Coakley Delays New Regulations

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Attorney General Martha Coakley is pushing back the start date for new regulations on mortgage lending in Massachusetts after some of the state's largest lenders threatened to stop writing mortgages here.

A key point of contention has been over changes to the way brokers will be compensated.

The new rules were set to go into effect on Thursday, but Coakley said she first needs to make sure that lenders threatening to leave the state actually understand the changes being implemented.

"We think that their threat is based upon a misunderstanding or confusion they have over what compensation is allowed under these regulations," Coakley said. "We are confident that if we have a chance to speak with them, we can clear up some of that confusion."

Executive director of the Massachusetts Mortgage Association Denise Leonard acknowledged there is confusion over the issue, and applauded the attorney general's decision to delay the regulations.

"She reacted to the concerns that we had, and what was taking place in the marketplace. It was a really good move," said Leonard. "After our conversations with her office, it became apparent that the intent of the language was not how it was being interpreted by our members."

Coakley met with a group of mortgage industry leaders last Friday, but no agreement came out of the meeting.

The attorney general maintains she won't back down on the changes she has planned for the industry.

"If, as a result of these regulations, they still say they're not going to sell in Massachusetts, then the line in the sand is drawn," Coakley said. "If they want to sell to consumers in Massachusetts based upon what we think is and unfair and deception practice of compensation, then they shouldn't be selling in Massachusetts."

The attorney general said a January implementation date also works better because the original start date is too soon for some lenders and borrowers who have already taken out loans, but have not yet finished paying them.

"I do not want to interfere with those loans, assuming the borrowers wish to proceed, delay those transactions, or even risk loss of buyer deposits if a lender failed to honor its loan commitment," Coakley wrote in a statement. "The additional time will permit all brokers and lenders to ensure that, as of 2008, all loan originations comply with the new regulations."

The new regulations are slated to go into effect on January 2.
Steve Brown contributed to this report.

This program aired on November 13, 2007. The audio for this program is not available.