An Act To Update Citations of Recodified Federal Regulations in the Maine Consumer Credit Code
Maine Legislature, Session 126, LD 1651
Committee: Insurance and Financial Services
Sponsors: WHITTEMORE, TREAT
Amends: 9-A MRSA §3, 9-A MRSA §8, 9-A MRSA §9, 9-A MRSA §10

Legislative Document 
No. 1651 
S.P. 643 
In Senate, December 23, 2013 
An Act To Update Citations of Recodified Federal Regulations in 
the Maine Consumer Credit Code 
Submitted by the Department of Professional and Financial Regulation pursuant to Joint 
Rule 204. 
Received by the Secretary of the Senate on December 23, 2013.  Referred to the Committee 
on Insurance and Financial Services pursuant to Joint Rule 308.2 and ordered printed. 
DAREK M. GRANT 
Secretary of the Senate 
Presented by Senator WHITTEMORE of Somerset. 
Cosponsored by Representative TREAT of Hallowell. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  9-A MRSA §3-310, sub-§1, as amended by PL 2011, c. 427, Pt. A, §10, 
is further amended to read: 
1.  In connection with a consumer credit transaction in which the interest rate may 
vary during the term of the transaction, the creditor shall make the following disclosures 
in writing accordance with section 8-504. 
A.  With respect to a closed-end transaction secured by the consumer's principal 
dwelling with a term greater than one year, the information required under 12 Code 
of Federal Regulations, 226.19(b) must be disclosed at the time an application form is 
provided or before the consumer pays a nonrefundable fee, whichever is earlier. 
B.  With respect to an open-end credit plan secured by the consumer's principal 
dwelling or by any 2nd or vacation home of the consumer, the information required 
by 12 Code of Federal Regulations, Section 226.5b(d) shall be disclosed at the time 
provided in 12 Code of Federal Regulations Section 226.5 b (b). 
C.  With respect to a closed-end transaction other than one described in paragraph A, 
the information required by 12 Code of Federal Regulations, Section 226.18(f)(1) 
shall be disclosed before consummation of the transaction. 
D.  With respect to an open-end credit plan other than one described in paragraph B, 
the information required by 12 Code of Federal Regulations, Section 226.6(a)(1)(ii) 
must be disclosed before the first transaction under the plan. 
Sec. 2.  9-A MRSA §3-316, as amended by PL 2011, c. 427, Pt. B, §9, is further 
amended to read: 
§3-316.  Real estate settlement procedures 
A creditor and its mortgage loan originators shall comply with the provisions of the 
federal Real Estate Settlement Procedures Act of 1974, 12 United States Code, Section 
2601 et seq. and its implementing regulation, Regulation X, 24 12 Code of Federal 
Regulations, Section 3500 1024.1 et seq. 
Sec. 3.  9-A MRSA §8-503, as enacted by PL 2011, c. 427, Pt. A, §15, is amended 
to read: 
§8-503.  Conformity with federal law 
Unless the context otherwise indicates, any word or phrase that is not defined in this 
Article but that is defined in the Federal Truth in Lending Act, Title I of the federal 
Consumer Credit Protection Act, 15 United States Code, Section 1601 et seq. or its 
implementing regulation, Regulation Z, 12 Code of Federal Regulations, Section 226.1 
1026.1 et seq., has the meaning set forth in the Federal Truth in Lending Act and its 
implementing regulations. 
Sec. 4.  9-A MRSA §8-504, sub-§§1 and 2, as enacted by PL 2011, c. 427, Pt. A, 
§15, are amended to read: 
1.  Compliance with Federal Truth in Lending Act.  Notwithstanding any other 
law, a creditor shall comply with the Federal Truth in Lending Act, Title I of the federal 
Consumer Credit Protection Act, 15 United States Code, Section 1601 et seq. and its 
implementing regulations, Regulation Z, 12 Code of Federal Regulations, Section 226.1 
1026.1 et seq. and Regulation M, 12 Code of Federal Regulations, Section 213.1 1013.1 
et seq., including any final regulations issued on or before July 21, 2011. 
2.  Rule-making authority.  Consistent with the purposes of Title X and Title XIV 
of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 
111-203 and with the purposes set forth in sections 1-102 and 8-502 and notwithstanding 
other law, the administrator may adopt rules substantially similar to or that afford more 
protection for consumers than those codified in 12 Code of Federal Regulations, Part 226 
1026 and 12 Code of Federal Regulations, Part 213 1013. Rules adopted pursuant to this 
subsection are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.  
In adopting rules pursuant to this subsection, the administrator shall specifically consider 
whether there is a substantial impact on consumer protection before adopting rules 
affecting the following provisions of section 8-506: 
A.  The rate thresholds pertaining to high-cost mortgage loans in section 8-506, 
subsection 1, paragraph H; 
B.  The prepayment penalties for high-cost mortgage loans in section 8-506, 
subsection 2, paragraph D; 
C.  The assignee liability for high-cost mortgage loans in section 8-506, subsection 3; 
D.  The ability to repay in section 8-506, subsection 4; 
E.  The prohibition against flipping and the principles of tangible net benefit in 
section 8-506, subsection 5; or and 
F.  The enhanced penalties for violations in section 8-506, subsection 6. 
The rules may contain classifications, differentiations or other provisions and may 
provide for adjustments and exceptions for any class of transactions subject to this Title 
that in the judgment of the administrator are necessary or proper to effectuate the 
purposes of this Title, or to prevent circumvention or evasion of or to facilitate 
compliance with, the provisions of this Title. 
