Code of Maine Rules
02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION
030 - BUREAU OF CONSUMER CREDIT PROTECTION
Chapter 250 - Alternative Mortgage Transactions
(Ch. 250 is a Joint Rule with 02-029, Ch. 119)
SUMMARY: This promulgation repeals and replaces the current Alternative Mortgage Transaction Joint Rule, Bureau of Financial Institutions Regulation 19 and Bureau of Consumer Credit Protection Rule 250. This promulgation permits creditors and financial institutions to offer certain alternative mortgage products that are secured by a first-lien on real estate and that are generally accepted on the national secondary market. It fosters an efficient approach to the regulation of alternative mortgage transactions and provides protection for consumer borrowers. An alternative mortgage transaction is, generally, a loan secured by an interest in residential property for which the mortgage interest rate or finance charge may be adjusted or renegotiated.
The federal Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 authorized the creation of the federal Consumer Financial Protection Bureau ("CFPB"). The purpose of the CFPB is to promote fairness and transparency for mortgages and other consumer financial products. The CFPB was given authority over federal consumer laws including the Alternative Mortgage Transaction Parity Act of 1982 ("AMTPA")[1] and the federal Truth-in-Lending Act ("TILA"). Since its inception, the CFPB has promulgated new consumer protections for mortgage borrowers. The CFPB has issued Regulation D, 12 C.F.R. §§ 1004.1-1004.4, to implement AMTPA and has made numerous changes to TILA regulations. The new federal protections found in TILA and TILA regulations have been incorporated into Maine law in Article VIII-A of the Consumer Credit Code and include a requirement that creditors consider a consumer's repayment ability, qualified mortgage incentives, restrictions on high-cost mortgages, and new integrated mortgage loan disclosure requirements under TILA and RESPA (the Real Estate Settlement Procedures Act).Given those new federal regulations, the Bureau of Financial Institutions and the Bureau of Consumer Credit Protection find it appropriate to update their Joint Rule so that it is substantially aligned with Regulation D. This effort to align State with federal law and thereby ease compliance burdens is made pursuant to the Bureaus' broad authority to prohibit, by rule or order, acts or practices in connection with residential mortgages that are unfair, deceptive, or designed to evade truth-in-lending laws.
BACKGROUND: Major goals of AMTPA's passage were to create federal preemption of state regulation of alternative mortgage transactions and to allow state housing creditors to make alternative mortgage transactions in compliance with federal rather than state law. However, pursuant to a provision of AMTPA,12 U.S.C. § 3804, federal preemption would not apply to alternative mortgage transactions subject to the laws of a state if such state, within three years of AMTPA's enactment, enacted its own law explicitly opting out of AMTPA's preemption. In 1983, the Maine Legislature responded by enacting legislation making the federal preemption inapplicable to the Maine Banking Code and Maine Consumer Credit Code.[2]Further, by enactment of 9-B M.R.S. §241(3) in 1983, the Legislature granted the Bureau of Financial Institutions (then the Bureau of Banking) specific authority to do rulemaking regarding alternative mortgage instruments; by enactment of 9-A M.R.S. 9302 in 1987, the Legislature granted the Bureau of Consumer Credit Protection (then the Office of Consumer Credit Protection) the same specific authority. As a consequence, creditors and financial institutions making alternative mortgage transactions in Maine have been, and will continue to be, subject to the Bureaus' laws and regulations, including this promulgation.
The CFPB's AMTPA Regulation D applies to federal housing creditors and, in states that have not opted out of AMTPA, to those state housing creditors seeking to utilize AMTPA preemption to make alternative mortgage transactions pursuant to federal law. Regulation D works in conjunction with the new TILA regulations to protect borrowers in alternative mortgage transactions. Aligning Maine's alternative mortgage regulations with the federal regulations will level the playing field for State and federal financial institutions, while protecting Maine consumers in a manner similar to that of the CFPB.
Protection for alternative mortgage borrowers is found in this promulgation and in truth-in-lending regulations. Creditors and financial institutions are reminded that they are still subject to the provisions of the Maine Consumer Credit Code including, but not limited to, Article VIII-A (Truth-in-Lending), as applicable.
Primary Sources of information relied upon by the Bureau in adopting the rule: 12 CFR 1004.1 - 1004.4; 12 CFR 1026.1 et seq.; 12 USCS § 1551 et seq.; 12 USCS § 8304 et seq. ; Bureau of Financial Institutions/ Bureau of Consumer Credit Protection Joint Rule 19 /250 ; 9-A M.R.S.§§1 - 102(2), 1 - 110, 6 - 104(1) (E), 8 - 504, 8 - 507(1), 8 - 508, 9 - 302; 9-B M.R.S. §§111, 215, 241(3)
STATUTORY AUTHORITY:
9-A M.R.S. §§1 - 102(2), 1 - 110, 6 - 104(1)(E), 8 - 504, 8 - 507(1), 8 - 508, 9 - 302(1)
9-B M.R.S. §§111 , 215 , 241(3)
