Coakley gives new rules to mortgage industry
BOSTON - Massachusetts Attorney General Martha Coakley has filed a new set of regulations regarding advertising by mortgage brokers and lenders.
Wednesday, Coakley said the guidelines, which she filed with Secretary of State William Gavin, will help prevent a future foreclosure crisis.
"It is my hope that by issuing these regulations, which will prohibit a range of unfair and unduly risky lending behaviors, we will be able to combat the rising number of foreclosures in Massachusetts," Coakley said. "These regulations will give us ability to more easily bring cases against unscrupulous lenders under the Consumer Protection Law, and should serve as a deterrent for brokers and lenders not to engage in unfair and deceptive practices."
Coakley said the regulations will:
-Prohibit mortgage brokers or lenders from making loans they do not believe will be repaid;
-Restrict brokers or lenders from abusing "stated income" loans by requiring them to disclose how interests rates and other charges increase in those types of loans;
-Prevent brokers from arranging or processing loans that are not in the borrower's best interest or brokering loans if the broker's financial interest conflicts with the borrower's; and
-Prohibit lenders from steering borrowers to more expensive loan products than what the borrower qualifies for.
These regulations previously applied only to the home improvement industry. Next week, Coakley will release a summary report of the feedback her office received in statewide public hearings held last month after she proposed the regulations in August.
Earlier this week, Coakley told the House Committee on Financial Services that similar federal regulations are needed.
The full document submitted by Coakley can be viewed here.