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State of MaineOffice of Consumer Credit Regulation

121 SHS, Augusta, Maine 04333


Phone: (207) 624-8527
Fax: (207) 582-7699
TDD: (207) 624-8563

Contact: William N. Lund, Director
(207) 624-8527

March 13, 2006
 

STATE TO STUDY PREDATORY MORTGAGE LENDING

Augusta -- Mortgage regulators at the Office of Consumer Credit Regulation today announced that they will review and evaluate various proposals to combat predatory mortgage lending in Maine, and make recommendations to the next Legislature.

The decision was sparked by Maine's involvement in multi-state settlements with two nationwide subprime lenders, Ameriquest (2006) and Household/Beneficial (2004), and by a study of subprime lending and foreclosures released last month by Coastal Enterprises, Inc. (CEI) of Wiscasset.

"Governor Baldacci has asked our office to study this critical issue and report to the legislature’s Insurance and Financial Services Committee," said Will Lund, director of the state agency. "We will review CEI's report, and evaluate the elements of the recent Ameriquest settlement and the earlier Household case. In addition, we will invite submission of testimony and evidence from lenders, consumer groups and other interested parties, and we will look to the experiences of other states that have tackled this complex issue in the past several years."

Lund said that licensed subprime lenders, which would be most directly affected by changes to existing law, will also be asked to participate in the study process.

Lund indicated that Maine's anti-predatory lending laws have not been updated in recent years, while laws enacted in many other states have addressed abusive lending by limiting the use of such loan features as prepayment penalties, high processing fees and other charges. However, he added, the State of Maine should not enact rules that would dry up the flow of money into the State for those consumers who wish to purchase a new house or refinance their existing residence.

"Many consumer advocates, lenders and loan brokers are in agreement that certain added protections should be enacted and existing laws strengthened," said Lund. "However, it is important to obtain input from all affected parties before amending state statutes. This study will provide an opportunity for a comprehensive review of these complex issues."

Lund noted that certain Maine laws have been amended in recent months to add protections for mortgage customers. Effective January 31, 2006, the Legislature increased surety bonds posted by loan brokers from $10,000 to $25,000. In addition, individual loan officers employed by loan brokers and non-bank mortgage lenders must now register with the State, increasing accountability in those fast-growing industries. More than 12,000 loan officers have registered under the mandatory program, which also took effect January 31.

The study process will involve one or more opportunities for public comment, as well as chances to submit written materials before and after those hearings. The results, including suggestions for legislation, will be presented to the First Regular Session of the 123rd Legislature for its consideration.

Notice of the opportunities for public comment will be provided to those parties who have regularly participated in discussions and debate on the issue of predatory mortgage lending. Other interested parties may register to receive notice by emailing the administrative staff of the Office of Consumer Credit Regulation at Doris.A.Whitaker@Maine.gov, or by writing to the agency at 35 State House Station, Augusta, ME 04333-0035.

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The Maine Office of Consumer Credit Regulation was established in 1975 to enforce a variety of credit-related consumer laws. The Office licenses lenders, creditors and collectors; conducts periodic examinations of creditors to determine compliance with state laws; and responds to consumer complaints and inquiries. The Office also conducts educational seminars and provides speakers to advise consumers and creditors of their legal rights and responsibilities.