Code of Massachusetts Regulations
209 CMR - DIVISION OF BANKS AND LOAN AGENCIES
Title 209 CMR 56.00 - Foreclosure prevention options
Section 56.02 - Definitions

For purposes of 209 CMR 56.00, the following definitions apply:

Affordable Monthly Payment means the monthly payments on a mortgage loan, which, taking into account the borrower's current circumstances, including verifiable gross monthly income, debts, assets and obligations enable a borrower to make the payments in accordance with the affordability guidelines and standards set forth under at least one of the defined modified mortgage loan programs.

Borrower means a mortgagor of a mortgage loan.

Certain Mortgage Loan means a loan to a natural person made primarily for personal, family or household purposes secured wholly or partially by a mortgage on an owner-occupied residential property with one or more of the following loan features:

(a) An introductory interest rate granted for a period of three years or less and such introductory rate is at least 2% lower than the fully indexed rate;

(b) Interest-only payments for any period of time, except in the case where the mortgage loan is an open-end home equity line of credit or is a construction loan;

(c) A payment option feature, where any one of the payment options is less than principal and interest fully amortized over the life of the loan;

(d) The loan did not require full documentation of income or assets;

(e) Prepayment penalties that exceed M.G.L. c. 183, § 56 or applicable federal law;

(f) The loan was underwritten with a loan-to-value ratio at or above 90% and the ratio of the borrower's debt, including all housing-related and recurring monthly debt, to the borrower's income exceeded 38%; or

(g) The loan was underwritten as a component of a loan transaction, in which the combined loan-to-value ratio exceeded 95%;

provided, however, that a loan shall be a certain mortgage loan if, after the performance of reasonable due diligence, a creditor is unable to determine whether the loan has one or more of the loan features in 209 CMR 56.02: Certain Mortgage Loan(a) through (g); and provided, further, that loans financed by the Massachusetts Housing Finance Agency, established in St. 1966, c. 708 and loans originated through programs administered by the Massachusetts Housing Partnership Fund board established in St. 1985, c. 405, § 35 shall not be certain mortgage loans.

Creditor means a person or entity that holds or controls, partially, wholly, indirectly, directly, or in a nominee capacity, a mortgage loan securing an owner-occupied residential property, including, but not limited to, an originator, holder, investor, assignee, successor, trust, trustee, nominee holder, Mortgage Electronic Registration System or mortgage servicer, including the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. Creditor shall also include any servant, employee or agent of a creditor.

Creditor's Representative means a person who has the authority to negotiate and approve the terms of and modify a mortgage loan, or a person who, under a servicing agreement, has the authority to negotiate and approve the terms of and modify a mortgage loan.

Full Documentation means a mortgage program requiring verifiable documentation of borrower's income, assets and financial obligations to perform an analysis of borrower eligibility for a mortgage loan. Notwithstanding the documentation standards provided under a full documentation loan, a 'streamlined refinance loan' of a mortgage loan insured by the Federal Housing Administration, or originated in accordance with guidelines published by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association, shall meet the definition of full documentation.

Fully Indexed Rate means the interest rate on an adjustable-rate mortgage calculated as the index rate prevailing at origination plus the margin to be added to it after the expiration of an introductory interest rate.

Modified Mortgage Loan means a mortgage loan modified from its original terms including, but not limited to, a loan modified pursuant to one of the following:

(a) The Home Affordable Modification Program;

(b) The Federal Deposit Insurance Corporation's Loan Modification Program;

(c) Any modification program that a lender uses which is based on accepted principles and the safety and soundness of the institution and authorized by the National Credit Union Administration, the Division of Banks or any other instrumentality of the Commonwealth;

(d) The Federal Housing Administration; or

(e) A similar federal loan modification plan.

Mortgagee means a person or entity to whom property is mortgaged, the mortgage creditor or lender including, but not limited to, mortgage servicers, lenders in a mortgage agreement and any agent, servant or employee of the mortgagee or any successor in interest or assignee of the mortgagee's rights, interests or obligations under the mortgage agreement.

Mortgage Loan means a loan to a natural person made primarily for personal, family or household purposes secured wholly or partially by a mortgage on residential property.

Mortgage Servicer means a person or entity which administers or at any point administered the mortgage; provided, however, that such administration shall include, but not be limited to, calculating principal and interest, collecting payments from the borrower, acting as escrow agent or foreclosing in the event of a default.

Net Present Value means the present net value of a residential property based on a calculation using one of the following:

(a) The federal Home Affordable Modification Program base net present value model;

(b) The Federal Deposit Insurance Corporation's Loan Modification Program;

(c) The Massachusetts Housing Finance Agency's loan program used solely by the agency to compare the expected economic outcome of a loan with or without a modified mortgage loan; or

(d) Any model approved by the Division of Banks to consider the total present value of a series of future cash flows relative to a mortgage loan.

Residential Property means real property located in the Commonwealth having thereon a dwelling house with accommodations for four or less separate households and occupied, or to be occupied, in whole or in part by the borrower; provided, however, that residential property shall be limited to the principal residence of a person; provided further, that residential property shall not include an investment property or residence other than a primary residence; and provided further, that residential property shall not include residential property taken in whole or in part as collateral for a commercial loan; and provided further, that for the purpose of determining whether a loan is a certain mortgage loan, residential property shall not include a property subject to condemnation or receivership.