(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; and
3. 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; and
2. 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, or
2. for which the fees bear no reasonable
relationship to the value of the services actually performed, or
3. 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.
