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CHAPTER 142 CHARGES PERMITTED FOR PREPAYMENT OF (Reg. 42) CERTAIN CONSUMER LOANS
Public Law 2003, Chapter 263, § 1, effective September 13, 2003, amended 9-A M.R.S.A. § 2-509. The amendment authorizes supervised financial organizations to assess a consumer a reasonable charge related to the prepayment of a consumer loan secured by an interest in land. That charge must be reasonably calculated to offset only the cost of origination of the loan. Title 9-A M.R.S.A. § 2-509 as amended requires the Superintendent to adopt rules to implement its provisions. Rules adopted pursuant to § 2-509 are routine technical rules as defined in Title 5, chapter 375, sub-chapter 2-A.
SECTION I. Purpose
This rule establishes guidelines to be followed by a supervised financial organization that assesses a charge for full repayment, through refinancing or otherwise, of a consumer loan secured by an interest in land, when repayment occurs prior to the end of the loan’s contractual term. This rule does not permit a supervised financial organization to assess a prepayment charge or prepayment penalty designed to recover anticipated revenue.
SECTION II. Definitions
For purposes of this rule, the following definitions shall apply:
SECTION III. General Provisions
Except as provided in Section IV, a supervised financial organization may assess a reasonable prepayment charge to recover certain closing costs, when a consumer repays a consumer loan secured by an interest in land in full prior to the maturity date stated in the loan note. The dollar amount of the prepayment charge must be disclosed in the note. Closing costs, including closing costs that are waived by the financial institution, must be fully disclosed and itemized in documentation accompanying the note. Only those closing costs incurred, but waived by the financial institution, are recoverable through the assessment of a prepayment charges permitted under this rule. The prepayment charge must not exceed the total of the incurred, but waived, closing costs prorated as follows:
SECTION IV. Exceptions
SECTION V. Disclosures, advertising.
Advertisements for consumer loans that provide a prepayment charge for early repayment must disclose, in a conspicuous and easy to comprehend manner, that fact and the methodology by which a prepayment charge may be assessed.
SECTION VI. Federal rules and regulations.
The Federal Deposit Insurance Corporation, the Federal Reserve System, the Comptroller of the Currency, the Office of Thrift Supervision, and the National Credit Union Administration have promulgated or may in the future promulgate, regulations or guidelines governing the manner in which a financial institution can assess charges for early repayment of a consumer loan. There may exist some difference between this rule and a regulation promulgated by a federal regulatory agency. It is not the intent of this rule to permit any practice that is not permitted by a federal regulatory agency.
9-B MRSA § 111, 215, 241, 242 and 251
9-A MRSA § 2-509
Last Updated: June 5, 2013
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