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PUBLIC LAWS OF MAINE
First Regular Session of the 121st

CHAPTER 49
H.P. 383 - L.D. 494

An Act To Enhance Consumer Protections in Relation to Certain Mortgages

Be it enacted by the People of the State of Maine as follows:

     Sec. 1. 9-A MRSA §8-103, sub-§1, ¶F-1, as enacted by PL 1995, c. 326, §2, is repealed and the following enacted in its place:

     Sec. 2. 9-A MRSA §8-206-A, sub-§8, as enacted by PL 1995, c. 326, §5, is amended to read:

     8. A high-rate, high-fee mortgage may not provide for an interest rate applicable after default that is higher than the interest rate that applies before default or for default charges in excess of 5% of the amount in default. If the date of maturity of such a mortgage is accelerated due to default and the consumer is entitled to a rebate of interest, that rebate must be computed by a method that is not less favorable than the actuarial method, as that term is defined in the federal Housing and Community Development Act of 1992, Public Law No. 102-550, Section 933(d) 106 Stat. 3672, 3892 (1992).

     Sec. 3. 9-A MRSA §8-206-A, sub-§11-A is enacted to read:

     11-A. A creditor who makes a high-rate, high-fee mortgage shall report both the favorable and unfavorable payment history of the consumer to a nationally recognized consumer credit reporting agency at least annually during the period the creditor holds or services the loan.

     Sec. 4. 9-A MRSA §8-206-A, sub-§12-A is enacted to read:

     12-A. A creditor may not:

     Sec. 5. 9-A MRSA §8-206-A, sub-§§13-A to 13-C are enacted to read:

     13-A. A creditor may not advertise that refinancing preexisting debt with a high-rate, high-fee mortgage will reduce a consumer's aggregate monthly debt payment without also disclosing that the high-rate, high-fee mortgage may increase both the consumer's aggregate number of monthly debt payments and the aggregate amount paid by the consumer over the term of the high-rate, high-fee mortgage.

     13-B. A creditor may not recommend or encourage default or further default by a consumer on an existing loan or other debt prior to the closing of a high-rate, high-fee mortgage that refinances all or any portion of the existing loan or debt.

     13-C. Beginning January 1, 2004, a creditor that makes a high-rate, high-fee mortgage to a consumer and offers the consumer the option to purchase an individual or group credit life, accident, health, disability or unemployment insurance product on a prepaid single premium basis must also offer the consumer the option of purchasing that insurance product on a monthly premium basis.

If a consumer purchases from a lender an individual or group credit life, accident, health, disability or unemployment insurance product, that consumer has the right to cancel the insurance product at any time and receive a refund of any unearned premiums paid. Notice of the right to cancel must be sent by mail to the consumer by the creditor no later than 30 days after consummation. The notice must also disclose the type of insurance product purchased, the cost of the product and the procedure for canceling the product.

     Sec. 6. 9-A MRSA §8-206-A, sub-§§16-A, 16-B and 18 are enacted to read:

     16-A. A creditor that makes a high-rate, high-fee mortgage to a consumer and any assignee of that creditor have the obligation, jointly and severally, to refund or credit the consumer for any default charges, prepayment penalties or prepaid finance charges collected in excess of the limits set forth in this article.

     16-B. A high-rate, high-fee mortgage may not include a call provision that permits the creditor, in its sole discretion, to accelerate the indebtedness. This subsection does not apply when repayment of the loan is accelerated by a bona fide default, pursuant to a due-on-sale clause provision or pursuant to another provision of the loan agreement unrelated to the payment schedule, including, but not limited to, bankruptcy or receivership.

     18. A political subdivision of this State is prohibited from enacting, issuing and enforcing ordinances, resolutions, rules, regulations, orders, requests for proposals or requests for bids pertaining to the making of a high-rate, high-fee mortgage by a person who:

This subsection applies to all ordinances, resolutions, rules, regulations, orders, requests for proposals and requests for bids pertaining to financial or lending activities, including any ordinances, resolutions, rules, regulations, orders, requests for proposals and requests for bids disqualifying persons from doing business with a political subdivision based upon the making of a high-rate, high-fee mortgage or imposing reporting requirements or any other obligations upon persons regarding the making of a high-rate, high-fee mortgage.
This subsection applies retroactively to all ordinances, resolutions, rules, regulations, orders, requests for proposals and requests for bids in existence on the effective date of this subsection.

Effective September 13, 2003, unless otherwise indicated.

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