Administrative Rules of Montana › Department 2 - ADMINISTRATION › Chapter 2.59 - BANKING AND FINANCIAL INSTITUTIONS › Subchapter 2.59.4 - Credit Unions › Rule 2.59.406 - DEFINITIONS APPLICABLE TO DEBT CANCELLATION AND DEBT SUSPENSION BY A CREDIT UNION

Current through Register Vol. 13, July 5, 2024
The following definitions apply in ARM
				  2.59.407
				  through
				  2.59.414:
(1) "Actuarial method" means the method of
				allocating payments made on a debt between the amount financed and the finance
				charge. Under this method, a payment is applied first to the accumulated
				finance charge and any remainder is subtracted from, or any deficiency is added
				to, the unpaid balance of the amount financed.
(2) "Contract" means a debt cancellation
				contract or a debt suspension agreement.
(3) "Debt cancellation contract" means a loan
				term or contractual arrangement modifying loan terms under which a credit union
				agrees, for a fee, to cancel all or part of a member's obligation to repay an
				extension of credit from that credit union upon the occurrence of a specified
				event. The agreement must specify the extension of credit to which it pertains.
				The agreement may be separate from or a part of other loan documents. A debt
				cancellation contract may be offered and purchased either contemporaneously
				with the other terms of the loan agreement or subsequently. The extension of
				credit to which it pertains may be a direct loan made by the credit union or an
				indirect loan in the form of a retail installment sales contract purchased by
				or assigned to the credit union. In the case of an indirect loan in the form of
				a retail installment sales contract, the debt cancellation contract may be
				offered by the credit union through a nonexclusive, unaffiliated agent
				contingent upon the credit union purchasing or taking assignment of the
				indirect loan.
(4) "Debt
				suspension agreement" means a loan term or contractual arrangement modifying
				loan terms under which a credit union agrees, for a fee, to suspend all or part
				of a member's obligation to repay an extension of credit from that credit union
				upon the occurrence of a specified event. The agreement must specify the
				extension of credit to which it pertains. The agreement may be separate from or
				a part of other loan documents. The term "debt suspension agreement" does not
				include loan payment deferral arrangements in which the triggering event is the
				member's unilateral election to defer repayment or the credit union's
				unilateral decision to allow a deferral of repayment. The extension of credit
				may be a direct loan made by the credit union or an indirect loan in the form
				of a retail installment sales contract purchased by or assigned to the credit
				union. In the case of an indirect loan in the form of a retail installment
				sales contract, the debt suspension agreement may be offered by the credit
				union through a nonexclusive, unaffiliated agent contingent upon the credit
				union purchasing or taking assignment of the indirect loan.
(5) "Guaranteed asset protection (GAP) waiver
				or agreement" means a term of an extension of credit or contractual arrangement
				modifying terms of an extension of credit for the purchase of titled personal
				property under which a credit union agrees to cancel the member's obligation to
				repay the portion of the extension of credit that exceeds the amount paid by
				the primary insurer of the titled personal property upon the insurer's
				declaration that the titled personal property is a total loss or determination
				that the titled personal property is stolen and not recoverable.
(6) "Loan" or "extension of credit" means a
				direct or indirect advance of funds to a member made on the basis of any
				obligation of that member to repay the funds or that is repayable from specific
				property pledged by or on the member's behalf. The term also includes any
				liability of a credit union to advance funds to or on behalf of any member
				under a contractual commitment.
(7) "Member" means an individual who obtains
				from a credit union an extension of credit that is primarily for personal,
				family, or household purposes. In the case of a credit union serving low income
				individuals, a qualifying nonmember is considered a "member." For purposes of
				this subchapter, the term means the same thing as borrower.
(8) "Residential mortgage loan" means a loan
				for personal, family, or household purposes secured by a one- to four-family
				residential property.
AUTH:
					 32-3-201,
					 MCA; IMP:
					 32-3-609,
					 M