Public Laws

124th Legislature

First Regular Session


Parts: A B C

Chapter 362

S.P. 523 - L.D. 1439

PART A

Sec. A-1. 9-A MRSA 8-103, sub-1-A, L, as enacted by PL 2007, c. 273, Pt. A, 4 and affected by 37 and 41, is repealed and the following enacted in its place:

L. "Creditor" has the same meaning as set forth in section 1-301, subsection 17, and in addition includes those entities defined as "lender" as set forth in 24 Code of Federal Regulations, Section 3500.2 and includes a mortgage broker.

Sec. A-2. 9-A MRSA 8-103, sub-1-A, Q-1 is enacted to read:

Q-1. "Higher-priced mortgage loan" means either:

(1) A residential mortgage loan that is a "nontraditional mortgage" as defined in paragraph T; or

(2) A "rate spread home loan" as defined in paragraph V.

Sec. A-3. 9-A MRSA 8-103, sub-1-A, S, as enacted by PL 2007, c. 273, Pt. A, 4 and affected by 37 and 41, is amended to read:

S."Mortgage broker" has the same meaning as set forth in 24 Code of Federal Regulations, Section 3500.2 , except as otherwise provided in this Article.

Sec. A-4. 9-A MRSA 8-103, sub-1-A, U, as amended by PL 2007, c. 471, 5 and affected by 18, is repealed and the following enacted in its place:

U. "Points and fees" has the same meaning as set forth in 12 Code of Federal Regulations, Section 226.32(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.

Sec. A-5. 9-A MRSA 8-103, sub-1-A, V, as enacted by PL 2007, c. 273, Pt. A, 4 and affected by 37 and 41, is amended to read:

V."Rate spread home loan" means any loan for which the rate spread must be reported under the Home Mortgage Disclosure Act of 1975, Regulation C except that, beginning October 1, 2009, "rate spread home loan" has the same meaning as set forth for "higher-priced mortgage loans" in 12 Code of Federal Regulations, Section 203.4(a)(12); and 226.35(a). In addition, "rate spread home loan" means any loan that meets the criteria of a high-rate, high-fee mortgage.

Sec. A-6. 9-A MRSA 8-103, sub-1-A, BB, as amended by PL 2007, c. 471, 7 and affected by 18, is repealed.

Sec. A-7. 9-A MRSA 8-104, sub-1, as amended by PL 1989, c. 502, Pt. D, 4, is repealed and the following enacted in its place:

1. The administrator shall adopt rules to carry out the purposes of this Article.
A. The rules may contain classifications, differentiations or other provisions, and may provide for those adjustments and exceptions for any class of transactions, that in the judgment of the administrator are necessary or proper to effectuate the purposes of this Article, to prevent circumvention or evasion of this Article and to facilitate compliance with this Article. Rules adopted pursuant to this Article are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.
B. The administrator is authorized to adopt rules substantially similar to, or that afford more protection for consumers than, those codified in 12 Code of Federal Regulations, Part 226, except where this Article expressly directs otherwise. Rules adopted pursuant to this paragraph are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.

Sec. A-8. 9-A MRSA 8-206, sub-3, as amended by PL 2007, c. 273, Pt. A, 5 and affected by 41, is repealed and the following enacted in its place:

3. The following provisions apply to an extension of credit secured by the consumer's dwelling, other than an open-end credit plan:
A. Except as provided in paragraph G, in the case of any extension of credit that is secured by the dwelling of a consumer, which is also subject to the Real Estate Settlement Procedures Act of 1974, 12 United States Code, Section 2601 et seq., good faith estimates of the disclosures required under subsection 1 must be made in accordance with rules of the administrator under section 8-201, subsection 3 and must be delivered or placed in the mail not later than 3 business days after the creditor receives the consumer's bona fide application, which must be at least 7 business days before consummation of the transaction.
B. If the disclosure statement furnished within 3 days of the bona fide application indicates that the consumer will not be assessed a prepayment penalty, and if that statement is subsequently rendered inaccurate, the creditor shall notify the consumer of that change as soon as practicable and shall also furnish a corrected statement prior to the time of settlement or consummation.
C. In the case of an extension of credit that is secured by the dwelling of a consumer, the disclosures provided under paragraph A are in addition to the other disclosures required by subsection 1, and must:

(1) Include in conspicuous type size and format, the following statement: "You are not required to complete this agreement merely because you have received these disclosures or signed a loan application."; and

(2) Be provided in the form of final disclosures at the time of consummation of the transaction, in the form and manner prescribed by this section.

