§ 35C — Creditor actions in violation of chapter

Section 35C. (a) As used in this section, the following words shall, unless the context clearly requires otherwise, have the following meanings:--"Borrower'', a mortgagor of a mortgage loan."Creditor'', a person or entity that holds or controls, partially, wholly, indirectly, directly or in a nominee capacity, a mortgage loan securing a 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. The term creditor shall also include any servant, employee or agent of a creditor."Mortgage loan'', a loan to a natural person made primarily for personal, family or household purposes secured wholly or partially by a mortgage on residential property."Residential property'', real property located in the commonwealth on which there is a dwelling house with accommodations for 4 or fewer separate households and occupied, or to be occupied, in whole or in part, by the obligor on the mortgage debt; 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.(b) A creditor shall not cause publication of notice of foreclosure, as required under section 14, when the creditor knows or should know that the mortgagee is neither the holder of the mortgage note nor the authorized agent of the note holder.Prior to publishing a notice of a foreclosure sale, as required by section 14, the creditor, or if the creditor is not a natural person, an officer or duly authorized agent of the creditor, shall certify compliance with this subsection in an affidavit based upon a review of the creditor's business records. The creditor, or an officer or duly authorized agent of the creditor, shall record this affidavit with the registry of deeds for the county or district where the land lies. The affidavit certifying compliance with this subsection shall be conclusive evidence in favor of an arm's-length third party purchaser for value, at or subsequent to the resulting foreclosure sale, that the creditor has fully complied with this section and the mortgagee is entitled to proceed with foreclosure of the subject mortgage under the power of sale contained in the mortgage and any 1 or more of the foreclosure procedures authorized in this chapter; provided that, the arm's-length third party purchaser for value relying on such affidavit shall not be liable for any failure of the foreclosing party to comply and title to the real property thereby acquired shall not be set aside on account of such failure. The filing of such affidavit shall not relieve the affiant, or other person on whose behalf the affidavit is executed, from liability for failure to comply with this section, including by reason of any statement in the affidavit. For purposes of this subsection, the term "arm's-length, third party purchaser for value'' shall include such purchaser's heirs, successors and assigns.(c) A creditor violates this chapter if the creditor imposes upon a third party the cost of correcting, curing or confirming documentation relating to the sale, transfer or assignment of a mortgage loan, including, but not limited to, costs related to curative actions taken because a foreclosure was commenced without the creditor's possession of a valid, written, signed and dated assignment evidencing the assignment of the mortgage, in violation of section 14. A third party may recover all of the third party's costs including reasonable attorneys' fees for having to correct, cure or confirm documentation.(d) A creditor violates this chapter if the creditor makes statements to a state or federal court related to foreclosure or compliance with this chapter, orally or in writing, that it knows or should know are false, including, but not limited to, statements about the offering of a loan modification, the borrower's history of payments, the validity of the assignment of the mortgage loan, that the creditor is the record holder of the mortgage loan or the creditor's compliance with any other requirements of this chapter.(e) A creditor violates this chapter if the creditor imposes a fee upon a borrower for goods not rendered or services not performed in connection with a foreclosure.(f) No person shall give and no person shall accept any portion, split or percentage of any charge made or received for the rendering of a service in connection with a transaction involving a foreclosure upon a mortgage loan other than for services actually performed.(g) The division of banks may adopt, amend or repeal rules and regulations for the administration and enforcement of this section.(h) In all circumstances in which an offer to purchase either a mortgage loan or residential property is made by an entity with a tax-exempt filing status under section 501(c)(3) of the Internal Revenue Code, or an entity controlled by an entity with such tax exempt filing status, no creditor shall require as a condition of sale or transfer to any such entity any affidavit, statement, agreement or addendum limiting ownership or occupancy of the residential property by the borrower and, if obtained, such affidavit, statement, agreement or addendum shall not provide a basis to avoid a sale or transfer nor shall it be enforceable against such acquiring entity or any real estate broker, borrower or settlement agent named in such affidavit, statement or addendum.