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John J. McKernan, Jr.    William N. Lund

   Governor    Superintendent

    Harry W. Giddinge

    Deputy Superintendent

  Jane E. Titcomb       Principal Examiners

  Commissioner      Del Pelton

    Richard Howard6

    Outreach/Research:

    Michael Brown

    Senior Examiners:

    Leslie Washburn

    Connie Berthiaume

    George B. Smith III

    Examiner:

    Douglas Stark

    Mary Young

    David Rolfe

Maine State Seal

 

DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION

BUREAU OF CONSUMER CREDIT PROTECTION

STATE HOUSE STATION 35

AUGUSTA, MAINE 04333-0035

(207)582-8718

Telecopier: 582-5415

 

ADVISORY RULING #102

JULY 9, 1993

 

July 9, 1993

 

Re:  Open-End Credit Not Secured by Real Estate or Manufactured Home

 

Dear  :

 

  You have asked whether the Maine Consumer Credit Code applies to a certain open-end credit product.

 

  Under the plan, the consumer's credit limit will be $175,000.  However, the debt will not be secured by an interest in land, a manufactured home or a dwelling.  Rather, the creditor will take a security interest in separate personal property.

 

  In my opinion, the open-end credit plan as described is exempt from the Consumer Credit Code.  I reach this conclusion despite 9-A M.R.S.A. §1-301(14)(A)(iv), which provides an exemption only where the security requirements are met and where the "amount financed" exceeds $25,000.  As you know, there is no such thing as an "amount financed" in an open-end line of credit, because unlike closed-end credit, an open-end plan theoretically starts with a $0 balance.

 

  Neither Federal law nor Maine law specifically addresses the situation involving open-end credit.  In this case, therefore, our office will conform to the interpretation provided by the Board of Governors of the Federal Reserve.  The Board exempts from Regulation Z an open-end transaction which meets the other requirements and which involves an "express written commitment to extend credit in excess of $25,000, or an "initial extension of credit [which] exceeds $25,000;"  see 12 CFR §226.3(b) and Comment 3(b)-2.

 

  I trust this is responsive to your request for an Advisory Ruling.

 

  Sincerely,

 

 

  William N. Lund

  Superintendent

 

WNL/bas