D. Beginning December 30, 2010, in the case of an extension of credit that is secured by the dwelling of a consumer, under which the annual rate of interest is variable or with respect to which the regular payments may otherwise be variable, in addition to the other disclosures required by subsection 1, the disclosures provided under this subsection must:

(1) Label the payment schedule as follows: "Payment Schedule: Payments Will Vary Based on Interest Rate Changes."; and

(2) State in conspicuous type size and format examples of adjustments to the regular required payment on the extension of credit based on the change in the interest rates specified by the contract for such extension of credit. Among the examples required to be provided under this subparagraph is an example that reflects the maximum payment amount of the regular required payments on the extension of credit, based on the maximum interest rate allowed under the contract, in accordance with the rules of the administrator. Prior to issuing any rules pursuant to this subparagraph, the administrator shall review consumer testing conducted by the Board of Governors of the Federal Reserve System to determine the appropriate format for providing the disclosures required under this subparagraph to consumers so that such disclosures can be easily understood, including the fact that the initial regular payments are for a specific time period that will end on a certain date, that payments will adjust afterwards potentially to a higher amount and that there is no guarantee that the borrower will be able to refinance to a lower amount.

E. In any case in which the disclosure statement under paragraph A contains an annual percentage rate of interest that is no longer accurate, as determined under section 8-106, subsection 3, the creditor shall furnish an additional, corrected statement to the borrower, not later than 3 business days before the date of consummation of the transaction.
F. The consumer must receive the disclosures required under this subsection before paying any fee to the creditor or other person in connection with the consumer's application for an extension of credit that is secured by the dwelling of a consumer. If the disclosures are mailed to the consumer, the consumer is considered to have received them 3 business days after they are mailed. A creditor or other person may impose a fee for obtaining the consumer's credit report before the consumer has received the disclosures under this subsection, provided the fee is bona fide and reasonable in amount.
G. To expedite consummation of a transaction, if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency, the consumer may waive or modify the timing requirements for disclosures under paragraph A, as long as:

(1) The term “bona fide personal emergency” may be further defined in rules issued by the administrator;

(2) The consumer provides to the creditor a dated, written statement describing the emergency and specifically waiving or modifying those timing requirements, which statement must bear the signature of all consumers entitled to receive the disclosures required by this subsection; and

(3) The creditor provides to the consumer at or before the time of such waiver or modification the final disclosures required by subsection 1.

H. The requirements of paragraphs C to G do not apply to extensions of credit relating to time-share estates as described in Title 33, section 591, subsection 7, or time-share plans as described in 11 United States Code, Section 101(53D).

Sec. A-9. 9-A MRSA 8-206-C, as corrected by RR 2007, c. 1, 4, is repealed.

Sec. A-10. 9-A MRSA 8-206-D, as amended by PL 2007, c. 471, 11 and 12 and affected by 18, is repealed.

Sec. A-11. 9-A MRSA 8-206-E, as corrected by RR 2007, c. 1, 5, is amended to read:

8-206-E. Special liability for violations of residential mortgage loan, higher-priced mortgage loan and high-rate, high-fee mortgage loan requirements

1. This section applies to any violation of section 8-206-A, 8-206-C 8-206-H, 8-206-I or 8-206-D 8-206-J in connection with the origination, brokering or servicing of a residential mortgage loan. This section does not apply to a purchaser or assignee of a residential mortgage loan except as permitted in section 8-206-C 8-206-H, subsection 2.
2. Any person who has been found in violation of section 8-206-A, 8-206-C 8-206-H, 8-206-I or 8-206-D 8-206-J by a court may be liable to the borrower for the following:
A.Actual damages, including consequential and incidental damages. The borrower may not be required to demonstrate reliance in order to receive actual damages;
B.Statutory damages as follows:

(1) For violations described in section 8-206-C 8-206-H, statutory damages equal to 2 times the finance charge paid under the loan and forfeiture of the remaining interest under the loan; and

