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Mich. OFIR clarifies single premium debt cancellations
NORTHVILLE TOWNSHIP, Mich. (7/22/08)--Michigan's Office of Financial and Insurance Regulation (OFIR) has clarified its position on debt cancellation contracts (DCC) offered by the state's credit unions and other depository institutions. The Michigan Credit Union League, working with CUNA Mutual Group, had requested that OFIR clarify its 2004 declaratory ruling, which authorized depository institutions to use the contracts and debt suspension agreements without being subject to the Insurance Code. (Michigan Monitor July 21). In the ruling, OFIR said if depositories complied with an Office of the Comptroller of the Currency regulation on the subject, OFIR would consider them operating in a safe and sound manner. It also said that unless a periodic premium payment plan also was offered, the depository could not offer a single or lump sum premium plan. The new bulletin, issued July 11, supersedes the first ruling. "The commissioner has concluded that state-chartered depository institutions do not have to offer a customer the option of paying the fee for a DCC in monthly or other periodic payments when the product is what is commonly known as GAP ('guaranteed auto' or 'guaranteed asset' protection) coverage or waiver," the new bulletin said. The position is similar to that taken by a small but growing number of states, said the league.


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