ANDREA NUCIFORO JR.
CRA bill ‘fair’
As summer comes to a close and members of the state Legislature get back to work in earnest, members of the banking and mortgage industry anxiously await decisions on some key bills that were held for further discussion in June’s executive session of the Joint Committee on Banks and Banking.
While some proposed pieces of legislation were given an OK, or in some cases given a negative recommendation by the committee, other bills were held for future disposition.
Sen. Andrea Nuciforo Jr., D-Pittsfield, chairman of the banking committee, said there are many reasons for holding a bill for future discussion, including the need for more education on the topic and content of the bill, additional time for staff to discuss and review the bill, the chance to give members of the community the option of weighing in their opinions on the bill, or the possibility that other laws or regulations may change and there will be no need for the additional piece of legislation. It is not unusual to give a controversial piece of legislation more time in committee to allow additional input from opponents and backers.
But regardless of the reasons they remained in committee, high-profile pieces of legislation including the imposing of Community Reinvestment Act requirements for mortgage companies and enhanced predatory and subprime lending laws are the bills industry observers will be watching most closely this fall.
“My top priority is getting the recodification bill and the predatory lending bills through, especially because we have a shortened session this fall, ending on Nov. 15,” said Rep. John Quinn, D-New Bedford, co-chairman of the banking committee. “We hope to move on the recodification bill – it has been very close to passing and hopefully we can push that over the goal line this year.”
The comprehensive recodification bill was filed by Nuciforo last year and fell short of passing due to rewrites needed before the last day of the session, but the bill has the support of the banking committee and banking industry leaders.
The bill, originally drafted as Senate Bill 10 and then reworked and reintroduced as Senate Bill 16, primarily seeks to modernize the lending and investment statutes for state-chartered banks and broaden the definition of “community” to allow more “underserved” neighborhoods to be considered part of an institution’s core market area, according to Nuciforo.
Members of the industry, including the Massachusetts Bankers Association and the Massachusetts Mortgage Bankers Association, are supportive of the bill and hope to see it pass.
“The mortgage industry recognizes the proactive updating of Sen. Nuciforo’s [recodification bill], An Act Relative to Banks and Banking, as a long overdue and comprehensive mark-up of the commonwealth’s banking statute. We continue to endorse these efforts,” said Kevin Cuff, executive director of the MMBA.
‘Comprehensive’ Approach
Of more controversial nature, however, are the predatory lending and Community Reinvestment Act extension bills currently before the committee.
The predatory lending bills, namely Senate Bill 24, An Act to Establish Protections Against Predatory Lending in the Home Lending Market, and House Bill 9, An Act Relative to Preventing Abusive Mortgage Lending Practices, will be discussed in the banking committee in the coming weeks, and Nuciforo said the industry can expect reformed predatory lending legislation to be approved by the committee.
Nuciforo said, “As far as I’m concerned, the current predatory lending laws do not go far enough and we will be putting something forward” in the way of new legislation to curb predatory lending abuse.
The challenge, however, is to curb predatory lending practices while still allowing legitimate subprime lending activity. The committee, in part, held up the bills in order to more clearly define and differentiate the two types of lending.
Quinn agreed, saying it was necessary to protect consumers against predatory lenders. But with the different bills proposed having the same overall action plan, Quinn said he “hopes to mesh them and get something that is comprehensive.”
Senate Bill 4 and House Bill 3107 – acts to establish community reinvestment obligations for certain mortgage lenders – are undoubtedly the target of future debates among industry goers and members of the industry, said industry officials.
“I think that it’s a fair bill,” said Nuciforo. “The market for mortgage companies has changed so much in the last 10 years. Where banks used to make a majority of the mortgage [loans] in the state, now banks only make about one-third of the overall mortgage loans. In my opinion, this bill will be getting attention … it’s not about whether the bill will happen, it’s about how many lenders will fall in the net [of the bills proposed coverage].”
The state’s two mortgage associations have both opposed extending Community Reinvestment Act requirement to mortgage lenders, in part, they say, because they are not depository institutions. Banking industry leaders, however, have backed the measure.
After a lengthy and intense debate in May on the merits of extending CRA requirements to mortgage lenders, members of the both the banking and mortgage anxiously awaited the committee’s final decision on whether the bill will move forward, and if so what the final language will contain.
“There are additional complex and somewhat controversial issues involving predatory lending, community reinvestment obligation and licensing. We at the MMBA continue to disseminate volumes of additional data and other information [to] the Legislature in order to consider many possible options,” said Cuff. “We hope to continue this progress through the remainder of the year and the legislative session.”
Members of the banking industry are also watching this bill closely, but also have their eye firmly fixed on other pieces of legislation scheduled for discussion this season, some of which will be considered by other committees.
Laws that put restrictions on third-party companies using financial institutions’ names for marketing material, stiffened penalties for note-passing, unarmed bank robbers and electronic banking amendments are just a few of the issues that the Massachusetts Bankers Association is watching this season, according to David E. Floreen, the association’s senior vice president of government affairs and trust services.
“The issues that we are working pretty closely on include the use-of-name legislation for third parties … we are watching the Committee on Criminal Justice hearings that would stiffen the penalties for note-passers and bank robbers, and we anticipate that the banking committee will look at issues like predatory lending and subprime lending,” said Floreen. “The Judiciary Committee will be holding a lot of hearings this fall and the MBA has a number of bills in front of the judiciary committee, including probate, and trust and wealth-management issues. We watch with interest to some extent on housing and affordable development legislation and where they want to move with respect to zoning, although we haven’t been deeply involved in those issues. There is an overall concern about where the economy is going and tax revenue issues, and those are the key issues between now and November.”
Meanwhile, both Nuciforo and Quinn have sponsored new pieces of financial legislation to be heard this season.
In response to recent securities and stock scandals in which working-class investors lost their savings as CEOs pocketed millions in stock options, Nuciforo and Sen. Jarrett T. Barrios have filed legislation that would strengthen the commonwealth’s securities laws.
The bill, which will be heard in the Commerce and Labor Committee this fall, seeks to make Massachusetts securities law stronger and more comparable to New York securities laws by broadening the provisions that protect investors from analysts and companies that misrepresent stock value or conduct other fraudulent activities.
Quinn also has filed new legislation aimed at making one uniform interest rate charged by pawnbrokers.
Currently, said Quinn, there is a “patchwork of interest rates” set by the local communities that can be changed by pawnbrokers. For example, in Fall River, the interest rate is approximately 10 percent a month for pawnbrokers, in Boston the rate is 5 percent a month and in Worcester is 8 percent a month. Because this issue deals with rates of interest, this bill will be heard first by the banking committee.
“In general, I hope that we can make some progress on these bills and we are trying to move these bills through the House or Senate before the governor signs it,” said Quinn.