(2) For violations described in section 8-206-D 8-206-J, statutory damages in the amount of $5,000 per violation;

C.Punitive damages for violations of section 8-206-C 8-206-H or section 8-206-D 8-206-I, subsection 1, paragraph B D when the violation was malicious or reckless; and
D.Costs, including reasonable attorney's fees.
3. A borrower may be granted injunctive, declaratory and other equitable relief the court determines appropriate in an action to enforce compliance with this section and sections 8-206-A, 8-206-C 8-206-H, 8-206-I and 8-206-D 8-206-J.
4. The right of rescission granted under 15 United States Code, Chapter 41, Subchapter I, Part A for a violation of that law is available to a borrower acting only in an individual capacity by way of recoupment as a defense against a party foreclosing on a residential mortgage loan at any time during the term of the loan. Any recoupment claim asserted pursuant to this provision is limited to amounts required to reduce or extinguish the borrower’s liability under the residential mortgage loan plus amounts required to recover costs, including reasonable attorney’s fees. This section may not be construed to limit recoupment rights available to the borrower under any other law.
5. The remedies provided in this section are not intended to be the exclusive remedies available to a borrower, nor must the borrower exhaust any administrative remedies provided under this section or any other applicable law before proceeding under this section.
6. Any person who knowingly violates section 8-206-A or 8-206-C 8-206-H is guilty of a Class E crime.
7. A creditor in a residential mortgage loan who, when acting in good faith, fails to comply with the provisions of section 8-206-A, 8-206-C 8-206-H, 8-206-I or 8-206-D 8-206-J is deemed not to have violated those sections if the creditor establishes that either:
A.Within 30 days of the loan closing and prior to receiving any notice of the compliance failure, the creditor has made appropriate restitution to the borrower and appropriate adjustments have been made to the loan; or
B.Within 60 days of the loan closing and prior to receiving any notice of the compliance failure, when the compliance failure was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid such errors, the borrower is notified of the compliance failure, appropriate restitution is made to the borrower and appropriate adjustments are made to the loan. Examples of a bona fide error include clerical, calculation, computer malfunction and programming and printing errors. An error of legal judgment with respect to a person’s obligations under this section is not a bona fide error.
8. The remedies provided in this section are cumulative.
9. Notwithstanding any other provision of law, a residential mortgage loan agreement may not include any provision that waives any borrower’s remedies available at law or equity, whether acting individually or on behalf of others similarly situated, or the borrower's rights to civil discovery or appeal. Any such provision is unenforceable and void as a matter of law.
10. Without regard to whether a borrower is acting individually or on behalf of others similarly situated, any provision of a residential mortgage loan agreement that allows a person to require a borrower to assert any claim or defense in a forum that is less convenient, more costly or more dilatory for the resolution of a dispute than a judicial forum established in this State where the borrower may otherwise properly bring a claim or defense or that limits in any way any claim or defense the borrower may have is unconscionable and void as a matter of law.
11. It is a violation of section 8-206-A, 8-206-C 8-206-H, 8-206-I or 8-206-D 8-206-J for any person to attempt in bad faith to avoid the application of those sections by dividing any loan transaction into separate parts or structuring a residential mortgage loan transaction as an open-end loan for the purpose of evading the provisions of those sections when the loan would have been a high-rate, high-fee mortgage if the loan had been structured as a closed-end loan or by engaging in any other subterfuge with the intent of evading any provision of this section.

Sec. A-12. 9-A MRSA 8-206-H is enacted to read:

8-206-H. High-rate, high-fee mortgages

1. The making of a high-rate, high-fee mortgage is subject to the following prohibitions, except that, notwithstanding any other provision of law, a residential mortgage loan made by the Maine State Housing Authority pursuant to Title 30-A, chapter 201 is not subject to the following prohibitions.
A. High-rate, high-fee mortgages are subject to the following restrictions.

(1) A high-rate, high-fee mortgage may not include payment terms under which the outstanding principal balance or accrued interest will increase at any time over the course of the loan because the regularly scheduled periodic payments do not cover the full amount of interest due.

