pamphlet, catalog, or letter.
				Advertisement includes any representation disseminated or accessible within
				Massachusetts if the advertisement is directed to consumers in
				Massachusetts.
Bait Advertising
means an offer to
				procure, arrange, or otherwise assist a borrower in obtaining a mortgage on
				terms which the broker or lender cannot, does not intend, or want to provide,
				or which the broker or lender knows cannot be reasonably provided. Its purpose
				is to switch borrowers from buying the advertised mortgage loan product to
				buying a different mortgage loan product, usually at a higher rate or on a
				basis more advantageous to the broker or lender.
Borrower
means any natural person
				seeking, using, or paying for directly or indirectly, the services of a
				mortgage lender or broker in connection with a mortgage loan.
Broker Fee
means any money,
				compensation, commission, fee, charge or other valuable consideration directly
				or indirectly imposed by a mortgage broker for the brokers services in
				negotiating, placing, finding, or otherwise assisting a borrower in obtaining a
				mortgage loan. The term broker fee does not include a fee charged by the lender
				(such as a commitment fee or a lock-in fee), wages or commissions paid to an
				employee of the mortgage broker or mortgage lender by his or her employer, nor
				does such term include bona fide and reasonable payments to be remitted to
				third party service providers, such as appraisal fees or fees for credit
				reports or payments or remittances to the mortgage lender.
Clear and Conspicuous
(including the
				terms "clearly and conspicuously") shall be defined in a manner which is
				consistent with the definition in
				940 CMR
				6.00: Retail Advertising.
				940 CMR 6.01:
Clear and Conspicuous
provides that clear and
				conspicuous (including the terms "clearly and conspicuously") shall mean
				that:
the material representation being disclosed is of such size,
				color, contrast, or audibility and is so presented as to be readily noticed and
				understood by a reasonable person to whom it is being disclosed.
Further, without limiting the requirements of the preceding
				sentence,
				940 CMR 6.01:
Clear and Conspicuous
(e) states that a
				representation in an advertisement is not clear and conspicuous unless:
1. for a printed, written, typed or graphic advertisement, such
				material representation appears in type which is at least one-third the size of
				the largest type of information which it modifies and is a minimum of eight
				point type;
2. for the video portion of a television advertisement, such
				material representation:
a. is displayed in type not less than 14 scan lines in
				height;
b. contains letters of a color or shade that noticeably
				contrast with the background, and the background does not consist of colors
				and/or images which obscure or detract attention from the representation or are
				disparaging to its meaning or importance; and
c. appears on the screen for a duration equal to at least one
				second for every three words of the material representation but not less than a
				total of five seconds.
3. for a radio advertisement or the audio portion of a
				television advertisement, such material representation complies with the
				requirements of
				940 CMR 6.01: Clear
				and Conspicuous(c).
Commissioner
means the Commissioner of
				Banks.
Commitment for Mortgage Loans
(or the
				word "commitment") means an oral or written agreement to loan or to advance
				funds for a mortgage loan. A commitment can specify a loan amount, repayment
				terms, interest rate or conditions necessary to close the loan.
Contractor or Home Improvement
				Contractor
means any person who owns or operates a residential
				contracting business or who undertakes, offers to undertake, purports to have
				the capacity to undertake, or submits a bid for, by him or herself or through
				others, residential contracting work as defined in M.G.L. c. 142A.
Mortgage Broker or Broker
means any
				person, who for compensation or gain, or in the expectation of compensation or
				gain, directly or indirectly negotiates, places, assists in placement, finds,
				or offers to negotiate, place, assist in placement or find mortgage loans on
				residential property for others, or as otherwise defined by M.G.L. c. 255E,
				§ 2 or by the Commissioner. Notwithstanding anything to the contrary in
				940 CMR 8.00, the following
				persons shall not be deemed to be a mortgage broker:
(a) any person who is exempt from the licensing requirements of
				M.G.L. c. 255E, § 2, provided, however, that individuals who work for or
				on behalf of brokers that are licensed pursuant to M.G.L. c. 255E, § 2,
				shall not be exempt from
				940 CMR 8.00; and
(b) any financial institution which is regulated by a federal
				and/or state bank regulatory agency and which, directly or indirectly,
				negotiates, places, assists in placement, finds, or offers to negotiate, place,
				assist in placement or find mortgage loans on residential property for a direct
				or indirect affiliate or subsidiary of such financial institution.
Mortgage Lender or Lender
means any
				person engaged in the business of making mortgage loans or issuing commitments
				for mortgage loans, including, but not limited to, mortgage lenders licensed or
				regulated by M.G.L. c. 255E, § 2 or by the Commissioner, and shall include
				all individuals who work on behalf of such lenders.
Mortgage Loan or Loan
means a loan to
				a natural person primarily for personal, family or household use secured wholly
				or partially by a mortgage on residential property, or as otherwise defined by
				M.G.L. c. 255E or by the Commissioner, and shall include loans to refinance a
				mortgage. "Mortgage loan" or "loan" shall not include either:
(a) reverse mortgages governed by M.G.L. c. 167E, § 7;
				or
(b) open-end home equity lines of credit.
Person
means a natural person or
				organization including a corporation, partnership, association, cooperative or
				trust or any other legal entity.
No Income Loan Product
means a
				mortgage loan where:
(a) in making its decision whether to underwrite the loan or
				extend credit, the mortgage lender does not account for or consider, in any
				manner whatsoever, the prospective borrower's income or employment status;
				and
(b) that fact is set forth in the lender's written underwriting
				or loan origination policies governing its No Income Loan Product.
Point
means an origination fee,
				finder's fee, or other fee, premium, service charge, or any other charge
				calculated as a percentage of the principal amount of the loan or a percentage
				of the amount financed, however such point may be called, which is charged by a
				mortgage lender at or before the time the mortgage loan is made as additional
				compensation for the mortgage loan, or as otherwise defined by M.G.L. c. 183,
				§ 63 or by the Commissioner. A point does not include:
(a)
bona fide
and reasonable fees for actual
				services performed including, but not limited to, attorney's fees, appraisal
				fees, credit reporting fees, private mortgage insurance premiums, and title
				insurance premiums or mortgage broker fees; or
(b) a charge which is credited to closing costs or other costs
				relating to such loan.
Residential Property
means real
				property located in Massachusetts having thereon a dwelling house with
				accommodations for four or fewer separate households and occupied, or to be
				occupied, in whole or in part by the obligor of the mortgage debt, or as
				otherwise defined in M.G.L. c. 255E.