New Predatory Lending Regulations – (18) Prohibiting Discrimination

The Attorney General is proposing new regulations under the Consumer Protection Act (M.G.L. 93A). The new regulations add new prohibited activities as provisions (15), (16), (17) and (18) under 940 C.M.R 8.06.

The new prohibited activity in item (18) of the proposed regulations prohibits a lender from discriminating among similar borrowers. “It is an unfair or deceptive act or practice for a lender (a) to use a pricing model for its mortgage loans which treats borrowers with similar credit criteria and bona fide qualification criteria differently; or (b) to make a mortgage loan when any or all of the cost features of the mortgage loan are based on criteria other than the borrower’s credit and other bona fide qualification criteria.”

Although this regulation has a good purpose in preventing lenders from discriminating among borrowers, no two borrowers or properties are the same. The regulation gives no safe harbor for a lender to show that it is not discriminating.

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