(2) A high-rate, high-fee mortgage may not contain a provision that increases the interest rate after default. This subparagraph does not apply to interest rate changes in a variable rate loan otherwise consistent with the provisions of the loan documents, as long as the change in the interest rate is not triggered by the event of default or the acceleration of the indebtedness.

(3) If the date of maturity of a high-rate, high-fee 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) and 15 United States Code, Section 1615.

(4) A high-rate, high-fee mortgage may not include terms under which more than 2 periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the borrower.

(5) A creditor may not make a payment to a contractor under a home improvement contract from amounts extended as credit under a high-rate, high-fee mortgage except:

(a) In the form of an instrument that is payable to the consumer or jointly to the consumer and the contractor; or

(b) At the election of the consumer, by a 3rd-party escrow agent in accordance with terms established in a written agreement signed by the consumer, the creditor and the contractor before the date of payment.

(6) All high-rate, high-fee mortgage documents that create a debt or pledge property as collateral must contain the following notice on the first page in a conspicuous manner: "Notice: This is a mortgage subject to special rules under the federal Truth in Lending Act. Purchasers or assignees of this mortgage could be liable for all claims and defenses with respect to the mortgage that the borrower could assert against the creditor. Maine law also provides for the liability of purchasers or assignees of this high-rate, high-fee loan."

(7) For a high-rate, high-fee mortgage loan with a term of less than 5 years, the payment schedule may not include regular payments that when aggregated do not fully amortize the outstanding principal balance.

(8) A high-rate, high-fee mortgage loan may not include a demand feature that permits the creditor to terminate the loan in advance of the original maturity date and to demand repayment of the entire outstanding balance except in the following circumstances:

(a) There is fraud or material misrepresentation by the consumer in connection with the loan;

(b) The consumer fails to meet the repayment terms of the agreement for any outstanding balance; or

(c) There is any action or inaction by the consumer that adversely affects the creditor's security for the loan or any right of the creditor in such security.

(9) A creditor may not extend a high-rate, high-fee mortgage to a consumer based on the value of the consumer's collateral without regard to the consumer's ability to pay as described in section 8-206-I, subsection 1, paragraph A.

(10) High-rate, high-fee mortgages are subject to rules relating to escrows as described in section 8-206-I, subsection 1, paragraph C.

B. High-rate, high-fee mortgages are subject to the following enhanced restrictions.

(1) In connection with a high-rate, high-fee mortgage, a creditor may not directly or indirectly finance any points or fees.

(2) In addition to the limitation found in paragraph A, subparagraph (7), a high-rate, high-fee mortgage may not contain a scheduled payment that is more than twice as large as the average of earlier scheduled payments. This subparagraph does not apply when the payment schedule is adjusted to the seasonal or irregular income of the borrower.

(3) A creditor may not make a high-rate, high-fee mortgage 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 Bureau of Consumer Credit Protection that the borrower has received counseling on the advisability of the loan transaction.

(4) A prepayment fee or penalty may not be included in the loan documents or charged under the terms of a high-rate, high-fee mortgage.

2. The following provisions apply to a claim made by a borrower against a purchaser or assignee of a high-rate, high-fee mortgage.
A. Any person who purchases or is otherwise assigned a high-rate, high-fee mortgage is subject to all affirmative claims and any defenses with respect to the loan that the borrower could assert against a creditor of the loan, except that this paragraph does not apply if the purchaser or assignee demonstrates by a preponderance of the evidence that it:

(1) Has in place, at the time of the purchase or assignment of the subject loan, policies that expressly prohibit its purchase or acceptance of assignment of any high-rate, high-fee mortgages;

(2) Requires by contract that a seller or assignor of residential mortgage loans to the purchaser or assignee represent and warrant to the purchaser or assignee that either the seller or assignor will not sell or assign any high-rate, high-fee mortgages to the purchaser or assignee, or the seller or assignor is a beneficiary of a representation and warranty from a previous seller or assignor to that effect; and

(3) Exercises reasonable due diligence, at the time of purchase or assignment of residential mortgage loans or within a reasonable period of time after the purchase or assignment of such residential mortgage loans, intended by the purchaser or assignee to prevent the purchaser or assignee from purchasing or taking assignment of any high-rate, high-fee mortgages. For purposes of this subparagraph, reasonable due diligence must provide for sampling and may not require loan-by-loan review.

