Code of Maine Rules › 02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION › 030 - BUREAU OF CONSUMER CREDIT PROTECTION › Chapter 250 - Alternative Mortgage Transactions › Section 030-250-4 - AUTHORIZATIONS AND LIMITATIONS

Current through 2024-29, July 17, 2024
1.
Authorizations and limitations
A.
Authorization to make alternative
				mortgages
. A creditor or financial institutionmay engage in an
				alternative mortgage transaction subject to the requirements and limitations of
				this rule.
B.
Mortgages with
				adjustable rates or finance charges
. A creditor or financial
				institutionthat makes an alternative mortgage transaction with an adjustable
				rate or finance charge may only increase the interest rate or finance charge as
				follows:
(1) The creditor or financial
				institution shall use either:
a. An index to
				which changes in the interest rate are tied that is readily available to and
				verifiable by the borrower and beyond the control of the creditor or financial
				institution: or
b. A formula or
				schedule identifying the amount that the interest rate or finance charge may
				increase and the times at which, or circumstances under which, a change may be
				made.
C.
Renegotiable rates for renewable balloon-payment mortgages
. A
				creditor or financial institution that makes an alternative mortgage
				transaction with payments based on an amortization period and a large final
				payment due after a shorter term may negotiate an increase or decrease in the
				interest rate when the transaction is renewed only if the creditor or financial
				institution makes a written commitment to renew the transaction at specified
				intervals throughout the amortization period. However, the creditor or
				financial institution is not required to renew the transaction if:
(1) Any action or inaction by the consumer
				materially and adversely affects the creditor's or financial institution's
				security for the transaction or any right of the creditor or financial
				institution in such security;
(2)
				There is a material failure by the consumer to meet the repayment terms of the
				transaction;
(3) There is fraud or
				willful or knowing material misrepresentation by the consumer in connection
				with the transaction; or
(4)
				Federal or State law dealing with credit extended by a financial institution to
				its executive officers specifically requires that as a condition of the
				extension the credit shall become due and payable on demand, provided that the
				financial institution includes such a provision in the initial
				agreement.
D.
Other requirements for and limitation on alternative mortgage
				transactions
. Other requirements for and limitation on alternative
				mortgage transactions include, for creditors and financial institutions,
				applicable truth-in-lending laws found in the
Maine Consumer Credit
				Code - Truth-in-Lending
, 9-A M.R.S. Article VIII-A.
E.
Reductions in interest rate or
				finance charge
. Nothing in this section prohibits a creditor or
				financial institution from decreasing the interest rate or finance charge on an
				alternative mortgage transaction.
F.
Right to prepay
. Acreditoror
				financial institution must allow borrowers to prepay in whole or in part
				without penalty at any time. Prepayments are a direct reduction on loan
				principal, unless otherwise agreed upon by the creditoror financial
				institutionand borrower.