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Entries in Truth in Lending (7)


Maine AchievesTruth-in-Lending Harmony, Adopts Regulation Z-3

Maine financial regulators have now finalized Regulation Z-3 in order to harmonize the State’s Truth-in-Lending rules with recently adopted changes approved by the Consumer Financial Protection Bureau.

The joint rulemaking was issued October 15, 2013 by Maine’s Bureau of Financial Institutions (Chapter 138) and Maine’s Bureau of Consumer Credit Protection (Chapter 240).

Under the new rules, federal Regulation Z (12 CFR Part 1026) and Regulation M (12 CFR Part 1013) are conformed to Maine law.  The new rule also includes changes to both rules that were adopted on September 13th of this year by the CPFB.

The original notice of rulemaking was issued on August 20, 2013 as reported in Banking Law Update

Regulation Z-3 became effective on October 15, 2013.


Maine Financial Regulators Propose "Regulation Z-3"

On Tuesday August 20th, the Maine Bureau of Financial Institutions and the Maine Bureau of Consumer Credit Protection issued a notice of proposed rulemaking entitled Regulation Z-3. The new rule would be codified as Chapter 138 of the rules of BOFI, and Chapter 240 of the rules of BCCP.

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CFPB Issues Small Entity Compliance Guide on Ability-to-Repay and Qualified Mortgage Rule

The Consumer Financial Protection Bureau (“CFPB”) recently issued a Small Entity Compliance Guide on the Ability-to-Repay and Qualified Mortgage Rule (the “Rule”). The Rule was issued under Dodd-Frank. The Guide provides an overall summary of the Rule and discusses application of the Rule in a Q&A format. The CFPB issued the final rule on January 10, 2013, with an effective date of January 10, 2014.

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Regulators Issue Final Rule For Higher-Priced Mortgage Appraisals

The OCC, Federal Reserve, CFPB, FDIC, FHFA, and NCUA recently issued notice of a Final Rule establishing new appraisal requirements for “higher-priced mortgage loans” (HPMLs). The Final Rule is being implemented under the Federal Truth in Lending Act and was required under Dodd-Frank. We discussed an earlier proposed version of the rule last November. Whether a consumer mortgage loan is an HPML generally depends on if the interest rate exceeds 1.5% or 2.5% over prime (depending on principal amount) for a first-lien residential mortgage, or 3.5% over prime for a subordinate-lien residential mortgages. There are a number of significant exclusions from requirements under the Final Rule, for example, for property located in “rural counties” and for property acquired from servicemembers.

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CFPB Issues Final Rules Governing MLO Compensation Restrictions and Other Requirements under Regulation Z

The Consumer Financial Protection Bureau (“CFPB”) recently issued a final rule (the “Final Rule”) implementing restrictions on mortgage loan originator (“MLO”) compensation under Regulation Z (Truth in Lending), along with additional interpretive guidance. These restrictions, which prohibit MLO compensation based on mortgage loan terms, or “proxies” for such terms, were mandated under the Dodd-Frank Act. In a number of prior blogs, we discussed the CFPB’s evolving guidance on these restrictions. One issue of particular interest was whether profit-based retirement and bonus plans would be prohibited under the rationale that profit serves as a “proxy” for certain loan terms such as interest rate (a view taken by Federal Reserve staff members when the rule was first introduced).

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