Massachusetts Adopts Truth in Lending Provisions
Massachusetts has adopted provisions under its Truth in Lending Act. These amendments are effective as of August 26, 2016.
Periodic Statements
The first amendment made to the Truth in Lending Regulation relates to the periodic statements which financial institutions are required to send to consumers regarding open-end credit. The change eliminates the requirement that periodic statements be sent at least 15 days prior to the date the payment must be received to avoid being treated as late. Also eliminated from the provision is the requirement that the creditor does not treat a required minimum periodic payment as late if it is received within 15 days after mailing or delivery of the periodic statement.
Special Credit Card Provisions
An amendment has been made to the provision prohibiting offsets by credit card issuers. Compliance with this provision will now require that for any plan pursuant to 12 CFR 1026.12(d)(3), under which the card issuer may periodically deduct all or part of the cardholder’s credit card debt from a deposit account held with the card issuer, such action may not be taken unless previously authorized by the cardholder in a separately signed agreement. Such action shall not be taken with respect to a disputed item if the cardholder so requests. The agreement must contain the following statement conspicuously on its face: YOU DO NOT HAVE TO SIGN THIS AGREEMENT IN ORDER TO OBTAIN A CREDIT CARD.
Relation to Federal Law
Another change concerns the relation of Massachusetts’ Truth in Lending Act with federal law. The amendment provides that if a regulation of the federal Truth in Lending Act, the Consumer Financial Protection Bureau’s Regulation Z, the Official Staff Commentary, or a disclosure or model form provided by a creditor thereunder conflicts with a state provision, the Commissioner may waive, in writing, the conflicting Massachusetts provision, provided the federal provision is not substantially less consumer protective.
Loan Estimate and Closing Disclosure
The final amendments to the Truth in Lending Act add provisions for Loan Estimates and Closing Disclosures. The provisions provide that compliance with the federal requirements for the contents of these disclosures will also constitute compliance under the Massachusetts Truth in Lending Act.
Elizabeth Dailey, JD, is a Regulatory Compliance Director with CLA. She is a graduate of the University of New Hampshire and earned her juris doctor at New England Law. She is admitted to the Massachusetts Bar.
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