HARRY HUGHES, Governor                                      3621

3. Notwithstanding subparagraph (i), the
lender may decrease the rate at any time and by any amount.

(3)  Interest rate decreases warranted by decreases in
the agreed upon index shall be mandatory except to the extent
that past increases in the index have not been implemented by the
lender, either at his option or because the lender was subject to
the rate change limitation of paragraph (2) of this section.

(4)  The loan instrument shall specify the
circumstances under which the rate may increase or decrease, any
limitations on an increase or decrease, and the effects of an
increase or decrease.

(5)  A lender must allow the borrower the choice of
implementing the variable rate feature of the loan either by
changes in the amount of periodic payments or by extending or
reducing the length of the term of the obligation;

(6)  (I) Through a periodic billing statement or other
written notice, the borrower is notified of the basis and effect
of a change in PERIODIC PAYMENT AMOUNT OR INTEREST rate[,
including any change in the required periodic payment amount,] at
least 15 days prior to the due date of the first payment that
reflects the changed rate;

(II) THE NOTIFICATION SHALL INCLUDE:

1.  ANY CHANGE IN THE REQUIRED PERIODIC
PAYMENT AMOUNT, INTEREST RATE, OR PRINCIPAL PAYMENT; AND

2.  THE CALCULATION REFLECTING THE EACH
CHANGE; and

(7)  No new closing costs, processing fees or similar
fees are imposed on the borrower as a result of adjustments in
rate.

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall
take effect July 1, 1986.

May 27, 1986
The Honorable Melvin A. Steinberg
President of the Senate
State House
Annapolis, Maryland 21404

Dear Mr. President:

In accordance with Article II, Section 17 of the Maryland
Constitution, I have today vetoed Senate Bill 142.