Issue #24: Personal foreclosures
Although Maine is usually considered a foreclosure that is“judicial state, Maine legislation nevertheless allows personal foreclosures. Nonetheless, the principles for such elements as solution of procedure, and accounting for equity within the property foreclosed upon, vary between personal and foreclosures that are judicial. We at OCCR feel that people kinds of conditions ought to be constant in both general public and private foreclosures, considering that the stakes (losing ownership of one’s house) are exactly the same. Consequently, the legislation that is proposedAppendix # 1, part 12) proposes to use exactly the same variety of solution of procedure criteria to personal foreclosures as it is now needed in judicial foreclosures; and extra parts (part 13 and part 14) would repeal the present right of this foreclosing party to postpone purchase of home for just two years and thereafter wthhold the entirety for the home without any duty to account towards the customer for just about any equity. Rather, we propose enactment of a requirement that the house be offered into the bidder that is highest, as it is done in judicial foreclosures, with any equity more than your debt plus costs incurred when you look at the action, being came back to the customer following the purchase.
Issue #25: Payoff demands
The problem of lenders’ responses to payoff demands had been a part of our ask for Comment because we heard from people that once the customers asked for payoff numbers, their loan providers bombarded them with provides to entice them to not ever refinance along with other lenders.
We’ve maybe maybe maybe not included any brand brand new proposal that is legislative deal with this dilemma. We now believe that any issues may be prevented 1) by vigorously enforcing present Maine legislation that needs a loan provider or servicer to quickly react to an ask for a payoff figure (see 9-A MRSA § 9-305-B); and 2) by likewise enforcing, where appropriate, the buyer Credit Code’s supply against unconscionable conduct by lenders (as an example, 9-A MRSA § 9-402 forbids the application of unconscionable conduct to cause a customer to get into a credit deal). As long as lenders conform to the present timeframes that are statutory producing a payoff figure, our company is perhaps maybe maybe not associated with viewpoint they should really be (or lawfully might be) avoided from offering their clients a far better deal.
Problem #26: feasible installment loans me addition of a OCCR staff lawyer and/or an detective to simply help avoid lending that is predatory
The proposition established when you look at the ask for Public Comment to incorporate a detective and a legal professional to OCCR’s staff came across with unanimous help from consumer teams and from industry commenters. We at OCCR feel that this type of step will be incredibly helpful in our efforts to protect customers by quickly and flexibly react to allegations by customers, or by rivals, of predatory activity by loan providers or loan agents.
Nonetheless, the connected bill will not propose authorization that is specific those two jobs. Offered the current belief favoring the addition of state staff just as a final resort, we believe that the legislative committee that considers this bill (in addition to CEI anti-predatory financing bill too) should make such determinations after assessing the necessity for such resources and after hearing from all events about the subject.
Issue #27: Other related proposals
The connected bill (Appendix #1) contains three proposals maybe maybe not particularly addressed in the ask for Public Comment, but which are relevant towards the problem of legislation of home loan financing. The very first is found in area hands down the bill. This area would allow ( not need) Maine to join in a significant mortgage that is multi-state certification project that is presently underway in lot of states. Exactly exactly What started as an endeavor to consider consistent permit application kinds has resulted in a proposition, sponsored by two split state regulatory associations (the seminar of State Bank Supervisors, or CSBS, in addition to United states Association of Residential Mortgage Regulators, or AARMR), to operate a centralized certification system which could accommodate the requirements of loan providers, particularly large home loan businesses with operations in a lot of states. Patterned following the nationwide registration procedure that regulates the securities industry, this technique was created to reduce steadily the burden on candidates as well as on participating states. Although a lot of concerns stay to be answered, OCCR believes it wise to include position the legislation essential to allow Maine to participate this work, if so when it’s about time for this kind of move.
The 2nd brand brand brand new problem is situated in Section 4 associated with the bill, plus it proposes to broaden protection of Article 9 associated with the credit rating Code to encompass a form of loan that few regulators knew existed until recently; specifically, a second-lien purchase-money loan. Most often occurring whenever a loan provider splits up the purchase that is total as a first-lien loan and a higher-rate, second-lien loan, this particular loan is wholly unregulated under present legislation because of the verbiage of 9-A MRSA § 9-101, “Scope, ” which indicates that this article covers just first-lien loans. OCCR is regarding the viewpoint that such loans deserve at the very least the protection granted first-lien purchase cash or refinancing loans, if you don’t the defenses of this complete Code relevant to second-mortgage, non-purchase, non-refinance loans.
The next and final “new” proposition can be found in Section 8 associated with bill connected as Appendix # 1. It needs that loan agents disclose to customers quantities compensated to those agents by loan providers in the shape of yield spread premiums. Yield spread premiums enhance once the interest on that loan increases, leading to a motivation for a financial loan broker to prepare a loan that is high-cost in the event that customer may be eligible for a lowered price. We never propose to restrict the re payment of these premiums; and then need so it be disclosed towards the debtor. We feel this might be a essential action toward the aim of monetary transparency when you look at the consumer-broker relationship.
We have the above actions, as further modified or supplemented through the legislative procedure, will play a crucial role in helping to combat predatory home loan lending in Maine. We have been additionally conscious that the so-called CEI bill is likewise considered by the Legislature during its future session, probably because of the exact same committee, as well as or just around the time that is same. Although the OCCR proposals are far more moderate compared to those proposed by CEI, we believe that the OCCR provisions are well-suited to your particular conditions that have arisen in this State, and to Maine’s restricted share of the market for mortgages and its concomitant restricted capability to influence major nationwide financing forces. Nonetheless, we additionally feel highly that CEI’s bill deserves severe debate, since Maine customers will in the long run reap the benefits of an energetic discussion of all of the viable methods to the task of preventing predatory home loan financing.
William N. Lund, Director
Workplace of Credit Rating Regulation
123 rd MAINE LEGISLATURE
FIRST AVERAGE SESSION – 2007
Legislative Document No. ___
An Act to stop Predatory Mortgage Lending Techniques
Be it enacted by the social people regarding the State of Maine to learn:
Sec. 1. 9-A MRSA, part 6-104-A is enacted to see:
Sec. 6-104-A. For purposes of taking part in the establishment and implementation of a uniform multistate automatic certification system (hereinafter the “system”) for loan brokers, supervised lenders that aren’t supervised banking institutions, and loan that is individual thereof, the manager regarding the workplace of credit rating Regulation may:
A. Modify by rule the permit renewal dates established in parts 2-302(1) and 10-201;
B. Establish by guideline such brand new requirements as are essential for the State to take part in the machine, including authorizing the machine to get permit charges on the behalf of their state and remit those costs towards the State, authorizing collection costs because of the device to cover its solutions, amending definitions in this name to conform with consistent forms used by the device, authorizing the device to process and keep maintaining permit documents, and authorizing utilization of the system’s consistent forms, upon the manager’s discovering that each brand brand new requirement is in keeping with the general public interest in addition to purposes for this Title; and
C. Demand a credit and back ground research of every applicant for the permit as that loan broker, a supervised loan provider that’s not a supervised standard bank, or a loan officer thereof, by means including fingerprint checks for state and nationwide unlawful records, commencing at such time due to the fact State joins the device pursuant to the area. The expense of such investigations needs to be charged into the applicants. Information obtained or held by the manager pursuant to the subsection will probably be non-public pursuant to area 6-116 and never susceptible to disclosure.