Issue #21: Effective notice of prepayment penalties

Issue #21: Effective notice of prepayment penalties

This matter is talked about with regards to problems #13 and #14, above. Conditions relating to prepayment charges happen integrated to the draft legislation connected as Appendix # 1; see part 3 and area 7 of that proposed legislation.

Problem #22: Requiring that “unpaid balance” figures reflect extra funds needed as prepayment charges

Because a lot of customers have actually told OCCR which they didn’t understand these were at the mercy of a prepayment penalty until they attempted to cover their loan off early, this proposition might have needed that every time the lending company notified the debtor associated with the unpaid stability to their loan (as an example, upon demand, or with every monthly declaration, or at year-end), the financial institution could be needed to include into that stability the prepayment penalty, to produce an exact image of the specific buck quantity essential to pay back the mortgage.

We felt that the proposition had been an easy and revolutionary solution to avoid “payoff shock. ” But, we now have opted for never to consist of it inside our proposed legislation. This proposal would likely prove too difficult for lenders’ billing computers to accommodate, at least just for borrowers in the State of Maine like so many seemingly simple solutions to complex issues. We continue steadily to believe that the idea has merit, and then we also note the actions other states have actually taken fully to deal with, and indirectly discourage, such charges (Massachusetts, for instance, calls for loan providers to add prepayment charges into the “points-and-fees” calculation to determine whether extra “Section 32”-type defenses must be imposed). Nevertheless, until or unless other states or federal regulators follow the idea, we believe that it might be impracticable to need such calculations entirely for Maine loans.

Problem #23: High attorney’s fees in the initial states of pre-foreclosure or foreclosure

The ask for Public Comment raised the matter of high very early appropriate charges, because inside our experience assisting customers that are delinquent inside their re re payments it usually seemed that loan providers incurred significant appropriate charges right after files had been provided for solicitors with guidelines to start property foreclosure. The imposition of these high charges hindered the talents of all of the events to “unwind” the situation and obtain the consumer straight straight back on track, because along with gathering all delinquent re payments, interest and late costs, loan providers additionally demanded reimbursement of appropriate charges incurred up to now.

The maximum amount of we are now of the opinion that the situation should be addressed by 1) requiring the lenders to obtain specific information from their attorneys to demonstrate exactly how claimed fees were incurred in a short time; and, if necessary, 2) communicating with the attorneys and/or with the Bar Overseers in egregious or repeated cases as we think this type of occurrence deserves scrutiny. As a result, the connected legislation will not include measures to handle appropriate fees incurred during the pre-foreclosure phase.

Issue #24: Personal foreclosures

Although Maine is normally considered a “judicial property foreclosure” state, Maine law nevertheless allows personal foreclosures. But, the guidelines for such elements as solution of procedure, and accounting for equity into the property foreclosed upon, vary between personal and judicial foreclosures. We at OCCR feel that people forms of conditions should always be constant both in general general general public and private foreclosures, considering that the stakes (losing ownership of one’s house) are exactly the same. Consequently, the proposed legislation (Appendix no. 1, area 12) proposes to put on equivalent types of solution of procedure criteria to personal foreclosures as it is now needed in judicial foreclosures; and extra parts (part 13 and area 14) would repeal the existing right regarding the foreclosing party to wait purchase of home for just two years and thereafter wthhold the entirety associated with home without any responsibility to account into the customer for just about any equity. Rather, we propose enactment of a necessity that the house be offered into the highest bidder, as it is carried out in judicial foreclosures, with any equity more than your debt plus expenses incurred into the action, being came back to the customer following the purchase.

Issue #25: Payoff needs

The problem of lenders’ responses to payoff requests ended up being incorporated into our ask for Comment because we heard from people who once the customers asked for payoff numbers, their loan providers bombarded them with provides to entice them to not ever refinance along with other loan providers.

We’ve perhaps perhaps not included any brand new proposal that is installment loans online louisiana legislative deal with this dilemma. We now believe that any issues could be prevented 1) by vigorously enforcing present Maine legislation that takes a loan provider or servicer to promptly react to an ask for a payoff figure (see 9-A MRSA § 9-305-B); and 2) by likewise enforcing, where appropriate, the buyer Credit Code’s supply against unconscionable conduct by loan providers (for instance, 9-A MRSA § 9-402 forbids making use of unconscionable conduct to cause a customer to access a credit deal). As long as lenders conform to the present statutory timeframes for creating a payoff figure, we have been perhaps not of this viewpoint which they must certanly be (or lawfully could possibly be) avoided from providing their clients a far better deal.

Problem #26: feasible addition of an OCCR staff lawyer and/or a detective to simply help avoid predatory financing methods

The proposition established in the ask for Public Comment to include a detective and a lawyer to OCCR’s staff came across with unanimous help from consumer teams and from industry commenters. We at OCCR believe that this kind of step will be acutely useful in our efforts to quickly protect consumers by and flexibly react to allegations by customers, or by rivals, of predatory activity by loan providers or loan agents.

Nevertheless, the connected bill will not propose authorization that is specific those two roles. Offered the current sentiment favoring the addition of state staff just as a final resort, we believe that the legislative committee that considers this bill (and also the CEI anti-predatory financing bill too) should make such determinations after assessing the necessity for such resources and after hearing from all parties about the subject.