Public Hearing on 209 CMR 31.00, 209 CMR 32.00, 209 CMR 35.00, 209 CMR 44.00, 209 CMR 45.00, 209 CMR 52.00 and 209 CMR 56.00

Pursuant to the provisions of Massachusetts General Laws chapter 140D, ss. 3 and 29; 167, ss. 2I and 46; chapter 167B; chapter 167C; chapter 169, s. 7; chapter 169A, s. 2; chapter 167F, s. 4; chapter 171, s. 8A; chapter 183C; chapter 244, ss. 35A and 35B;  c. 255D, s. 1; and St. 1998, c. 169; and in accordance with Massachusetts General Laws chapter 30A, s. 2, a public hearing will be held on Thursday, May 12, 2016 at 10:00 a.m., 1000 Washington Street, Hearing Room 1-E, Boston, Massachusetts, at which the Division of Banks (Division) will receive oral comments relative to the proposed amendments to 209 CMR 31.00: Establishment and Operation of Electronic Branches of Financial Institutions and for the Protection of Consumers in Electronic Fund Transfers; 209 CMR 32.00:  Truth in Lending; 209 CMR 45.00: The Licensing and Regulation of Check Cashers; and 209 CMR 56.00: Foreclosure Prevention Options; and the proposed repeal of 209 CMR 35.00: Check Cashing Procedures for Certain Banks Required to Honor and Cash Certain Checks of Pensioners and Retirees; 209 CMR 44.00: Licensing of Foreign Transmittal Agencies; and 209 CMR 52.00: Credit Insurance Disclosure Requirements.

209 CMR 31.00, Establishment and Operation of Electronic Branches of Financial Institutions and for the Protection of Consumers in Electronic Fund Transfers :

The purpose of 209 CMR 31.00 is to set forth the procedures for the establishment of Automated Teller Machines (ATMs) by banks, credit unions and non-bank ATM providers (non-banks) and safeguards for consumers in bank, credit union and non-bank ATM and electronic funds transfer (EFT) transactions.  The proposed amendments to 209 CMR 31.00 reflect amendments set forth in Chapter 482 of the Acts of 2014 (the Bank Modernization Act), which significantly amended General Laws chapter 167B, the chapter governing ATM and EFT transactions.  The Bank Modernization Act deemed compliance by depository institutions with federal law regarding EFTs to be sufficient to satisfy Massachusetts law, with the exception of limited circumstances.    In addition, the proposed amendments to the regulation include a new provision that compliance by non-banks with the provisions of the federal EFT Act and its corresponding regulation, 12 CFR Part 1005 (Regulation E), which do not conflict with Massachusetts laws or regulations, shall be deemed compliance with Massachusetts law.  Another purpose of the proposed amendments is to amend this regulation in a way to incorporate future federal changes while preserving the Massachusetts differences deemed more advantageous to consumers.

Proposed Amendments to 209 CMR 32.00, Truth in Lending :

The purpose of 209 CMR 32.00 is to promote the informed use of consumer credit by requiring disclosures about credit terms and cost.  209 CMR 32.00 also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer’s principal dwelling, regulates certain credit card practices, and provides a means for resolution of credit billing disputes.  The regulation includes enhanced disclosure requirements for high cost mortgage loans, reverse mortgages, and private education loans, among other things.  209 CMR 32.00 also prohibits certain acts or practices in connection with the extension of credit secured by the consumer’s dwelling.  Some proposed amendments were necessitated by changes in federal law or enabled by recent amendments to Massachusetts law.  These proposed amendments to the regulation include the following: (1) authorizing creditors to use a uniform billing statement for all types of open end credit accounts under certain conditions; (2) clarifying disclosure and consent requirements; (3) incorporating authority pursuant to Chapter 482 of the Acts of 2014 for the Commissioner of Banks to waive certain requirements of M.G.L. c. 140D or 209 CMR 32.00 under defined circumstances; and (4) adding, for clarification, two sections relative to disclosures provided in a residential mortgage loan transaction which correspond to two provisions that were recently added to the federal Truth in Lending regulation. 

