Massachusetts Updates Truth in Lending Regulations
By Margaret Wright, J.D.
The Code of Massachusetts Regulations Truth in Lending section (209 CMR 32) has recently been amended to align to recent Federal Regulation Z updates.
Many states, including Massachusetts, have adopted their own Truth in Lending regulations as permitted to do so where the regulations are substantially similar to Regulation Z and adequately enforced.
The Massachusetts Truth in Lending regulations are set apart by affording consumers greater protection in certain areas covered by the Truth in Lending Act. Massachusetts consumers are offered greater Truth in Lending protections including, but not limited to, the areas of rescission and high cost mortgage loans.
In Massachusetts, failure to deliver the notice of the consumer’s right to rescind extends the rescission period to four years, while the consumer retains an interest in the property during that period. Federally, Regulation Z extends the rescission period to three years where the notice was not delivered.
Additionally, Massachusetts rules for High Cost Mortgage Loans cover a more restrictive set than the Federal Regulation Z requirements. For comparison, below are partial sections from the Massachusetts CMR and Federal Regulation Z concerning High Cost Mortgage coverage and APR percentage points:
Massachusetts:
32.32: Requirements for High Cost Mortgages
(1) Coverage.
(a) Except as provided in 209 CMR 32.32(1)(b), the requirements of 209 CMR 32.32 apply to a consumer credit transaction that is secured by the consumer’s principal dwelling, and in which:
1. a. The annual percentage rate at consummation will exceed by more than eight percentage points for first lien loans, or by more than nine percentage points for subordinate lien loans, the yield on Treasury securities having comparable periods of maturity to the loan maturity as of the 15th day of the month immediately preceding the month in which the application for the extension of credit is received by the creditor …
Regulation Z:
§1026.32 Requirements for high-cost mortgages.
(a) Coverage. (1) The requirements of this section apply to a high-cost mortgage, which is any consumer credit transaction that is secured by the consumer’s principal dwelling, other than as provided in paragraph (a)(2) of this section, and in which:
(i) The annual percentage rate applicable to the transaction, as determined in accordance with paragraph (a)(3) of this section, will exceed the average prime offer rate, as defined in §1026.35(a)(2), for a comparable transaction by more than:
(A) 6.5 percentage points for a first-lien transaction, other than as described in paragraph (a)(1)(i)(B) of this section;
(B) 8.5 percentage points for a first-lien transaction if the dwelling is personal property and the loan amount is less than $50,000; or
(C) 8.5 percentage points for a subordinate-lien transaction…
View the Massachusetts Truth in Lending Regulations in their entirety:
http://www.mass.gov/courts/docs/lawlib/201-209cmr/209cmr32.pdf
About the Author:
Margaret Wright, J.D. is Vice President and Regulatory Compliance Director at Bankers Advisory. She is a graduate of Stonehill College and earned her Juris Doctor at Suffolk University Law School. She is admitted to the Massachusetts Bar. She can be reached at Margaret@bankersadvisory.com
Margaret Wright, JD, is regulatory compliance director with CLA. She is a graduate of Stonehill College and earned her juris doctor at Suffolk University Law School. She is admitted to the Massachusetts Bar.
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