Sec. 5.  9-A MRSA §8-505, sub-§2, as enacted by PL 2011, c. 427, Pt. A, §15, is 
amended to read: 
2.  Reimbursement.  The administrator may adopt by rule a reimbursement program 
such that creditors subject to an administrative order under section 6-108 may be ordered 
to make whatever adjustments are necessary to ensure that any person will not be 
required to pay a finance charge in excess of the finance charge actually disclosed or the 
dollar equivalent of the annual percentage rate actually disclosed, whichever is lower. In 
determining any readjustment, the administrator shall apply, with respect to the annual 
percentage rate, a tolerance allowed under the Federal Truth in Lending Act, 15 United 
States Code, Section 1607 and its implementing regulation, Regulation Z, 12 Code of 
Federal Regulations, Section 226.1 1026.1 et seq. and, with respect to the finance charge, 
a corresponding numerical tolerance as generated by the tolerance allowed by the Federal 
Truth in Lending Act and its implementing regulations for the annual percentage rate. 
The administrator may order partial adjustment or partial payments over an extended 
period if the administrator determines that a partial adjustment or making partial 
payments over an extended period is necessary to avoid causing the creditor to become 
undercapitalized pursuant to the Federal Deposit Insurance Act. 
Sec. 6.  9-A MRSA §8-506, sub-§1, ¶D, as enacted by PL 2011, c. 427, Pt. A, 
§15, is amended to read: 
D.  "Conventional mortgage rate" means the most recently published annual yield on 
conventional mortgages published by the Board of Governors of the Federal Reserve 
System, as published in statistical release H.15 or any superseding publication, as of 
the applicable time set forth in 12 Code of Federal Regulations, Section 
226.32(a)(1)(i) 1026.32(a)(1)(i). 
Sec. 7.  9-A MRSA §8-506, sub-§1, ¶F, as enacted by PL 2011, c. 427, Pt. A, 
§15, is amended to read: 
F.  "Creditor" has the same meaning as set forth in section 1-301, subsection 17. For 
purposes of this section, "creditor" also includes an entity defined as a lender as set 
forth in 24 12 Code of Federal Regulations, Section 3500.2 1024.2, including a 
mortgage broker. 
Sec. 8.  9-A MRSA §8-506, sub-§1, ¶¶H to M, as enacted by PL 2011, c. 427, 
Pt. A, §15, are amended to read: 
H.  "High-cost mortgage loan" means a residential mortgage loan in which the terms 
of the loan meet or exceed one or more of the following thresholds: 
(1)  Rate threshold, which, for a residential mortgage loan, is the point at which 
the annual percentage rate equals or exceeds the rate set forth in 12 Code of 
Federal Regulations, Section 226.32(a)(1)(i) 1026.32(a)(1)(i) without regard to 
whether the residential mortgage loan may be considered a "residential mortgage 
transaction" or an extension of "open-end credit" as those terms are set forth in 12 
Code of Federal Regulations, Section 226.2 1026.2; or and 
(2)  The total points and fees threshold, which is: 
(a)  For loans in which the total loan amount is $40,000 or more, the point at 
which the total points and fees payable in connection with the residential 
mortgage loan less any excluded points and fees exceed 5% of the total loan 
amount; and 
(b)  For loans in which the total loan amount is less than $40,000, the point at 
which the total points and fees payable in connection with the residential 
mortgage loan less any excluded points and fees exceed 6% of the total loan 
amount. 
I.  "Higher-priced mortgage loan" has the same meaning as set forth in the Federal 
Truth in Lending Act and its implementing regulation, Regulation Z, 12 Code of 
Federal Regulations, Section 226.35(a) 1026.35(a).  "Higher-priced mortgage loan" 
also includes a residential mortgage loan that is a nontraditional mortgage as 
described in the "Interagency Guidance on Nontraditional Mortgage Product Risks" 
issued September 29, 2006 and published in 71 Federal Register, 58609 on October 
4, 2006 and as updated from time to time, except that "higher-priced mortgage loan" 
does not include a mortgage that does not allow a borrower to defer repayment of 
principal or interest. 
J.  "Mortgage broker" has the same meaning as set forth in 24 12 Code of Federal 
Regulations, Section 3500.2 1024.2, except as otherwise provided in this Article. 
K.  "Points and fees" has the same meaning as set forth in 12 Code of Federal 
Regulations, Section 226.32(b)(1) 1026.32(b)(1). In addition, "points and fees" 
includes: 
(1)  The maximum prepayment fees and penalties that may be charged or 
collected under the terms of the loan documents; 
(2)  All prepayment fees and penalties that are incurred by the borrower if the 
loan refinances a previous loan made or currently held by the same creditor or an 
affiliate of the creditor; and 
(3)  All compensation paid directly or indirectly to a mortgage broker from any 
source, including a mortgage broker that originates a loan in its own name in a 
table-funded transaction. 
