Section 8 of what is known as the
Unfair and Deceptive Acts and Practices Act went into effect in Massachusetts on Jan. 2. The new law prohibits as conflicts of interest any increases in brokers' compensation that are tied to higher interest rates and less favorable terms. Most subjective is the requirement that lenders and brokers must reasonably assess the borrower's ability to repay the loan, including the ability to repay an adjustable-rate mortgage at the higher adjusted rates, even when the initial adjustment does not occur until the fifth, seventh or tenth year. Wholesale lenders including IndyMac and Wells Fargo told
MortgageDaily.com that they are making changes to their broker programs, while other wholesalers are reportedly curtailing business in the state.
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