Proposed Amendments to 209 CMR 45.00, The Licensing and Regulation of Check Cashers and Proposed Repeal of 209 CMR 44.00, Licensing of Foreign Transmittal Agencies :

The purpose of 209 CMR 45.00 is to provide procedures and requirements for the licensing, regulation, and supervision of check cashers under the provisions of M.G.L. c. 169A.  The proposed amendments expand the scope of the regulation to check sellers, check cashers, and foreign transmittal agencies within the Commonwealth.  The purpose of the proposed amendments to 209 CMR 45.00 is to update and consolidate procedures and requirements for licensing/certifying, regulating, and supervising check sellers, check cashers, and foreign transmittal agencies within the Commonwealth.  The proposed amendments to 209 CMR 45.00: (1) incorporate sections of 209 CMR 44.00: Licensing of Foreign Transmittal Agencies, which will be repealed; (2) update requirements and prohibitions for check cashers and foreign transmittal agencies; and (3) create approval and operational requirements for check sellers.  209 CMR 44.00 is therefore proposed for repeal since its provisions are updated and included in the proposed amendments to 209 CMR 45.00, to be entitled “The Licensing and Regulation of Money Services Businesses”. 

Proposed Amendments to 209 CMR 56.00: Foreclosure Prevention Options :

The purpose of 209 CMR 56.00: Foreclosure Prevention Options is to define the Right to Cure notification process for lenders and mortgage servicers to be followed in notifying borrowers of a mortgage default, and in disclosing repayment options available to homeowners in order to prevent a foreclosure.  209 CMR 56.00 also implements standards and requirements for the mortgage loan modification process for a subcategory of residential mortgage loans having characteristics commonly associated with subprime mortgages, defined as Certain Mortgage Loans

Chapter 258 of the Acts of 2010 included a sunset provision governing the written notice of a right to cure a default under a residential mortgage loan (Right to Cure Notice), which reduced the Right to Cure period from 150 days to 90 days in M.G.L. c. 244, s. 35A.  This provision took effect on January 1, 2016.   The proposed amendments adjust references within the regulation and the respective forms from a 150 day Right to Cure period to 90 days.  In addition, prior to January 1, 2016, the Right to Cure provisions of M.G.L. c. 244, s. 35A included procedures whereby the lender or mortgage servicer was authorized to reduce the Right to Cure period from 150 days to 90 days if they undertook certain intervention efforts to attempt to negotiate an alternative to foreclosure.  These procedures are currently included in 209 CMR 56.00.  With the Right to Cure period reduced to 90 days, this component was extinguished in the statute and is proposed for removal from the regulation.  Other proposed amendments of the regulation are incorporated for clarification and, where possible, to permit a consolidation of the delivery of the notice(s) required under this regulation with other loss mitigation related notices required to be delivered to a delinquent mortgage borrower under federal regulations promulgated by the Consumer Financial Protection Bureau (CFPB).

Proposed Repeal of 209 CMR 35.00, Check Cashing Procedures for Certain Banks Required to Honor and Cash Certain Checks of Pensioners and Retirees:

The purpose of 209 CMR 35.00 is to establish certain check cashing procedures for every bank and credit union doing business in the Commonwealth to cash Social Security and other government benefit checks as well as pension checks issued by the federal government or any agency thereof, or by the Commonwealth or any agency or political subdivision for customers and non-customers of the bank or credit union.  The Division proposes to repeal 209 CMR 35.00 because methods for check cashing and depositing have changed significantly since 1983 when the law requiring 209 CMR 35.00, M.G.L. c. 167, s. 46, was enacted.  Pension and other government benefits are now delivered primarily by direct deposit into a consumer’s account as opposed to by a paper check.  In conjunction with repealing 209 CMR 35.00, the Division proposes to issue industry guidance that will explain the procedures that banks and credit unions must continue to have in place for those consumers who still wish to cash a paper check for pension or other governmental benefits.

Proposed Repeal of 209 CMR 52.00, Credit Insurance Disclosure Requirements:

The purpose of 209 CMR 52.00: Credit Insurance Disclosure Requirements is to require disclosure to consumers of the coverage, costs and other aspects of credit insurance related to a credit transaction so that a consumer may make a more informed decision.  The Division proposes to repeal this regulation because it is essentially duplicative to a regulation of the Division of Insurance and provides no additional consumer protections.  

Additional changes may be made based on comments received at the public hearing or during the comment period.

Written comments may be submitted to the Massachusetts Division of Banks, 1000 Washington St., 10^th Floor, Boston, MA 02118-6400 or at dob.comments@state.ma.us until 5:00 p.m. on Thursday, May 19, 2016.  Copies of the proposed amendments are available at www.mass.gov/dob or may be obtained from the Division.