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Mortgage Lending: 38 U.S.C. § 3709 Refinancing of housing loans

(a) Fee recoupment.—Except as provided in subsection (d) and notwithstanding section 3703 of this title or any other provision of law, a loan to a veteran for a purpose specified in section 3710 of this title that is being refinanced may not be guaranteed or insured under this chapter unless—

Mortgage Lending: 38 U.S.C. § 3728 Exemption from State anti-usury provisions

If, under any law of the United States, loans and mortgages insured under title I or title II of the National Housing Act are exempt from the application of the provisions of any State constitution or law (1) limiting the rate or amount of interest, discount points, or other charges which may be charged, taken, received, or reserved by lenders, (2) restricting the manner of calculating such interest (including prohibition of the charging of interest on interest), or (3) requiring a minimum amortization of principal, then loans guaranteed or insured under this chapter a

Mortgage Lending: Listing of Provisions

Title 38. Pensions, Bonuses, and Veterans’ Relief

Chapter I. Department of Veterans Affairs

Part 36. Loan Guaranty

Subpart B. Guaranty or Insurance of Loans to Veterans with Electronic Reporting

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Sec.

36.4310 Amortization.

36.4311 Prepayment.

36.4312 Interest rates.

36.4313 Charges and fees.

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Mortgage Lending: § 36.4310 Amortization.

(a) All loans, the maturity date of which is beyond 5 years from date of loan or date of assumption by the veteran, shall be amortized. Except as provided in paragraph (e) of this section, the schedule of payments thereon shall be in accordance with any generally recognized plan of amortization requiring approximately equal periodic payments and shall require a principal reduction not less often than annually during the life of the loan.

Mortgage Lending: § 36.4311 Prepayment.

The debtor shall have the right to prepay at any time, without premium or fee, the entire indebtedness or any part thereof not less than the amount of one installment, or $100, whichever is less. Any prepayment in full of the indebtedness shall be credited on the date received, and no interest may be charged thereafter. Any partial prepayment made on other than an installment due date need not be credited until the next following installment due date or 30 days after such prepayment, whichever is earlier.

Mortgage Lending: § 36.4312 Interest rates.

(a) In guaranteeing or insuring loans under 38 U.S.C. chapter 37, the Secretary may elect to require that such loans either bear interest at a rate that is agreed upon by the veteran and the lender, or bear interest at a rate not in excess of a rate established by the Secretary. The Secretary may, from time to time, change that election by publishing a notice in the Federal Register. However, the interest rate of a loan for the purpose of an interest rate reduction under 38 U.S.C.

Mortgage Lending: § 36.4313 Charges and fees.

(a) No charge shall be made against, or paid by, the borrower incident to the making of a guaranteed or insured loan other than those expressly permitted under paragraph (d) or (e) of this section, and no loan shall be guaranteed or insured unless the lender certifies to the Secretary that it has not imposed and will not impose any charges or fees against the borrower in excess of those permissible under paragraph (d) or (e) of this section.

Mortgage Lending: Listing of Provisions

Title 7. Agriculture

Subtitle B. Regulations of the Department of Agriculture

Chapter XVIII. Rural Housing Service, Rural Business-Cooperative Service, Rural Utilities Service, and Farm Service Agency, Department of Agriculture

Subchapter H. Program Regulations

Part 1980. General

Subpart D. Rural Housing Loans

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Mortgage Lending: § 1980.320 Interest rate.

The interest rate must not exceed the established, applicable usury rate. Loans guaranteed under this subpart must bear a fixed interest rate over the life of the loan. The rate shall be agreed upon by the borrower and the Lender and must not be more than the current Fannie Mae rate as defined in § 1980.302(a) of this subpart. The Lender must document the rate and the date it was determined.

[76 Fed. Reg. 31,220 (May 31, 2011).]

Mortgage Lending: § 1980.321 Terms of loan repayment.

(a) Note. Principal and interest shall be due and payable monthly.

(b) Term. The term for final maturity shall be not less than 30 years from the date of the note and not more than 30 years from the date of the first scheduled payment.

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Mortgage Lending: § 1980.324 Charges and fees by Lender.

(a) Routine charges and fees. The Lender may establish the charges and fees for the loan, provided they are the same as those charged other applicants for similar types of transactions.

(b) Late payment charges. Late payment charges will not be covered by the guarantee. Such charges may not be added to the principal and interest due under any guaranteed note. Late charges may be made only if:

Mortgage Lending: Listing of Provisions

Title 7. Agriculture

Subtitle B. Regulations of the Department of Agriculture

Chapter XXXV. Rural Housing Service, Department of Agriculture

Part 3555. Guaranteed Rural Housing Program

Subpart C. Loan Requirements

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Sec.

