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at the Sherwood Mortgage Group, Thornhill, Ontario. Canadian mortgage rates benefit from our current inflationary sweet spot. The PRA suggests that high LTV ERM are not suitable for MA.

In Massachusetts, there are further limitations on enforcement of mortgages on residences, which may now include a credit amendment instead of enforcement.

Massachusetts became the newest state to place extra limits on enforcement of home real estate lending on August 3, 2012, when Governor Deval Patrick passed House Bill 4323 "An Act preventing unlawful und unnecessary foreclosures"("Act"). "First and foremost, the Act amends (i) the enforcement procedure and capacity to enforce the legal sales authorization for enforcement set forth in Section 21 of Section 183 of Massachusetts General Laws, Section 244, and (ii) introduces new positive requirements on the creditor in an effort to prevent enforcement resulting from certain kinds of credit that many consider to be "risky" for the consumer.

There are also extra provisions in the Act to record mortgage transfers and to identify title to mortgage debt before enforcement. Except for one, and notwithstanding certain changes in style, the Act does not change the actual wording used in Section 14 of Section 244, Section 2, which outlines the general containment processes in Massachusetts. In particular, if a security right over real property creditor is holding a mortgage in accordance with an assignment, before sending the necessary enforcement notification in accordance with 14, (1) an assignment must have been properly entered in the relevant land register, and (2) the record information for all registered cessions must be included in the sales notification prescribed in 14.

In addition, if a mortgage creditor within an assignment has either renamed or amalgamated with a company other than the one holding the mortgage, the enforcement order must highlight'the fact of a fusion, consolidate, change, transform or take-over of property that causes a mortgage creditor's name to change'.

Further significant changes in the enforcement procedure appear in two entirely new stages established by the Act (Chapter 244, Section 35B and 35C). Which credits are protected by the law? Specific mortgage loan" means a credit granted (1) to a physical entity, (2) primarily for private, familial or domestic use, (3) fully or partly backed by a mortgage on "owner-occupied immovable property" (2) which (4) has one or more of the following characteristics:

A starting interest rates of 3 years or less that is at least 2% below the fully Indexed Interest Rates (e.g. the " Teaser " rates); pure interest repayments for any given duration (with the exclusion of open home ownership facilities or building loans) (e.g. 3/1 only interest based ARMs); a repayment facility where one of the options is to repay less than the nominal amount and the interest is fully amortised over the term of the facility (e.g.

g. No obligation to record revenue or asset information (e.g. "no doc" borrowings that also fall under 940 C.M.R. 8. 06(15); Advance penalty payments that exceed the thresholds in Section 56 of Section 183 or current Swiss legislation; Underwriting with a loan-to-value ratios of or above 90% and borrowers with a gearing of more than 38%; What does a lender have to do if a borrowing is in default?

Prior to the publication of a notification of a forced sales auction in the event of failure to perform under a "specific mortgage loan", a lender4 must first take "reasonable steps" and endeavour in good faith not to enforce. "This means that a lender must take into account (1) an evaluation of the borrower's capacity to "make an acceptable payment on a per month basis", (2) the present value of the cash receipts from a "modified mortgage loan" in comparison to the expected net liquidation after enforcement, and (3) the lender's interests, to include (but not be restricted to) the investors' interests.

Legislation lays down special conditions for the bearers of bundled housing mortgages: Unless otherwise specified in a policy, a provider of bundled residential mortgage loans may specify whether the present value of the payment for the amended mortgage credit is likely to be higher than the expected net realisation that would arise from enforcement for all depositors and owners of economic interests in such investments, but not for individuals or groups of depositors or usufructuaries.

It also provides that a believer shall be deemed to have "acted in good faith" and to have respected Section 35B if, prior to the publication of the notification of a compulsory purchase, he has made a claim against the believer: Defines a borrower's actual capacity to "make an accessible monetary payment"; Denotes a modification of a mortgage credit that reaches the borrower's accessible monetary payments, which may comprise one or more of the following items:

a) a capital decrease; b) a decrease in interest rates; or c) an extension of the payback time ( provided that the payback time is not extended by more than 15 years and the overall payback time does not extend beyond 45 years); and, at the same time as the termination already requested in Section 35A(g) of Section 244 (concerning a borrower's right to a cure), a lender must announce the borrower's right to enforce an amended mortgage under Section 35B and submit a copy of such termination to the Massachusetts Attorney General's Office.

It must also contain the appropriate Prosecutor's change support details and must be similar in content and format to the Massachusetts Division of Banks' notification under Section 35A. However, the procedure for deciding whether to "offer a qualified mortgage loan" does not take longer than 150 working days.

" Mortgagor must reply to the notification within 30 workingdays of receipt and notify Mortgagor of Mortgagor's intention (1) to make a change and a declaration of Mortgagor's earnings and "the full listing of aggregate debt and liabilities as required by Mortgagor, "Continue (2) to seek an option to enforcement, incorporating a surrender or enforcement, (3) not to seek a revised mortgage or the right to a cure as described in Section 3.5.A, or (4) to renounce the right to a cure and enforce the enforcement.

