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Opinion Summary of Selected Opinion 98-065

Date: 04/01/1998
Organization: Division of Banks
Docket Number: 98-065

This opinion was issued in the second quarter of 1998.

Maturity notice requirements for time deposit accounts longer than one month that renew automatically

Mass. Gen. Laws chapter 167D, section 8, entitled "Time Deposits," provides that for time deposits with maturities in excess of thirty days, banks must mail to the depositors written notifications of maturity at least thirty days, but less than forty-five days, before the maturity date of said plans or deposits. 209 CMR 4.04, promulgated pursuant to the Commonwealth's Truth-In-Savings statute, Mass. Gen. Laws chapter 140E, provides that a bank which complies with the consumer deposit account disclosure provisions of 12 CFR Part 230 ("Regulation DD", the regulation implementing the federal Truth in Savings Act) shall be deemed to comply with M.G.L. ch. 140E and 209 CMR 4.00. Regulation DD, at 12 CFR 230.5(b), provides that for time accounts with a maturity longer than one month that renew automatically, the disclosures shall be mailed or delivered at least 30 days before said accounts mature. Alternately, disclosures may be mailed or delivered at least 20 calendar days before the end of the grace period on the account, provided a grace period of at least five calendar days is allowed (the "Alternative Timing Rule'). For example, an institution offering a 10-day grace period must provide the disclosures at least 10 days prior to the scheduled maturity date.

It is the Division's position that the Alternative Timing Rule in Regulation DD is an alternate rule which provides a consumer advantage, and, notwithstanding M.G.L. ch. 167D § 8, an institution providing notice which complies with Regulation DD would be deemed to be in compliance with M.G.L. ch. 140E and 209 CMR 4.00 et. seq. In so doing, the Division gives weight to the fact that M.G.L. ch. 140E and 209 CMR 4.00 et. seq., were passed and promulgated more recently than M.G.L. ch. 167D § 8. The Division's position recognizes the later enacted statute and eliminates conflict between state and federal provisions.

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