MA Law Creating Headaches, Official Says

Created as an anti-flipping law, the borrowers' interest standard of the Massachusetts predatory lending law has created major headaches for the industry, according to David Cotney, deputy commissioner of the Massachusetts Division of Banks.Concerns have been raised that credit is being restricted in certain areas and that borrowers have refinanced homes in order to pay off credit card debt, Mr. Cotney told the Regulatory Compliance Seminar sponsored by the Massachusetts Mortgage Bankers Association and the Massachusetts Mortgage Association. The final regulations say refis must be put into a new home loan, but can also pay off other debt. The new law covers high-cost home mortgage loans and points and fees. Mortgage brokers must now include yield-spread premiums in fee calculations, and this could lead to a larger pool of loans that fall into the high-cost category, Mr. Cotney noted. A public hearing is scheduled for March 9 in Boston, and the division will take public comment through March 16.