| 17 | 17 | | |
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| 18 | 18 | | Referred to Committee on BANKS |
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| 19 | 19 | | |
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| 20 | 20 | | Introduced by: |
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| 21 | 21 | | |
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| 22 | 22 | | (BA) |
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| 23 | 23 | | |
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| 24 | 24 | | AN ACT CONCERNING REVISIONS TO THE BANKING LAW TO REFLECT THE TRANSFER OF RESPONSIBILITIES TO THE CONSUMER FINANCIAL PROTECTION BUREAU. |
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| 25 | 25 | | |
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| 26 | 26 | | Be it enacted by the Senate and House of Representatives in General Assembly convened: |
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| 27 | 27 | | |
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| 28 | 28 | | Section 1. Section 36a-746a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage): |
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| 29 | 29 | | |
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| 30 | 30 | | As used in this section and sections 36a-746b to 36a-746g, inclusive: |
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| 31 | 31 | | |
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| 32 | 32 | | (1) "APR" means the annual percentage rate for the loan calculated according to the provisions of the federal Truth-in-Lending Act, 15 USC Section 1601 et seq., as amended from time to time, and the regulations promulgated thereunder. For open-end lines of credit, "APR" means the highest corresponding annual percentage rate required to be disclosed under 12 CFR [226.6(a)(2) and 226.14(b)] 1026.6(a)(2) and 1026.14(b), as amended from time to time, excluding any maximum rates required to be disclosed or stated pursuant to 12 CFR [226.6(a)(2) or 226.30] 1026.6(a)(2) or 1026.30, as amended from time to time. For closed-end loans, "APR" means the annual percentage rate required to be disclosed under 12 CFR [226.18(e)] 1026.18(e), as amended from time to time, excluding any maximum rates required to be disclosed or stated pursuant to 12 CFR [226.18(f) or 226.30] 1026.18(f) or 1026.30, as amended from time to time. For purposes of this subdivision, any variable rate calculation shall use an index value in effect within forty-five days prior to consummation; |
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| 33 | 33 | | |
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| 34 | 34 | | (2) "Broker" means a person who, for a fee, commission or other valuable consideration, negotiates, solicits, arranges, places or finds a high cost home loan that is to be made by a lender; |
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| 35 | 35 | | |
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| 36 | 36 | | (3) "Consummation" means the time that a borrower becomes contractually obligated on a loan or extension of credit; |
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| 37 | 37 | | |
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| 38 | 38 | | (4) "High cost home loan" means any loan or extension of credit, including an open-end line of credit but excluding a reverse mortgage transaction, as defined in 12 CFR [226.33] 1026.33, as amended from time to time: |
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| 39 | 39 | | |
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| 40 | 40 | | (A) In which the borrower is a natural person; |
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| 41 | 41 | | |
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| 42 | 42 | | (B) The proceeds of which are to be used primarily for personal, family or household purposes; |
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| 43 | 43 | | |
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| 44 | 44 | | (C) In which the loan is secured by a mortgage upon any interest in one-to-four family residential property, as defined in section 36a-485, located in this state that is, or, when the loan is made, is intended to be used or occupied by the borrower as a principal residence; and |
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| 45 | 45 | | |
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| 46 | 46 | | (D) In which the APR at consummation is greater than the yield on Treasury securities having comparable periods of maturity to the loan maturity as of the fifteenth day of the month immediately preceding the month in which the application for the loan or extension of credit is received by the lender, by more than the number of percentage points specified in 12 CFR [226.32(a)(1)(i)] 1026.32(a)(1)(i), as amended from time to time; |
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| 47 | 47 | | |
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| 48 | 48 | | (5) "Interim interest" means interest for the period from funding to the start of amortization paid by a borrower at or before consummation of a closed-end loan where such amortization begins sixty-two days or less after funding; |
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| 49 | 49 | | |
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| 50 | 50 | | (6) "Lender" means any person who originates one or more high cost home loans; and |
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| 51 | 51 | | |
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| 52 | 52 | | (7) "Prepaid finance charge" means any finance charge determined in accordance with 12 CFR [226.4] 1026.4, as amended from time to time, that is paid separately in cash or by check before or at consummation of a loan or extension of credit or withheld from the proceeds of such transaction at any time, except the term includes any fees or commissions payable to the lender or broker in connection with the sale of credit life, accident, health, disability or unemployment insurance products or unrelated goods or services sold in conjunction with the loan or extension of credit when the cost of such insurance products or goods or services is prepaid with the proceeds of the loan or extension of credit and financed as part of the principal amount of the loan or extension of credit, and excludes premiums, fees and any other amounts paid to a governmental agency, any amounts required to be escrowed by a governmental agency and interim interest. |
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| 53 | 53 | | |
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| 54 | 54 | | Sec. 2. Subdivision (1) of section 36a-746c of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage): |
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| 55 | 55 | | |
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| 56 | 56 | | (1) For a loan with a term of less than seven years, a payment schedule with regular periodic payments that when aggregated do not fully amortize the outstanding principal balance, except that this limitation does not apply to a loan with maturities of less than one year if the purpose of the loan is a bridge loan, as used in 12 CFR [226.32] 1026.32, as amended from time to time, connected with the acquisition or construction of a dwelling intended to become the borrower's principal dwelling; |
