Issue #24: Personal foreclosures

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 into the property foreclosed upon, vary between personal and foreclosures that are judicial. We at OCCR feel that people kinds of conditions must be constant both in general general public and private foreclosures, because the stakes (losing ownership of one’s house) are exactly the same. Consequently, the proposed legislation (Appendix no. 1, area 12) proposes to utilize exactly the same style of service of procedure criteria to personal foreclosures as it happens to be needed in judicial foreclosures; and extra parts (Section 13 and part 14) would repeal the existing right regarding the foreclosing party to wait purchase of home for just two years and thereafter wthhold the entirety of this home without any responsibility to account into the customer for almost any equity. Rather, we propose enactment of a necessity that the house be offered towards the highest bidder, because is carried out in judicial foreclosures, with any equity in excess of the debt plus expenses incurred into the action, being came back to the customer following the purchase.

Issue #25: Payoff demands

The matter of lenders’ responses to payoff demands ended up being incorporated into our ask for Comment because we heard from people that once the customers asked for payoff numbers, their loan providers bombarded them with proposes to entice them not to ever refinance along with other loan providers.

We now have maybe not included any brand new proposal that is legislative deal with this matter. We currently believe that any dilemmas could be prevented 1) by vigorously enforcing Maine that is current law takes a loan provider or servicer to quickly answer a obtain 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 loan providers (for instance, 9-A MRSA § 9-402 prohibits the application of unconscionable conduct to cause a customer to come into a credit transaction). As long as lenders conform to the present statutory timeframes for creating a payoff figure, we have been perhaps maybe not associated with the viewpoint which they must certanly be (or legitimately could possibly be) avoided from providing their clients a significantly better deal.

Problem #26: feasible addition of an OCCR staff lawyer and/or a detective to simply help avoid predatory financing techniques

The proposition established when you look at the obtain Public Comment to incorporate an detective and legal counsel to OCCR’s staff came across with unanimous help from customer teams and from industry commenters. We at OCCR feel that this kind of step could be exceedingly useful in our efforts to quickly protect consumers by and flexibly react to allegations by customers, or by competitors, of predatory activity by loan providers or loan agents.

Nonetheless, the attached bill doesn’t propose particular authorization for those two roles. Because of the sentiment that is current the addition of state staff just as a final resort, we believe 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 them.

Issue #27: Other proposals that are related her response

The bill that is attachedAppendix #1) contains three proposals perhaps perhaps not especially addressed in the ask for Public Comment, but which can be relevant to your dilemma of regulation of mortgage financing. The foremost is found in part hands down the bill. This area would allow (although not require) Maine to become listed on in a significant mortgage that is multi-state certification project this is certainly presently underway in many states. What started as an attempt to look at consistent permit application types has resulted in a proposition, sponsored by two split state regulatory associations (the meeting of State Bank Supervisors, or CSBS, as well as the American Association of Residential Mortgage Regulators, or AARMR), to operate a centralized certification system that may accommodate the requirements of loan providers, particularly big home loan organizations with operations in several states. Patterned following the nationwide registration process that regulates the securities industry, this technique is made 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 set up destination the legislation required to allow Maine to participate this work, if so when it’s high time for this type of move.

The 2nd new problem can be found in Section 4 associated with the bill, and it also proposes to broaden protection of Article 9 associated with the Consumer Credit Code to encompass a kind of loan that few regulators knew existed until recently; specifically, a second-lien purchase-money loan. Most often occurring when a loan provider splits within the purchase that is total in to a first-lien loan and a higher-rate, second-lien loan, this particular loan is wholly unregulated under current legislation as a result of the verbiage of 9-A MRSA § 9-101, “Scope, ” which indicates that this article covers just first-lien loans. OCCR is of this viewpoint that such loans deserve at least the protection granted purchase that is first-lien or refinancing loans, or even the defenses associated with complete Code applicable to second-mortgage, non-purchase, non-refinance loans.

The 3rd and final “new” proposition can be found in Section 8 of this bill attached as Appendix #1. It needs that loan agents disclose to customers quantities paid to those brokers by lenders by means of yield spread premiums. Yield spread premiums enhance once the rate of interest on financing increases, leading to a reason for a financial loan broker to set up a loan that is high-cost in the event that customer may be eligible for a lowered rate. We usually do not propose to limit the re re re payment of such premiums; simply to need so it be disclosed to your debtor. We feel this really is a crucial action toward the aim of monetary transparency within 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 fight predatory home loan financing in Maine. Our company is additionally conscious that the so-called CEI bill is likewise considered because of the Legislature during its future session, most likely by the exact same committee, and also at or just around the exact same time. As the OCCR proposals are far more moderate compared to those proposed by CEI, we believe that the OCCR conditions are well-suited towards the particular problems that have actually arisen in this State, also to Maine’s restricted market share for mortgages and its concomitant restricted capacity to influence major nationwide lending forces. Nonetheless, we additionally feel strongly that CEI’s bill deserves severe debate, since Maine consumers will in the long run take advantage of a energetic conversation of all of the viable methods to the task of preventing predatory home loan financing.

William N. Lund, Director

Workplace of Credit Rating Regulation



Legislative Document No. ___

An Act to stop Predatory Mortgage Lending Methods

Be it enacted by the social people associated with State of Maine to see:

Sec. 1. 9-A MRSA, area 6-104-A is enacted to learn:

Sec. 6-104-A. For purposes of taking part in the establishment and utilization of a uniform multistate automated certification system (hereinafter the “system”) for loan brokers, supervised lenders that aren’t supervised finance institutions, and loan that is individual thereof, the manager of this workplace of credit rating Regulation may:

A. Modify by rule the permit renewal dates set forth in parts 2-302(1) and 10-201;

B. Establish by guideline such brand brand new requirements as are essential for the State to take part in the device, including authorizing the device to gather permit fees with respect to their state and remit those fees towards the State, authorizing collection costs by the device to fund its solutions, amending definitions in this Title to conform with consistent forms used by the machine, authorizing the device to process and keep permit documents, and authorizing utilization of the system’s consistent forms, upon the manager’s discovering that each brand new requirement is in line with the general public interest therefore the purposes of the Title; and

C. Need a credit and back ground research of each and every applicant for a permit as that loan broker, a supervised loan provider which is not a supervised standard bank, or that loan officer thereof, by means including fingerprint checks for state and nationwide criminal records, commencing at such time once the State joins the device pursuant to the part. The price of such investigations should be charged to your candidates. Information obtained or held by the manager pursuant for this subsection will probably be non-public pursuant to part 6-116 and never at the mercy of disclosure.

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