Given the microscope under which the predatory lending practices of many banks and mortgage companies are being examined these days, it is important to know which practices are legal and which are not when shopping for a new mortgage.

Massachusetts law provides that “it is an unfair or deceptive act or practice for a mortgage broker or lender to conceal or fail to disclose to a borrower any fact relating to the loan transaction, disclosure of which may have influenced the borrower not to enter into the transaction with the broker or lender.” In addition, any affirmative false or misleading representation or statement of fact concerning the loan may violate the law. These regulations have the teeth of the Massachusetts Consumer Protection Laws behind them, and damages may include attorney’s fees and treble damages.

While no hard and fast rule exists, in deciding cases courts typically consider the parties’ circumstances and distinguish statements of concrete fact from more general statements. For example, the courts may consider the borrower’s education and level of sophistication with business matters. Decisions also recognize that statements of expectation, such as “we’ll work with you,” do not support an action for common law fraud or a claim for a violation of the consumer protection statutes.

If you are concerned about the validity of a statement made to you by your mortgage broker, always ask for it in writing and read all the paperwork before you sign. If you do not understand any of the documents you are asked to sign, always seek legal advice prior to signing.