Maine Legislative Update

Maine Legislative Update

The Maine legislature recently enacted laws addressing unlicensed lending under the Maine Consumer Credit Code (“Code”) and amended the Code to facilitate the multistate licensing process.  Both pieces of legislation are effective September 17, 2014.

 

MAINE LEGISLATIVE DOCUMENT 1691 (S.P. 1214)

 

“Automated clearinghouse” means the nationwide electronic funds transfer system that provides for an interbank exchange of either checks or automated debit or credit entries.

 

“Financial account” means a checking, savings, share, stored value, prepaid, payroll card or other depository account.

 

“Lender” means a person engaged in the business of making loans of money and charging, contracting for, or receiving on any such loan interest, a finance charge, a discount, or consideration.  “Lender” does not include a supervised financial organization.

 

“Process” or “processing” includes printing a check, draft, or other form of negotiable instrument drawn on or debited against a consumer’s financial account, formatting, or transferring data for use in connection with the debiting of a consumer’s financial account by means of such an instrument or an electronic funds transfer, or arranging for such services to be provided to a lender.

 

“Processor” means a person who engages in processing.  “Processor” does not include the automated clearinghouse.

 

It is an unfair or deceptive act or practice in commerce, a violation of the Maine Unfair Trade Practices Act, and a violation of the Code for a lender directly or through an agent to solicit or make a loan to a consumer by any means, unless the lender is a supervised lender in compliance with the Code or is otherwise exempt from the Code’s supervised lender requirements.

 

It is an unfair or deceptive act or practice in commerce, a violation of the Maine Unfair Trade Practices Act, and a violation of the Code for a processor, other than a supervised financial organization, to process a check, draft, other form of negotiable instrument, or an electronic funds transfer from a consumer’s financial account in connection with a loan solicited from or made by any means to a consumer, unless the lender is a supervised lender in compliance with the Code or is otherwise exempt from the Code’s supervised lender requirements.

 

It is an unfair or deceptive act or practice in commerce, a violation of the Maine Unfair Trade Practices Act, and a violation of the Code for a person or lender to provide substantial assistance to a lender or processor when the person or lender, or the person’s or lender’s authorized agent, receives notice from a regulatory, law enforcement, or similar governmental authority, knows from its normal monitoring and compliance systems, or consciously avoids knowing that the lender or processor is in violation of the above provisions, or is engaging in an unfair or deceptive act or practice in commerce. This paragraph does not apply to a supervised financial organization.

 

MAINE LEGISLATIVE DOCUMENT 1712 (S.P. 678)

 

For a lender whose activities include making or arranging residential mortgage loans, an application for a license to make supervised loans must be made electronically through the Nationwide Mortgage Licensing System and Registry (“NMLS”).  Licenses expire December 31st of each year and must be renewed through the NMLS.

 

An application for an initial license must be accompanied by a fee of $250, and an annual renewal application must be accompanied by a fee of $100.  An application for an initial license or renewal for a place of business other than that of the applicant’s first licensed location must be accompanied by a fee of $100.  An applicant must also pay an NMLS processing fee in an amount to be determined by the NMLS.

 

A tax-exempt nonprofit organization engaged in the financing of housing for low-income people under a program designed specifically for that purpose must pay an initial licensing fee and a fee for each branch location, of $20 and a renewal licensing fee and renewal fee for each branch location of $10, plus the applicable NMLS processing fee.

Each branch location license application must be accompanied by a surety bond, in a form acceptable to the Superintendent of Financial Institutions (“Administrator”) in the amount of $50,000.

 

The Administrator may now require licensees to file composite annual and quarterly reports related to all supervised loans made or arranged by the licensee.  Previously the regulations only specified composite annual reports.

 

Loan brokers whose activities include arranging for or obtaining an extension of credit for a residential mortgage loan:

 

A loan broker whose activities include arranging for or obtaining an extension of credit for a residential mortgage loan must apply for a license electronically through the NMLS.  The initial application must include a fee of $300 and a renewal application must include a fee of $150.

 

An application for a branch location license for a location other than that of the first licensed location from which the applicant conducts business or from which the applicant conducts business under a different name than that listed on the first license must be accompanied by a license fee of $150 and an annual renewal fee of $75.

 

The applicant must also pay NMLS processing fees.  A license expires on December 31st of each year and must be renewed through the NMLS.  Renewal applications and applications received after the due date are subject to an additional fee of $100.

 

A licensed loan broker may conduct business only through a mortgage loan originator who possesses a current, valid license.

 

The following provisions have been deleted:

 

A mortgage loan originator who continues to meet the minimum standards for license issuance and who has paid all required fees for license renewal may make up any deficiency in continuing education as established by rule of the Administrator.

 

A written test may not be treated as a qualified written test unless the test adequately measures the applicant’s knowledge and comprehension in appropriate subject areas, including:

o       Ethics;

o       Federal laws and regulations pertaining to mortgage origination;

o       State laws and rules pertaining to mortgage origination; and

o       Federal and state laws, rules, and regulations, including instruction on fraud, consumer protection, the nontraditional mortgage product marketplace, and fair lending issues.

 

A licensed mortgage loan originator must complete at least 8 hours of education, which must include at least:

o       Three hours of federal laws and regulations;

o       Two hours of ethics, which must include instruction on fraud, consumer protection, and fair lending issues; and

o       Two hours of training related to lending standards for the nontraditional mortgage product marketplace.

 

In order to meet the prelicensing education requirements, a person must complete at least 20 hours of education, which must include at least:

o       Three hours of instruction in federal laws and regulations;

o       Three hours of ethics, which must include instruction on fraud, consumer protection, and fair lending issues; and

o       Two hours of training related to lending standards for the nontraditional mortgage product marketplace.