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Bureau Issues Proposed Rules Regarding Regulation Z-2 and the Tangible Net Benefit Rule

On September 27, 2011, the Superintendant of the Bureau of Financial Institutions issued notice of two proposed rules in light of the passage of Public Law 2011, Chapter 427, “An Act to Amend the Maine Consumer Credit Code to Conform with Federal Law.” 

The first rule would repeal Regulation Z-2, Truth in Lending (Bureau of Financial Institution Regulation 38 and Bureau of Consumer Credit Protection Chapter 240), which dates back to 1981.  As a result of Public Law 2011, Chapter 427, which incorporates federal truth-in-lending regulations into Maine law, the Bureau considers Regulation Z-2 out-of-date and duplicative.  State-chartered banks and credit unions would look to the Maine Consumer Credit Code for any distinctions from federal truth-in-lending laws.

The second rule would eliminate Bureau of Financial Institutions Chapter 144, which implemented Section 8-506 of the Maine Consumer Credit Code.  Section 8-506 imposed restrictions and requirements on certain residential mortgage loan practices, such as determinations of a reasonable, tangible net benefit from a higher-priced mortgage loan and a prohibition on “flipping.”  Chapter 144 Public Law 2011, Chapter 427 exempted supervised financial organizations from Section 8-506, rendering Chapter 144 (Bureau of Consumer Credit Protection Chapter 550) inapplicable to state-chartered banks and credit unions.

The deadline for public comment on the new rules is October 31, 2011.  A link to the Bureau’s notice may be found here:

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