Notwithstanding this paragraph, liability pursuant to this subsection may not accrue to a purchaser or assignee of a high-rate, high-fee mortgage as a result of an alleged violation by a creditor of section 8-206-I, subsection 1, paragraph D.

B. A borrower acting only in an individual capacity may assert claims that the borrower could assert against a creditor of the high-rate, high-fee mortgage against any subsequent holder or assignee of the high-rate, high-fee mortgage as follows:

(1) Within 5 years of the closing of a high-rate, high-fee mortgage, the borrower may assert a violation of this section in connection with the loan as an original action; and

(2) Within 10 years of the closing of a high-rate, high-fee mortgage, after an action to collect on the residential mortgage loan or foreclose on the collateral securing the residential mortgage loan has been initiated or the debt arising from the residential mortgage loan has been accelerated or the residential mortgage loan has become 60 days in default, the borrower may assert any defense, claim or counterclaim or action to enjoin foreclosure or preserve or obtain possession of the property that secures the loan.

A claim asserted by a borrower under this paragraph is limited to amounts required to reduce or extinguish the borrower's liability under the high-rate, high-fee mortgage, plus amounts required to recover costs, including reasonable attorney's fees.

3. This section applies notwithstanding any other provision of law, except that nothing in this section may be construed to limit the substantive rights, remedies or procedural rights available to a borrower against any creditor, assignee or holder of a high-rate, high-fee mortgage under any other law. The rights conferred on borrowers in subsection 2, paragraphs A and B are independent of each other and do not limit each other.

Sec. A-13. 9-A MRSA 8-206-I is enacted to read:

8-206-I. Higher-priced mortgage loans

1. Higher-priced mortgage loans are subject to the following restrictions:
A. A creditor may not extend a higher-priced mortgage to a consumer based on the value of the consumer's collateral without regard to the consumer's repayment ability as of consummation, including the consumer's current and reasonably expected income, employment, assets other than the collateral, credit history, debt-to-income ratio, current obligations and mortgage-related obligations.

(1) For purposes of this paragraph, mortgage-related obligations are expected property taxes, premiums for mortgage-related insurance required by the creditor as set forth in paragraph C and similar expenses.

(2) Under this paragraph, a creditor must verify the consumer's repayment ability as follows.

(a) A creditor must verify amounts of income or assets that it relies on to determine repayment ability, including expected income or assets, by the consumer's federal Internal Revenue Service Form W-2, tax returns, payroll receipts, financial institution records or other 3rd-party documents that provide reasonably reliable evidence of the consumer's income or assets. For the purposes of this division, "reasonably reliable evidence of the consumer's income or assets" includes, but is not limited to, statements from investment advisors, broker-dealers and others in a fiduciary relationship with the consumer as long as the statements reflect the consumer's actual income and not estimated, projected or anticipated income or a range of earnings for a consumer's type or class of employment.

(b) A creditor must verify the consumer's current obligations.

(3) A creditor is presumed to have complied with this paragraph with respect to a transaction if the creditor:

(a) Verifies the consumer's repayment ability as provided in subparagraphs (1) and (2);

(b) Determines the consumer's repayment ability using the largest payment of principal and interest scheduled in the first 7 years following consummation and taking into account current obligations and mortgage-related obligations; and

(c) Assesses the consumer's repayment ability taking into account at least one of the following:

(i) The ratio of total debt obligations to income; and

(ii) The income the consumer will have after paying debt obligations.

(4) Notwithstanding subparagraph (3), no presumption of compliance is available for a transaction for which:

(a) The regular periodic payments for the first 7 years would cause the principal balance to increase; or

(b) The term of the loan is less than 7 years and the regular periodic payments when aggregated do not fully amortize the outstanding principal balance.

(5) This paragraph does not apply to a temporary or so-called "bridge" loan with a term of 12 months or less, such as a loan to purchase a new dwelling when the consumer plans to sell a current dwelling within 12 months.

B. Beginning October 1, 2009, a higher-priced mortgage loan may not include a penalty for paying all or part of the principal before the date on which the principal is due except as allowed under subparagraph (1). The exception under subparagraph (1) does not apply to high-rate, high-fee mortgages, which are subject to section 8-206-H, subsection 1, paragraph B, subparagraph (4), and alternative mortgage transactions, which are subject to section 9-308.

