On January 2, 2015 the Massachusetts Division of Banks and Loan Agencies finalized rules amending the Code of Massachusetts Regulations, Title 209, Chapter 32 (see http://archives.lib.state.ma.us/handle/2452/219037), which is the Commonwealth’s version of Federal Regulation Z, from which they are exempt (see 12 CFR § 1026.29 and associated Official Staff Commentaries).
The Division has decided to amend Chapter 32 “in a way to incorporate future federal changes while preserving the Massachusetts [sic] differences deemed more advantageous to consumers.” These amendments largely incorporate the provisions and requirements of 12 CFR Pt. 1026, with some caveats (e.g. in cases where “material disclosures” are not provided in a timely fashion for certain transactions, consumers may have the right to rescind the transaction up to four years after “the occurrence giving rise to the right of rescission”, rather than the three years allowed under Federal Regulation Z).
As a result of these changes, we will be modifying the following documents for the following reasons:
- MA High Cost Loan Application Disclosure (Cx3742) and High Cost Loan Payment Disclosure (Cx3746). These two documents are provided, in part, pursuant to Mass. Regs. Code tit. 209, § 32.32. This Section has been amended, in relevant part, to stipulate that “compliance with 12 CFR § 1026.32(c) constitutes compliance with [this Section].”
Our “Section 32 Mortgage Loan Disclosure” (Cx17901 and Cx17902) are provided pursuant to Supra, therefore it is no longer necessary to provide Cx3742 and Cx3746 pursuant to Section 32.32. However, these documents are still required to be provided under Ibid. tit. 209, § 40.04, so we will be modifying these documents to remove the citations to Section 32.32.
Please note that Section 40.04, Title 209 of Massachusetts Regulations has been slated for revisions as well which would basically require creditors to provide the disclosures required under Section 32 of Federal Regulation Z (see 2014 Mass. Reg. 375170). However, these revisions have not been finalized as yet. If they are finalized in substantially the same form as proposed, we will be retiring Cx3742 and Cx3746 altogether.
- MA High Cost Loan Insurance Disclosure (Cx3745). Surprisingly, Mass. Regs. Code tit. 209, § 32.34(2)(b), which permits (under certain circumstances) certain credit insurances to be “packed” into the loan (e. the premiums may be financed into the loan) was not amended to substantially conform with 12 CFR § 1026.36(i), which generally prohibits such practices.
However, the Subsection was amended to place the clauses concerning “packing” into Subsection (2)(a), rather than Subsection (2)(b), so we will be modifying the citations in Cx3745 to refer to Mass. Regs. Code tit. 209, §§ 32.34(2)(a) & 40.07(2).
Due to increased ambiguity as to whether this “packing” provision would survive a challenge that it “is substantially similar to Federal law” under Regulation Z’s state exemption rules (see 12 CFR § 1026.29[a]), we will be changing the caveat clause “unless applicable Federal law (particularly 12 CFR § 1026.36[i]) provides otherwise” to “unless applicable law provides otherwise.”
- MA High Cost Home Loan Disclosure (Cx14937). This document is provided pursuant to the provisions of Mass. Regs. Code tit. 209, § 32.32(3)(a) through (e). Subsection 32.32(3) has been modified to stipulate that “compliance with 12 CFR 1026.32(c) constitutes compliance with [this Subsection].” Basically, this means that providing Cx17901 and Cx17902 is considered to be in compliance with Section 32.32(3), rather than providing Cx14937. Since Cx14937 is also not required by any other laws, we will be retiring this document.
These changes will take effect on January 21, 2015. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
January 14, 2015