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Opinion  Summary of Selected Opinion 00-030

Date: 05/01/2000
Organization: Division of Banks
Docket Number: 00-030

This opinion was issued in the second quarter of 2000.

Table of Contents

Excusing a delay by a bank in making a timely periodic statement

A bank has requested to be excused for a justified delay in making available to certain of its home equity line of credit customers a timely periodic statement.

Subsection (a) of the Mass. Gen. Laws chapter 140D requires the bank to mail or deliver to the Customers a statement at least fifteen (15) days before the end of the next succeeding billing cycle or the payment due date, whichever is earlier. Unless the banks delay to timely make available the statement to the customers is excused or justified, it must (i) forfeit the finance charge with respect to the next succeeding billing cycle based upon the balance of the preceding billing cycle and (ii) credit or refund any such finance charge assessed to or collect from the customers within two billing cycles following such assessment or collection. Mass.Gen. Laws chapter 140D, subsection (b) (subsection(b)") provides that subsection (a) shall not apply to a failure caused by " ...an act of God, war, natural disaster, strike or other excusable or justifiable cause, as determined by the commissioner." It is the position of the Division that a banks systems failure to produce timely statements due to a computer malfunction is not excusable.

Subsection (b) may be invoked by the Division where there was a specific identifiable cause which arises to the level of the specified mentioned Subsection (b) i.e. act of God, war, natural disaster or strike.

209 CMR 32.05(2)(b) provides the regulatory requirement for providing the periodic statement. Footnote 10 to that provision provides the same standards for excusing as provided in Subsection 19(b). In addition, the Federal Reserve's Official Commentary is applicable to the Massachusetts regulation pursuant to 209 CMR 32.27. The Official Staff Commentary in discussing the federal regulation states that" Footnote 10 does not extend to the failure to provide a periodic statement because of computer malfunction."

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