Bulletin: MA2008001

Dear Associates:

Mortgage Brokers and Mortgage Loan Originators.

Because of the problems that have developed by recent sub-prime lending practices, the Massachusetts legislature has passed a statute, the purpose of which, in part, is to make a record of and keep track of mortgage brokers and mortgage loan originators who have participated in placing or directing a mortgage loan on certain residential properties.  The statute, G.L.c. 183, §6D, was created by Section 3 of Chapter 206 of the Acts of 2007, passed and made effective November 29, 2007, and it provides as follows:

Every mortgage and assignment of mortgage secured by residential property, as defined in section 1 of chapter 255E, presented for record, in which a mortgage broker, as defined in said section 1 of said chapter 255E, is involved shall contain or have endorsed upon it the name, post office address and license number of the mortgage broker and, if applicable, the mortgage loan originator, as defined in section 1 of chapter 255F, responsible for placing the mortgage loan with the mortgagee. This endorsement, or notation that no mortgage broker or mortgage loan originator was involved in the mortgage, if known, shall be recorded as part of the mortgage or assignment of mortgage. Failure to comply with this section shall not affect the validity of any mortgage or the recording of any mortgage or assignment of mortgage.

Although the statute provides that failure to comply with the section does not affect the validity of any mortgage or the recording of any mortgage or assignment, the fact remains that the register of deeds or assistant recorder of the land court would seem to be able to reject the instrument in the first instance if it did not comply with the law.

As referred to in the new statute, the terms “residential property,” “mortgage broker” and “mortgage loan originator” are defined terms, as set out in G.L.c. 255E, §1 and G.L.c. 255F, §1, respectively, and mean:

“Residential Property” means real property located in the commonwealth having thereon a dwelling house with accommodations for four or less separate households and occupied, or to be occupied, in whole or in part by the obligor on the mortgage debt.

“Mortgage Broker” means any person who for compensation or gain, or in the expectation of compensation or gain, directly or indirectly negotiates, places, assists in placement, finds or offers to negotiate, place, assist in placement or find mortgage loans on residential property for others.

“Mortgage Loan Originator” means a natural person who: (a) is employed by or associated with 1 and not more than 1 entity; and (b) negotiates, solicits, arranges, provides or accepts residential mortgage loan applications, or assists consumers in completing such applications, except that employees whose responsibilities are limited to clerical and administrative tasks and who do not solicit borrowers, accept applications or negotiate the terms of residential mortgage loans on behalf of the employer shall not be considered mortgage loan originators and do not require licenses.  This definition is very broad and would include loan officers.  The part of the statute that makes this reference cites Section 1 of Chapter 255F for a definition, but that statute itself is not effective until July 1, 2008.

If a Mortgage Broker or a Mortgage Loan Originator is not involved in the loan, this must be so stated in the mortgage or assignment.

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Other Statutes.

There are, and have been for some time, other statutes that are in the nature of directives to the register of deeds or assistant recorder of the land court governing technical recording requirements, and failure to observe these requirements could likewise result in the instrument being rejected for recording. A few of these statutes are:

G.L.c. 183, §6:

Every deed presented for record shall contain or have endorsed upon it the full name, residence and post office address of the grantee and a recital of the amount of the full consideration thereof in dollars or the nature of the other consideration therefor, if not delivered for a specific monetary sum. The full consideration shall mean the total price for the conveyance without deduction for any liens or encumbrances assumed by the grantee or remaining thereon. All such endorsements and recitals shall be recorded as part of the deed. Failure to comply with this section shall not affect the validity of any deed. No register of deeds shall accept a deed for recording unless it is in compliance with the requirements of this section.

G.L.c. 183, §6A:

No instrument conveying unregistered land shall be accepted for recording unless (a) the instrument indicates that the land conveyed is the same as described in or conveyed by prior recorded instruments identified sufficiently to locate the place of recording within the registry, or states that the instrument does not create any new boundaries, or (b) the instrument identifies the land conveyed either by reference to a plan or plans previously recorded in the same registry of deeds and identified sufficiently to locate the place of recording therein, or by reference to a plan or plans recorded with the conveyance. Failure to comply with this section shall not affect the validity of any instrument.

G.L.c. 183, §6B:

All documents to be recorded in the land court or registry of deeds shall, where applicable, set forth in the margin the street address of the property which is affected by such document; provided, however, that failure to include such address shall not affect the validity of the document or the recording thereof.

G.L.c. 183, §6C:

Every mortgage and assignment of a mortgage presented for record shall contain or have endorsed upon it the residence and post office address of the mortgagee or assignee if said mortgagee or assignee is a natural person, or a business address, mail address or post office address of the mortgagee or assignee if the mortgagee or assignee is not a natural person. Such endorsement shall be recorded as part of the mortgage or assignment of a mortgage. Failure to comply with this section shall not affect the validity of any mortgage or assignment of a mortgage or the recording thereof. No register of deeds shall accept a mortgage or assignment of a mortgage for recording unless it is in compliance with the requirements of this section.

G.L.c. 183, §54(b) [portion of statute only]

A discharge [of mortgage] shall contain the street address of the mortgaged property, the book number and page number or the land court document number and recording date of the mortgage, and the name of the original mortgagor; but the failure to include the information shall not affect the validity of the instrument.

G.L.c. 222, §8:

A justice of the peace or notary public, when taking acknowledgement of any instrument provided by law to be recorded, shall print or type his name directly below his signature and affix thereto the date of the expiration of his commission in the following language: “My commission expires _______”.  Failure to comply with this section shall not affect the validity of any instrument, or the record thereof.

Please contact your local Stewart underwriter if you have questions concerning this or any other topic for which you need assistance.