§ 3555.102 Loan restrictions.

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§ 3555.104 Loan terms.

Mortgage Lending: § 3555.102 Loan restrictions.

A guarantee will not be issued if loan funds are to be used for:

(a) Existing manufactured homes. Purchase of an existing manufactured home, except as provided in § 3555.208(b)(3);

(b) Income producing land or buildings. Purchase or improvement of land or buildings that are typically used principally for income-producing purposes;

Mortgage Lending: § 3555.104 Loan terms.

(a) Interest rate. The loan must be written at an interest rate that:

(1) Is fixed over the term of the loan;

(2) Shall be negotiated between the lender and borrower to allow the borrower to obtain the best available rate available in compliance with all applicable laws.

Mortgage Lending: § 3555.253 Late payment charges.

Late payment charges will not be covered by the guarantee and cannot be added to the principal and interest due under any guaranteed note.

(a) Maximum amount. Any late payment charge must be reasonable and customary for the area.

(b) Loans with interest assistance. The lender must not charge a late fee if the only unpaid portion of the borrower’s scheduled payment is interest assistance owed by Rural Development.

Mortgage Lending: 13.8.11.2 Overview of Requirements for Electronic Notes

“Provisions of both E-Sign and UETA create an alternative scheme preserving the incidents of negotiability in an electronic environment while requiring the information to be stored, reproduced and processed in electronic media.”420 The alternative scheme applies to transferable records, which would be notes under UCC Article 3 if the electronic records were in writing.421 Transferable records can be signed electronically.422

Mortgage Lending: 13.8.11.4 Was the Transferable Record Created, Stored, and Assigned in Compliance with Control-Related Requirements?

The lender or assignee also must maintain “control” of the transferable record. “Control” in the electronic world substitutes for “possession” in the paper world.436 “A person has control of a transferable record if a system employed for evidencing the transfer of interests in the transferable record reliably establishes that person as the person to which the transferable record was issued or transferred.”437

Mortgage Lending: 13.8.11.5 Can the Person Claiming Control Provide “Reasonable Proof” of Its Claim?

If a person attempts to enforce the note, the obligor can request that they provide proof of compliance with E-Sign section 7021 or UETA section 16, whichever applies—in other words, “reasonable proof” that they are in control of the transferable record.450 The proof can include “access to the authoritative copy of the transferable record and related business records sufficient to review the terms of the transferable record and to establish the identity of the person having control of the transferable record.”

Mortgage Lending: 13.8.11.6 Does the Person Controlling the Record Meet the UCC Holder-in-Due-Course Requirements?

When a person legally controls a transferable record, that person is a holder and then can seek holder-in-due-course status if it acquired the note for value, in good faith, and without notice of a host of things delineated in UCC § 3-302, including notice of the debtor’s default on the note.454 In other words, the person who controls a transferable record must satisfy the same requirements to be a holder in due course as a holder of a paper note.455 This is because UCC Article 3’s holder-in

Mortgage Lending: 13.8.13 Defenses That Can Be Raised Against a Holder in Due Course

Even if an instrument meets all the requirements of a negotiable instrument, and even if the holder meets the requirements for being a holder in due course or otherwise acquires the rights of a holder in due course, the holder is still subject to some defenses. UCC § 3-305 provides that a holder in due course takes an instrument free from all defenses except:

Mortgage Lending: 13.9.2.1 Scope

The Truth in Lending Act (TILA), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), effectively prohibits forced arbitration of disputes involving closed-end loans secured by a dwelling and open-end loans secured by a consumer’s principal dwelling.489 TILA defines a residential mortgage loan as “a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained against the

Mortgage Lending: 1.5.8 Appraisers and Appraisal Management Companies

Most lenders require an appraisal to determine whether a property will be adequate security for a mortgage loan. Lenders, or sometimes mortgage brokers, hire appraisers or appraisal management companies to determine the value of the property. Appraisers are individuals; appraisal firms are businesses or partnerships, like law firms. And appraisal management companies (AMCs) are essentially brokers for appraisal services. They administer panels of independent appraisers to perform appraisals and frequently act as middlemen between the lender and appraiser.

Mortgage Lending: 9.10.9.5 OTS Preemption As to Federal Savings Associations

According to Office of Thrift Supervision (OTS) regulations (no longer in effect), state laws relating to prepayment penalties were preempted “without limitation” for loans originated by federal savings associations.508 In addition, a second more specific regulation stated: “Subject to the terms of the contract, a Federal savings association may impose a fee for any prepayment of a loan.”509 OTS regulations extended this preemption to loans originated by operating subsidies of federal saving