(1) A higher-priced mortgage loan may provide for a prepayment penalty, including a refund calculated according to the sum of the balances method, as defined in section 2-503, subsection 7, under the terms of the loan if:

(a) The penalty will not apply after the 2-year period following consummation;

(b) The penalty will not apply if the source of the prepayment funds is a refinancing by the creditor or an affiliate of the creditor; and

(c) The amount of the periodic payment of principal or interest or both may not change during the 4-year period following consummation.

C. Beginning April 1, 2010, higher-priced loans are subject to the following requirements relating to escrow accounts:

(1) A creditor may not extend a loan secured by a first lien on a principal dwelling unless an escrow account is established before consummation for payment of property taxes and premiums for mortgage-related insurance required by the creditor, such as insurance against loss of or damage to property, or against liability arising out of the ownership or use of the property or insurance protecting the creditor against the consumer's default or other credit loss.

(2) Notwithstanding the requirements set forth in subparagraph (1):

(a) Escrow accounts need not be established for loans secured by shares in a cooperative; and

(b) Insurance premiums described in subparagraph (1) need not be included in escrow accounts for loans secured by condominium units when the condominium association has an obligation to the condominium unit owners to maintain a master policy insuring condominium units.

(3) A creditor or servicer may permit a consumer to cancel the escrow account required in subparagraph (1) only in response to a consumer's dated written request to cancel the escrow account that is received no earlier than 365 days after consummation.

(4) For purposes of this paragraph, "escrow account" has the same meaning set forth in 24 Code of Federal Regulations, Section 3500.17(b).

D. A creditor may not knowingly or intentionally engage in the act or practice of flipping a residential mortgage loan when making a higher-priced mortgage loan. The administrator is authorized to adopt rules defining with reasonable specificity the requirements for compliance with this paragraph. Rules adopted pursuant to this paragraph are routine technical rules pursuant to Title 5, chapter 375, subchapter 2-A.

Sec. A-14. 9-A MRSA 8-206-J is enacted to read:

8-206-J. Residential mortgage loan requirements

1. Beginning October 1, 2009, residential mortgage loans are subject to the following restrictions.
A. In connection with a consumer credit transaction secured by a consumer's principal dwelling, no creditor or mortgage broker, and no affiliate of a creditor or mortgage broker, shall directly or indirectly coerce, influence or otherwise encourage an appraiser to misstate or misrepresent the value of such dwelling.

(1) In connection with a consumer credit transaction secured by a consumer's principal dwelling, a creditor who knows, at or before loan consummation, of a violation of this paragraph in connection with an appraisal may not extend credit based on such appraisal unless the creditor documents that it has acted with reasonable diligence to determine that the appraisal does not materially misstate or misrepresent the value of such dwelling.

(2) For purposes of this paragraph, "mortgage broker" means a person, other than an employee of a lender, who for compensation or other monetary gain, or in expectation of compensation or other monetary gain, arranges, negotiates or otherwise obtains an extension of consumer credit for another person. "Mortgage broker" includes a person meeting this definition, even if the consumer credit obligation is initially payable to such person, unless the person provides the funds for the transaction at consummation out of the person's own resources, out of deposits held by the person or by drawing on a bona fide warehouse line of credit.

(3) For the purposes of this paragraph, "appraiser" means a person who engages in the business of providing assessments of the value of dwellings. "Appraiser" includes a person that employs, refers or manages appraisers and affiliates of such persons.

B. In connection with a consumer credit transaction secured by a consumer's principal dwelling, a servicer may not:

(1) Fail to credit a payment to the consumer's loan account as of the date of receipt, except when a delay in crediting does not result in any charge to the consumer or in the reporting of negative information to a consumer reporting agency or except as provided in subparagraph (4);

(2) Impose on the consumer any late fee or delinquency charge in connection with a payment, when the only delinquency is attributable to late fees or delinquency charges assessed on an earlier payment and the payment is otherwise a full payment for the applicable period and is paid on its due date or within any applicable grace period;

(3) Fail to provide, within a reasonable time after receiving a request from the consumer or any person acting on behalf of the consumer, an accurate statement of the total outstanding balance that would be required to satisfy the consumer's obligation in full as of a specified date; or

(4) Fail to credit a payment as of 5 days after receipt if a servicer specifies in writing requirements for the consumer to follow in making payments, but accepts a payment that does not conform to the requirements.

