Massachusetts regulators are Cracking down on Mortgage Lenders

Continuing a crackdown on alleged mortgage fraud, regulators issued cease-and-desist orders against two mortgage brokerages Monday and shut down a third unlicensed lender. 

Since Sept. 8, the Massachusetts Division of Banks has conducted sweeps looking for instances in which borrowers’ income was inflated to qualify them for loans they could not afford. Investigations are turning up falsified documents that were used to inflate borrower incomes.

Regulators are treating this as an emergency and issued a call for a public hearing on    regulations that is scheduled for 10 a.m. Oct. 17 at One South Station, 5th Floor, in Boston.

The new regulations would explicitly forbid lenders from falsifying income or asset information, or having borrowers sign blank or incomplete loan applications. One wonders didn’t they already have that?