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| 57 | 57 | | |
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| 58 | 58 | | Sec. 3. Section 36a-758 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage): |
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| 59 | 59 | | |
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| 60 | 60 | | Any person who makes any first mortgage loan, as defined in section 36a-485, or any secondary mortgage loan, as defined in section 36a-485, shall, at the time of consummation of such loan or at the termination of any right to rescind the loan transaction under 12 CFR [226] 1026, as amended from time to time, whichever is later, pay the loan proceeds to the mortgagor, to the mortgagor's attorney, to the mortgagee's attorney or to any other person specified in any settlement statement, any written agreement between the mortgagor and the mortgagee or any written instruction of the mortgagor, by a certified, bank treasurer's or cashier's check or by means of wire transfer. |
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| 61 | 61 | | |
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| 62 | 62 | | Sec. 4. Subdivision (7) of subsection (a) of section 36a-760 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage): |
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| 63 | 63 | | |
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| 64 | 64 | | (7) "Nonprime home loan" means any loan or extension of credit, excluding an open-end line of credit, and further excluding a reverse mortgage transaction, as defined in 12 CFR [226.33] 1026.33, as amended from time to time: |
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| 65 | 65 | | |
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| 66 | 66 | | (A) In which the borrower is a natural person; |
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| 67 | 67 | | |
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| 68 | 68 | | (B) The proceeds of which are to be used primarily for personal family or household purposes; |
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| 69 | 69 | | |
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| 70 | 70 | | (C) In which the loan is secured by a mortgage upon any interest in one-to-four family residential real property located in this state which is, or when the loan is made, intended to be used or occupied by the borrower as a principal residence; |
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| 71 | 71 | | |
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| 72 | 72 | | (D) In which the principal amount of the loan does not exceed four hundred seventeen thousand dollars; |
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| 73 | 73 | | |
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| 74 | 74 | | (E) Where the loan is not a CHFA loan; and |
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| 75 | 75 | | |
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| 76 | 76 | | (F) In which the conditions set forth in clauses (i) and (ii) of this subparagraph apply, subject to any adjustments made pursuant to clause (iii) of this subparagraph: |
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| 77 | 77 | | |
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| 78 | 78 | | (i) The difference, at the time of consummation, between the APR for the loan and the conventional mortgage rate is either equal to or greater than (I) one and three-quarters percentage points, if the loan is a first mortgage loan, or (II) three and three-quarters percentage points, if the loan is a secondary mortgage loan. For purposes of such calculation, "conventional mortgage rate" means the most recent contract interest rate on commitments for fixed-rate mortgages published by the Board of Governors of the Federal Reserve System in its statistical release H.15, or any publication that may supersede it, during the week preceding the week in which the interest rate for the loan is set. For purposes of determining the beginning of each weekly period, the first day of each week shall be the effective date for the applicable prime offer rate, as of the date the interest rate is set, as determined in accordance with subparagraph (F)(ii) of this subdivision. |
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| 79 | 79 | | |
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| 80 | 80 | | (ii) The difference, at the time of consummation, between the APR for the loan or extension of credit and the average prime offer rate for a comparable transaction, as of the date the interest rate is set, is greater than one and one-half percentage points if the loan is a first mortgage loan or three and one-half percentage points if the loan is a secondary mortgage loan. For purposes of this subparagraph, "average prime offer rate" has the meaning as provided in 12 CFR [226.35] 1026.35, as amended from time to time. For purposes of subparagraphs (F)(i) and (F)(ii) of this subdivision, the date the interest rate is set is the last date the interest rate is set, provided the rate is adjusted on or before consummation. |
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| 81 | 81 | | |
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| 82 | 82 | | (iii) The commissioner shall have the authority, after consideration of the relevant factors, to increase the percentages set forth in clauses (i) and (ii) of this subparagraph. For purposes of this clause, the relevant factors to be considered by the commissioner shall include, but not be limited to, the existence and amount of increases in fees or charges in connection with purchases of mortgages by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and increases in fees or charges imposed by mortgage insurers and the impact, including the magnitude of the impact, that such increases have had, or will likely have, on APRs for mortgage loans in this state. When considering such factors, the commissioner shall focus on those increases that are related to the deterioration in the housing market and credit conditions. The commissioner may refrain from increasing such percentages if it appears that lenders are increasing interest rates or fees in bad faith or if increasing the percentages would be contrary to the purposes of sections 36a-760 to 36a-760f, inclusive. No increase authorized by the commissioner to a particular percentage shall exceed one-quarter of one percentage point, and the total of all increases to a particular percentage under this clause shall not exceed one-half of one percentage point. No increase shall be made unless: (I) The increase is noticed in the Banking Department Bulletin and the Connecticut Law Journal, and (II) a public comment period of twenty days is provided. Any increase made under this clause shall be reduced proportionately when the need for the increase has diminished or no longer exists. The commissioner, in the exercise of his discretion, may authorize an increase in the percentages with respect to all loans or just with respect to a certain class or classes of loans; |
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| 83 | 83 | | |
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| 84 | 84 | | Sec. 5. Subdivision (3) of subsection (a) of section 36a-760e of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage): |