For open-end loans, points and fees are calculated by adding the total points and fees 
known at or before closing, including the maximum prepayment penalties that may 
be charged or collected under the terms of the loan documents and the minimum 
additional fees the borrower would be required to pay to draw down an amount equal 
to the total credit line. 
L.  "Residential mortgage loan" means an extension of credit, including an open-end 
credit plan, in which: 
(1)  The loan does not exceed the maximum original principal obligation as set 
forth in and from time to time adjusted according to the provisions of 12 United 
States Code, Section 1454(a)(2); 
(2)  The loan is considered a federally related mortgage loan as set forth in 24 12 
Code of Federal Regulations, Section 3500.2 1024.2; 
(3)  The loan is not a reverse mortgage transaction or a loan made primarily for 
business, agricultural or commercial purposes; 
(4)  The loan is not a construction loan; and 
(5)  The loan is secured by the borrower's principal dwelling. 
M.  "Servicing" has the same meaning as set forth in 24 12 Code of Federal 
Regulations, Section 3500.2 1024.2 and includes any other activities or 
responsibilities undertaken in connection with a residential mortgage loan by a person 
who acts as a servicer with respect to that residential mortgage loan, including 
collection and default management functions. 
Sec. 9.  9-A MRSA §8-506, sub-§2, as enacted by PL 2011, c. 427, Pt. A, §15, is 
amended to read: 
2.  High-cost mortgage loans; restrictions.  A high-cost mortgage loan is subject to 
the provisions applying to certain closed-end home mortgages covered by Regulation Z, 
Code of Federal Regulations, Section 226.32 1026.32 and the following restrictions.  
A.  In connection with a high-cost mortgage loan, a creditor may not directly or 
indirectly finance any points or fees. 
B.  In addition to the limitation on balloon payments found in Regulation Z, 12 Code 
of Federal Regulations, Section 226.32 1026.32, a high-cost mortgage loan may not 
contain a scheduled payment that is more than twice as large as the average of earlier 
scheduled payments. This paragraph does not apply when the payment schedule is 
adjusted to the seasonal or irregular income of the borrower. 
C.  A creditor may not make a high-cost mortgage loan without first receiving 
certification from a counselor with a 3rd-party, nonprofit organization approved by 
the United States Department of Housing and Urban Development, a housing 
financing agency of this State or the Department of Professional and Financial 
Regulation, Bureau of Consumer Credit Protection that the borrower has received 
counseling on the advisability of the loan transaction. 
D.  A prepayment fee or penalty may not be included in the loan documents or 
charged under the terms of a high-cost mortgage loan. 
Sec. 10.  9-A MRSA §8-507, as enacted by PL 2011, c. 427, Pt. A, §15, is 
amended to read: 
§8-507.  Exemption from the Federal Truth in Lending Act 
1.  Preservation of federal exemption.  As required by the Federal Truth in Lending 
Act, 15 United States Code, Section 1633 and its implementing regulation, Regulation Z, 
Code of Federal Regulations, Section 226.29 1026.29, the administrator may take any 
action necessary to apply for or to preserve a determination by the Federal Reserve Board 
federal Consumer Financial Protection Bureau or its successor agency that under the laws 
of this State any class of credit transactions within this State is subject to requirements 
substantially similar to federal requirements and that there are adequate provisions for 
enforcement of such requirements. 
2.  Application.  This Article does not apply to any class of credit transactions within 
this State that is subject to the requirements of the Federal Truth in Lending Act, Title I of 
the federal Consumer Credit Protection Act unless any such class of transactions has first 
been exempted by a regulation of the Board of Governors of the Federal Reserve Board 
federal Consumer Financial Protection Bureau and that exemption remains in effect. 
Sec. 11.  9-A MRSA §9-311-A, as amended by PL 2011, c. 427, Pt. B, §12, is 
further amended to read: 
§9-311-A.  Real estate settlement procedures 
A creditor and its mortgage loan originators shall comply with the provisions of the 
federal Real Estate Settlement Procedures Act of 1974, 12 United States Code, Section 
2601 et seq. and its implementing regulation, Regulation X, 24 12 Code of Federal 
Regulations, Section 3500 1024.1 et seq. 
Sec. 12.  9-A MRSA §10-307, as amended by PL 2011, c. 427, Pt. B, §16, is 
further amended to read: 
§10-307.  Real estate settlement procedures 
A loan broker and its mortgage loan originators shall comply with the provisions of 
United States Code, Section 2601 et seq., the federal Real Estate Settlement 
Procedures Act of 1974 and its implementing regulation, Regulation X, 24 12 Code of 
Federal Regulations, Section 3500 1024.1 et seq. 
SUMMARY 
This bill updates the Maine Consumer Credit Code so that existing references to 
federal regulations are up to date.  The bill also amends the Maine Revised Statutes, Title 
9-A, section 3-310 by consolidating references to the implementing regulations of the 
Federal Truth in Lending Act.