In the event that a Mortgagor does not react within 30 calendar Days, the Mortgagor shall be deemed to have expired if it has failed to exercise the 150-day right to rectification and shall be entitled to a 90-day right to rectification. In the event that a Mortgagor is notified by a Mortgagor that the Mortgagor wishes to take out a revised Mortgage Facility, the Mortgagor shall notify the Mortgagor (within 30 calendar days upon receipt) of its written opinion pursuant to 35B(b), which shall contain without restriction (1) a summary of the Mortgagor's revenues,

Debt and liabilities as defined by the lender, (2) the present value of the mortgagee' s mortgage debtor, (3) the expected net liquidation of the mortgagee' s mortgage in the event of enforcement, (4) a declaration of the lender' s interests, and (5) a revised mortgage credit proposal or notification that a revised mortgage credit is not being proposed.

Where an amendment is proposed, the lender need not appoint more than two agents to hear and agree the amended credit and must communicate to the lender the first and last name and phone numbers of those agents. In the event that a Mortgagor reacts to an amended mortgage credit proposal within 30 calendar days of receiving it, the Mortgagor may (1) take up the amended mortgage credit proposal, (2) make an appropriate counter-offer, or (3) declare that the Mortgagor intends to relinquish the Mortgagor's right under 35B and to enforce the same.

In the event that a counter-offer is submitted, the lender must within 30 workingdays after receiving the counter-offer either agree to, refuse or suggest a counter-offer to the borrowing party. Entitlement to a revised mortgage credit is given once within a three-year term. Furthermore, the believer (or a properly authorised representative if the believer is not a physical person) must register an oath of affirmation with the competent registration authority prior to the publication of a notification of the enforcement sales confirming adherence to the provisions of Section 35B, on the basis of a check of the believer's commercial documents.

The declaration in lieu of an oath is convincing proof (in favour of a third buyer at market conditions) that the lender has fully observed 35B and that the security right over real property holder is authorised to carry out enforcement within the scope of the sales authorisation transferred in the mortgage and one or more enforcement proceedings approved by Section 244.

It also obliges lenders to provide the Massachusetts Division of Banks with a half-yearly statement of the "final result" of all credits in respect of which the lender has provided the necessary notification to a borrowing party of the right to change the credit relationship. Section 35B shall be responsible for enacting, modifying or revoking rules to assist the management and enforcement of Section 35B, which shall include minimal standards of good repute imposed on the Mortgagor to comply with the notification requirement of Section 35B(c), as well as standards of appropriate action and good repute of the Mortgagor to prevent levy of execution and extra secure harbours for adherence.

Paragraph 35C, which (unlike 35B) in its definitions of "creditor" does not preclude the Massachusetts Housing Finance Agency and the Massachusetts Housing Partnership Fund, provides that a lender does not disclose a compulsory enforcement order under paragraph 14 if the lender knows "or should know" that the lender is neither the owner of the mortgage nor the authorised representative of the lender.

Before publication of the notification, the holder (or a properly authorised representative if the holder is not a physical person) must confirm adherence to this subparagraph in an oath of affirmation consisting of a verification of the holder's commercial documents and recording this oath of affirmation with the appropriate register of documents. Sworn declaration is convincing proof (for the benefit of a third buyer on market terms) that the lender has fully respected Section 35C and that the lender is authorised to execute execution under the sales authority transferred in the mortgage and under one or more enforcement proceedings approved by Section 244.

Creditors are in breach of the provisions of Section 244 if the creditor: charges a third person for the correction, recovery or confirmation of documents related to the purchase, conveyance or cession of a mortgage credit; charges a debtor a charge for undelivered goods or provision of undelivered service.

Paragraph 35C also provides that no individual shall be charged or accepted a part, a division or a proportion of a fee charged or accepted for the provision of a supply of supply of service related to a mortgage enforcement operation other than for actually provided use. Lastly, as regards an offer to buy a mortgage or home by a 501 (c)(3) unit or a unit under the control of a 501 (c) (3) unit, no lender may make a provision to such a unit as a precondition for the selling or transferring of an affidavit, declaration, arrangement or supplement restricting the borrower's title or use of the home.

Until August 1, 2014, the Act also prolongs the entry into force of the personal advice requirement for inverted mortgage lending under Massachusetts General Laws Chapters 167E, Section 7A(b), and 171, Section 65C1/2. Lastly, the Act obliges the Massachusetts Division of Banks to monitor each year the "final result of the credit change processes for all specific mortgage loans" and to submit a statement within 90 working days of the end of each 2012-2017 calender year.

The changes in the enforcement context in Massachusetts are far-reaching and are likely to impact a significant number of mortgage loans (and their individual borrower, creditor and service provider) when they come into effect in November.

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