SECTION 2. Mortgage broker or lender license requirement; exempted entities

No person shall act as a mortgage broker or mortgage lender with respect to residential property unless first obtaining a license from the commissioner; provided, however, that any person who is employed by or associated with a licensed mortgage broker or mortgage lender in the capacity of a mortgage broker or mortgage lender under the direction of said licensed mortgage broker or mortgage lender shall not be required to obtain such license. The provisions of this chapter shall not apply to any mortgage lender making fewer than five mortgage loans within any period of twelve consecutive months; provided, however, that in computing the number of mortgage loans, there shall be counted in the loans of more than one partnership, association, trust or corporation, the majority interest of which are owned or controlled directly or indirectly by the same person or persons, partnerships, associations, trusts or corporations and including in the loans of a partnership or company not incorporated the loans of the several members thereof. The provisions of this chapter shall not apply to any person who acts as a mortgage broker fewer than five times within any period of twelve consecutive months. The provisions of this chapter shall not apply to a bank as defined in section one of chapter one hundred and sixty-seven, a national banking association, a federally chartered credit union, a federal savings and loan association, a federal savings bank, or any subsidiary or affiliate of the above, insurance company, or to any bank, trust company, savings bank, savings and loan association, credit union or insurance company organized under the laws of any other state; provided, however, that except as provided herein, such provisions shall apply to any subsidiary or affiliate, as defined by the commissioner, of any such exempted entity and of a bank holding company established in accordance with state or federal law; and provided, further, that such provisions shall not apply to any instrumentality created by the United States or any state or to any nonprofit, public or independent post-secondary educational institution within the commonwealth authorized by law to grant degrees by the commonwealth, or by any agency or instrumentality thereof, for mortgage loans made by any such educational institution to its faculty or staff, or to any charitable organization originally created by a last will and testament before January first, nineteen hundred and fifty which makes no more than twelve mortgage loans during a twelve month period or to a real estate broker or real estate salesman as defined in section eighty-seven PP of chapter one hundred and twelve who, in connection with services performed in a prospective real estate transaction, provides mortgage information or assistance to a buyer if such real estate broker or real estate salesman is not compensated for the same in addition to the compensation received from the seller for such real estate services. The commissioner may adopt, amend or repeal rules and regulations, which may include an adequate capitalization requirement for mortgage lenders, to aid in the administration and enforcement of this chapter.

The commissioner may make a determination that a bona fide nonprofit affordable homeownership organization is exempt from this chapter upon application for an exemption by such organization. Such application shall be approved upon the commissioner's determination that the organization satisfies the following criteria:

(a) the organization shall be a nonprofit corporation with a primary purpose of helping qualified low-income individuals build, repair and purchase affordable housing;

(b) the organization shall be exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code;

(c) the organization shall not charge loan origination fees;

(d) the organization shall not provide residential mortgage loans that do not fully amortize over the term of the loans;

(e) the organization shall not compensate employees based on the number or size of mortgage loans originated by the employee or otherwise incentivize any employees to act other than in the best interests of the borrower;

(f) the organization provides mortgage products that meet the ability-to-repay and qualified mortgage standards pursuant to 12 CFR Part 1026; and

(g) the organization shall determine that a borrower has a reasonable ability to repay a mortgage before consummation; provided, however, that a borrower's debt-to-income ratio shall not exceed 43 per cent.

The division of banks may periodically monitor an exempted bona fide nonprofit affordable homeownership organization and a nonprofit entity that is an instrumentality created by the United States or any state under section 2 of chapter 255F and examine its books and activities to determine whether it remains in compliance with this chapter.

The commissioner may revoke a bona fide nonprofit affordable homeownership organization's exempt status if the commissioner determines said organization no longer meets the criteria of this section.