Determining Borrower's Interest

(1) A home loan shall be in compliance with 209 CMR 53.03 if it meets any of the following: (a) The new home loan is guaranteed, originated, or funded by the Federal Housing Administration, the Department of Veterans Affairs, or other State or federal housing finance agencies; (b) The annual percentage rate of the new home loan at consummation does not exceed by more than 2.5 percentage points for closed-end first-lien home loans, or by more than 3.5 percentage points for closed- end subordinate-lien home loans, the yield on United States Treasury securities having comparable periods of maturity to the loan maturity as of the 15th day of the month immediately preceding the month in which the application for the extension of credit is received by the lender; (c) The new home loan is an open-end home loan and the annual percentage rate under the agreement will not exceed at any time the Prime rate index as published in the Wall Street Journal plus a margin of one percentage point; (d) The new home loan is a Qualified Mortgage; or (e) The borrower is able to recoup the costs of refinancing the home loan within two years, taking into account the costs and fees, and the interest rate on the new home loan is reduced without increasing the amortization period of the new home loan compared to the original amortization term of the old home loan. (2) A refinancing which does not meet the provisions of 209 CMR 53.04(1) shall not be presumed to be a violation of 209 CMR 53.03. (3) A lender making a home loan which is not exempt under 209 CMR 53.04(1) shall not knowingly refinance the home loan unless the lender shall have determined that the refinancing is in the borrower's interest. Factors to be considered by a lender in determining if the refinancing is in the borrower's interest include, but are not limited to the following: (a) the borrower's new monthly payment is lower than the total of all monthly obligations being financed, taking into account the costs and fees; (b) there is a change in the amortization period of the new loan compared to the original amortization term of the old home loan; (c) the borrower receives cash in excess of the costs and fees of refinancing; (d) the borrower's note rate of interest is reduced; (e) there is a change from an adjustable to a fixed rate loan, taking into account costs and fees; (f) the refinancing is necessary to respond to a bona fide personal need or an order of a court of competent jurisdiction; or (g) the time it takes to recoup the costs of refinancing, taking into account the costs and fees. 53.05 Underwriting Standards In making a home loan in which a determination under 209 CMR 53.04 that the home loan is in the borrower's interest is required, a lender shall use sound underwriting practices which are reasonable in relation to the home loan requested.