Skip to main content

Search

Mortgage Lending: Introduction

1. Official status. This commentary is the primary vehicle by which the Bureau of Consumer Financial Protection issues official interpretations of Regulation X. Good faith compliance with this commentary affords protection from liability under section 19(b) of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2617(b).

Mortgage Lending: Appendix MS to Part 1024—Mortgage Servicing Model Forms and Clauses

1. In general. This appendix contains model forms and clauses for mortgage servicing disclosures required by §§ 1024.33, 37, and 39. Each of the model forms is designated for uses in a particular set of circumstances as indicated by the title of that model form or clause. Although use of the model forms and clauses is not required, servicers using them appropriately will be in compliance with disclosure requirements of §§ 1024.33, 37, and 39. To use the forms appropriately, information required by regulation must be set forth in the disclosures.

Mortgage Lending: 12 C.F.R. § 701.21 Loans to members and lines of credit to members.

* * *

(b) Relation to other laws—

(1) Preemption of state laws. Section 701.21 is promulgated pursuant to the NCUA Board’s exclusive authority as set forth in section 107(5) of the Federal Credit Union Act (12 U.S.C. 1757(5)) to regulate the rates, terms of repayment and other conditions of Federal credit union loans and lines of credit (including credit cards) to members. This exercise of the Board’s authority preempts any state law purporting to limit or affect:

Mortgage Lending: Introduction

This appendix summarizes the key aspects of state predatory lending laws. It is a quick reference tool for determining if a specified state has a statute that focuses on high-cost mortgage loans and whether that statute covers a particular predatory lending issue. Readers should consult the relevant statutes themselves to obtain a complete understanding of what loans a particular law covers and what restrictions it imposes.

Fair Credit Reporting: J.1 Introduction

This appendix contains several sample complaints with Fair Credit Reporting Act and other related claims. Perhaps just as critically, it also includes model language to be used in settlements over debt litigation designed to address credit reporting consequences (Appx.

Mortgage Lending: ALABAMA

Ala. Code §§ 5-19-1, 5-19-4, 5-19-7

Scope: Consumer credit transactions made by licensed lenders secured by real property (see §§ 5-19-1, 5-19-4, 5-19-31).

Net Tangible Benefit Requirement for Refinancings: None.

Ability to Repay: None.

Loan Counseling: None.

Disclosures: None.

Negative Amortization: None.

Mortgage Lending: ALASKA

Alaska Stat. §§ 06.20.250, 06.60.350, 45.45.010

Scope: Some provisions limited to loans made by covered lenders as defined in §§ 06.20.010, 06.60.010, 06.60.380, other provision applies more broadly.

Net Tangible Benefit Requirement for Refinancings: Yes, within 12 months after date covered mortgage loan is closed (§ 06.60.350).

Ability to Repay: None.

Loan Counseling: None.

Disclosures: None.

Negative Amortization: None.

Limits on Points and Fees: None.

Mortgage Lending: ARIZONA

Ariz. Rev. Stat. Ann. § 6-114

Scope: Covered secondary mortgages as defined in § 6-114.

Net Tangible Benefit Requirement for Refinancings: None.

Ability to Repay: None.

Loan Counseling: None.

Disclosures: None.

Negative Amortization: None.

Limits on Points and Fees: None.

Prepayment Penalties: None.

Balloon Payments: Payments greater than twice smallest payment prohibited.

Assignee Liability: None.

Mortgage Lending: ARKANSAS

Ark. Code Ann. §§ 23-53-101 to 23-53-106

Scope: High-cost home loans as defined in § 23-53-103.

Net Tangible Benefit Requirement for Refinancings: Refinancing must provide borrower net tangible benefit (§ 23-53-104).

Ability to Repay: Creditor must reasonably believe borrower has ability to repay before making covered loan (§ 23-53-104).

Loan Counseling: Counseling required before making covered loan (§ 23-53-104).

Disclosures: None.

Mortgage Lending: CALIFORNIA

Cal. Fin. Code §§ 4970 to 4979.8, 4995 to 4995.6 (West)

Scope: Covered loans as defined in § 4970.

Net Tangible Benefit Requirement for Refinancings: Refinancing must result in identifiable benefit to consumer (§ 4973(j)).