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| 85 | 85 | | |
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| 86 | 86 | | (3) For a loan with a term of less than seven years, a payment schedule with regular periodic payments that when aggregated do not fully amortize the outstanding principal balance, except that this limitation does not apply to a loan with maturities of less than one year if the purpose of the loan is a bridge loan, as used in 12 CFR [226.32] 1026.32, as amended from time to time, connected with the acquisition or construction of a dwelling intended to become the borrower's principal dwelling; |
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| 87 | 87 | | |
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| 88 | 88 | | Sec. 6. Section 42-460a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage): |
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| 89 | 89 | | |
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| 90 | 90 | | (a) As used in this section, "general-use prepaid card" has the same meaning given to that term in 12 CFR [205.20(a)(3)] 1005.20(a)(3), as from time to time amended. |
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| 91 | 91 | | |
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| 92 | 92 | | (b) A general-use prepaid card shall not include an expiration date relative to the underlying funds that are redeemable through the use of the applicable card, code or device. Notwithstanding the provisions of this subsection, a general-use prepaid card may include an expiration date with regard to such card, code or device, provided: (1) The following disclosures are made, in writing, on such card, code or device: (A) That such card, code or device expires, but that the underlying funds do not expire and that the consumer may contact the issuer for a replacement card, code or device; and (B) a toll-free telephone number and an Internet web site address, if one is maintained, that a holder of a general-use prepaid card may use to obtain a replacement card, code or device after such card, code or device expires; (2) no fee or charge is imposed on such holder for replacing the card, code or device or for providing such holder with the remaining balance in some other manner, provided the card, code or device has not been lost or stolen; and (3) the seller of the card, code or device has established policies and procedures to provide consumers a reasonable opportunity to purchase a card, code or device that has not less than five years remaining until the card, code or device expires. |
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| 93 | 93 | | |
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| 94 | 94 | | (c) For purposes of complying with the disclosure requirements of subdivision (1) of subsection (b) of this section, (1) the issuer of the general-use prepaid card may provide disclosures that are consistent with the applicable provisions of 12 CFR [205.20(e)] 1005.20(e), as from time to time amended, and (2) such issuer shall make the disclosure required under subparagraph (A) of said subdivision (1) with equal prominence and in close proximity to the expiration date on the applicable card, code or device. |
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| 95 | 95 | | |
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| 96 | 96 | | |
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| 97 | 97 | | |
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| 98 | 98 | | |
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| 99 | 99 | | This act shall take effect as follows and shall amend the following sections: |
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| 100 | 100 | | Section 1 from passage 36a-746a |
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| 101 | 101 | | Sec. 2 from passage 36a-746c(1) |
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| 102 | 102 | | Sec. 3 from passage 36a-758 |
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| 103 | 103 | | Sec. 4 from passage 36a-760(a)(7) |
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| 104 | 104 | | Sec. 5 from passage 36a-760e(a)(3) |
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| 105 | 105 | | Sec. 6 from passage 42-460a |
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| 106 | 106 | | |
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| 107 | 107 | | This act shall take effect as follows and shall amend the following sections: |
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| 108 | 108 | | |
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| 109 | 109 | | Section 1 |
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| 110 | 110 | | |
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| 111 | 111 | | from passage |
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| 112 | 112 | | |
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| 113 | 113 | | 36a-746a |
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| 114 | 114 | | |
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| 115 | 115 | | Sec. 2 |
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| 116 | 116 | | |
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| 117 | 117 | | from passage |
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| 118 | 118 | | |
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| 119 | 119 | | 36a-746c(1) |
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| 120 | 120 | | |
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| 121 | 121 | | Sec. 3 |
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| 122 | 122 | | |
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| 123 | 123 | | from passage |
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| 124 | 124 | | |
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| 125 | 125 | | 36a-758 |
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| 126 | 126 | | |
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| 127 | 127 | | Sec. 4 |
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| 128 | 128 | | |
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| 129 | 129 | | from passage |
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| 130 | 130 | | |
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| 131 | 131 | | 36a-760(a)(7) |
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| 132 | 132 | | |
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| 133 | 133 | | Sec. 5 |
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| 134 | 134 | | |
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| 135 | 135 | | from passage |
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| 136 | 136 | | |
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| 137 | 137 | | 36a-760e(a)(3) |
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| 138 | 138 | | |
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| 139 | 139 | | Sec. 6 |
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| 140 | 140 | | |
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| 141 | 141 | | from passage |
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| 142 | 142 | | |
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| 143 | 143 | | 42-460a |
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| 144 | 144 | | |
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