[ Subsection (i) added by 2024, 238, Sec. 269 effective November 20, 2024.](i)(1) For purposes of this subsection, the following words shall have the following meanings unless the context clearly requires otherwise:"Entity'', an entity with a tax-exempt filing status under section 501(c)(3) of the Internal Revenue Code or an entity controlled by an entity with such tax-exempt filing status."Shared appreciation mortgage'', a mortgage or security instrument that is a second lien on the residential property for the percentage of shared appreciation required to be paid under the accompanying shared appreciation promissory note and secured by such shared appreciation mortgage."Shared appreciation'', the percentage share of the appreciation in the value of a residential property as defined in a shared appreciation mortgage and shared appreciation promissory note.(2) If an entity obtains from a person acquiring or re-acquiring a residential property a shared appreciation mortgage encumbering such residential property that secures the contingent right of the entity to receive a percentage share of the appreciation in value of such residential property upon: (i) the sale, conveyance, assignment or other transfer thereof; (ii) refinancing or other payoff or satisfaction of the new first priority mortgage loan encumbering such residential property; or (iii) the occurrence of other events specified in such shared appreciation mortgage or such shared appreciation promissory note, including reaching a defined maturity date, then the entity and the maker, lender, grantor or holder of the new first priority mortgage loan shall not be liable for monetary relief, injunctive relief or other equitable relief at common law or by statute, including chapter 93A, chapter 140D, chapter 183C and section 49 of chapter 271 for the use of or the terms of said shared appreciation mortgage or shared appreciation promissory note, so long as such person receives a full disclosure, in writing as required herein and in advance of the closing of such person's acquisition or re-acquisition of such residential property, stating that such person will be required to enter into a shared appreciation mortgage and shared appreciation promissory note to such entity at said closing and upon such person's entering into a new first priority mortgage loan. A shared appreciation mortgage and shared appreciation promissory note offered under this subsection shall be permitted only if a person has received notice or is otherwise shown to be not less than 90 days delinquent on their prior mortgage loan. An offer for a shared appreciation mortgage shall be invalid if there is no reduction of the prior delinquent mortgage loan principal the person owes or owed when the person acquires or re-acquires such residential property and enters into a new first priority mortgage loan.(3) An entity shall not offer a shared appreciation mortgage and shared appreciation promissory note to a person without first providing written notice disclosing substantially the following information:Notice of Shared Appreciation Mortgage AgreementIn connection with your acquisition or re-acquisition of your property at _______________, the undersigned entity intends to make an offer to you to enter into a shared appreciation mortgage and shared appreciation promissory note. Please be advised that under such shared appreciation mortgage and promissory note:You will not be required to make any payment on the shared appreciation mortgage or shared appreciation note during the mortgage term.You must pay the shared appreciation mortgage upon refinancing of your new first priority mortgage loan or upon the sale of the property.Your percentage of shared appreciation will be based on the amount that your prior mortgage debt has been reduced.(4) Said written notice may include substantially the following information:You are encouraged to discuss this agreement with family, community service providers, housing counselors or others at any time during this mortgage process. If you fail or refuse to seek housing counseling, the entity may choose not to proceed. A list of housing counselors certified by the United States Department of Housing and Urban Development is enclosed with this notice or has otherwise been provided.In order to proceed with this transaction, you must sign, date and return this notice to us promptly, but in not less than 7 days after your receipt of this notice.By signing this notice, you are not bound to proceed to enter into a shared appreciation mortgage and promissory note. The entity has no obligation to proceed to assist you with acquiring or reacquiring a residential property or otherwise proceed to negotiate a shared appreciation mortgage and promissory note. No shared appreciation mortgage or promissory note shall be binding on you or the entity until a final shared appreciation mortgage and note are signed and dated by both you and the entity.Your shared appreciation mortgage and promissory note shall become due and payable upon the sale, conveyance, assignment or other transfer of your residential property, upon refinancing of the new first priority mortgage loan encumbering such residential property, or other payoff or satisfaction of such new first priority mortgage loan, or upon the occurrence of other events specified in the shared appreciation mortgage or shared appreciation promissory note, including reaching a defined maturity date.(5) The attorney general may promulgate rules and regulations to implement this subsection.