For purposes of this paragraph, "servicer" and "servicing" have the same meanings as provided in 24 Code of Federal Regulations, Section 3500.2(b).

C. This subsection does not apply to a home equity line of credit subject to section 8-205.
2. Residential mortgage loans are subject to the following enhanced restrictions.
A. A creditor may not recommend or encourage default on an existing loan or other debt prior to and in connection with the closing or planned closing of a residential mortgage loan that refinances all or a portion of the existing loan or debt.
B. A borrower may not be charged for a late payment unless the loan documents specifically authorize the charge, the charge is not imposed unless the payment is past due for 10 days or more and the charge does not exceed 5% of the amount of the late payment. A late payment charge may not be imposed more than once with respect to a particular late payment. If a late payment charge is deducted from a payment made on the residential mortgage loan and that deduction results in a subsequent default on a subsequent payment, a late payment charge may not be imposed for that default. A creditor or servicer may apply any payment made in the order of maturity to a prior period's payment due even if the result is late payment charges accruing on subsequent payments due.
C. A residential mortgage loan may not contain a provision that permits the creditor, in its sole discretion, to accelerate the indebtedness. This paragraph does not prohibit the acceleration of the loan in good faith due to the borrower’s failure to abide by the material terms of the loan.
D. A creditor making a residential mortgage loan may not finance directly or indirectly any credit life insurance, credit disability insurance, credit unemployment insurance or credit property insurance or any other life or health insurance or any payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that insurance premiums or debt cancellation or suspension fees calculated and paid on a monthly basis or through regularly scheduled periodic payments may not be considered financed by the creditor.
E. A borrower may not be charged a fee in addition to the actual public discharge fee to provide a release upon prepayment. Payoff balances must be provided in accordance with section 9-305-B.
F. The following provisions apply with respect to a right to cure default of a residential mortgage loan.

(1) If all defaults in connection with a residential mortgage loan are cured after the initiation of any action to foreclose, the creditor or the servicer shall take steps as necessary to terminate the foreclosure proceeding or other action. The borrower shall pay any reasonable costs incurred by the creditor or servicer before the cure of default. Cure of default reinstates the borrower to the same position as if the default had not occurred and nullifies, as of the date of the cure, any acceleration of any obligation under the security instrument or note arising from the default.

(2) A borrower has the right to cure a default once in a 12-month period.

3. The administrator, by rule or order, shall prohibit acts or practices in connection with:
A. Residential mortgage loans that the administrator finds unfair, deceptive or designed to evade the provisions of this section; and
B. Refinancing of residential mortgage loans that the administrator finds are associated with abusive lending practices or that are otherwise not in the interest of the borrowing public.
4. The Attorney General has jurisdiction to enforce this section against loan brokers and supervised lenders who are not supervised financial organizations through their general regulatory powers and through civil process. The administrator, through the Attorney General, may bring a civil action to restrain any person from violating this section.
5. The rights conferred by this section are independent of and in addition to any other rights under this Title and other state and federal laws.

Sec. A-15. 9-A MRSA 8-208, sub-1, B, as corrected by RR 1995, c. 2, 18, is amended to read:

B.In an individual action:

(i) Twice the amount of any finance charge in connection with the transaction; or

(ii) In the case of a consumer lease, 25% of the total amount of monthly payments under the lease.

Liability under this paragraph may not be less than $100 nor greater than $1,000; except that in the case of a credit transaction not under an open-end credit plan that is secured by real property or a dwelling, liability under this paragraph may not be less than $200 $400 nor greater than $2,000 $4,000;

Sec. A-16. Effective date. Those sections of this Act that amend the Maine Revised Statutes, Title 9-A, section 8-206, subsection 3 and section 8-208, subsection 1, paragraph B take effect July 30, 2009.

Office of the Revisor of Statutes
State House, Room 108
Augusta, ME 04333