Ability to Repay: Lender may not make or arrange a covered loan unless lender reasonably believes consumer will be able to make the scheduled payments (§ 4973(f)).

Loan Counseling: None.

Disclosures: Lender must give statutory notice to covered loan borrower (§ 4973(k)).

Mortgage Lending: COLORADO

Colo. Rev. Stat. §§ 5-3.5-101 to 5-3.5-303, 38-40-105(1.7)(a)

Scope: Some provisions limited to covered loans as defined in § 5-3.5-101, others applicable more broadly.

Net Tangible Benefit Requirement for Refinancings: Refinancing of an existing residential mortgage loan must produce reasonable, tangible net benefit to the consumer (§ 38-40-105(1.7)(a)(II)).

Mortgage Lending: CONNECTICUT

Conn. Gen. Stat. §§ 36a-746 to 36a-746g

Scope: High-cost home loans as defined in § 36a-746a.

Net Tangible Benefit Requirement for Refinancings: No lender may make a loan to a borrower that refinances an existing loan unless the high-cost home loan provides a benefit to the borrower considering all of the circumstances, including the terms of both the new and refinanced loans, the cost of the new loan, and the borrower’s circumstances (§ 36a-746e).

Mortgage Lending: DISTRICT OF COLUMBIA

D.C. Code §§ 26-1151.01 to 26-1155.01

Scope: Covered loans as defined in § 26-1151.01.

Net Tangible Benefit Requirement for Refinancings: None.

Ability to Repay: Income, asset, employment verification required; borrower must reasonably be expected to be able to make scheduled loan payments (§ 26-1152.02).

Loan Counseling: Lender must give notice of right to obtain counseling (§ 26-1152.19).

Disclosures: Lender must send borrower a “Red Flag Warning Disclosure Notice” (§ 26-1152.11).

Mortgage Lending: GEORGIA

Ga. Code Ann. §§ 7-6A-1 to 7-6A-13

Scope: High-cost home loans as defined in § 7-6A-2.

Net Tangible Benefit Requirement for Refinancings: No refinancing with a high-cost home loan within five years of original loan when refinancing does not provide reasonable, tangible net benefit to borrower (§ 7-6A-4).

Ability to Repay: Lender may not make a high-cost home loan unless lender reasonably believes consumer will be able to make the scheduled payments (§ 7-6A-5(8)).

Mortgage Lending: ILLINOIS

765 Ill. Comp. Stat. §§ 77/70 to 77/80; 815 Ill. Comp. Stat. §§ 137/1 to 137/175; Ill. Admin. Code tit. 38, pts. 1050, 1075

Scope: High-risk home loans (non-purchase money loans) as defined in 815 Ill. Comp. Stat. § 137/10, or home loans as defined in 765 Ill. Comp. Stat. § 77/73; prepayment penalty limitations apply more broadly.

Mortgage Lending: INDIANA

Ind. Code §§ 24-9-1-1 to 24-9-9-4

Scope: High-cost home loans as defined in § 24-9-2-8.

Net Tangible Benefit Requirement for Refinancings: No refinancing that charges points and fees allowed within four years after making of existing high-cost home loan (§ 24-9-4-2).

Ability to Repay: Creditor may not make a high-cost home loan without regard to repayment ability (§ 24-9-4-8).

Mortgage Lending: KENTUCKY

Ky. Rev. Stat. Ann. §§ 286.8-110, 360.100 (West)

Scope: High-cost home loans as defined by § 360.100(1)(a); additional loans subject to prepayment penalty limitations.

Net Tangible Benefit Requirement for Refinancings: None.

Ability to Repay: No creditor shall make a high-cost home loan if creditor does not believe borrower will be able to make scheduled loan payments; verification of income and financial resources required; verification of ability to repay required (§ 360.100(2)(i), (y), (z)).

Mortgage Lending: LOUISIANA

La. Stat. Ann. § 6:1096

Scope: Residential mortgage loans, excluding federally related mortgage loans, as defined in § 6:1096.

Net Tangible Benefit Requirement for Refinancings: None.

Ability to Repay: None.

Loan Counseling: None.

Disclosures: None.

Negative Amortization: None.

Mortgage Lending: MAINE

Me. Stat. tit. 9-A, §§ 8-501 to 8-507

Scope: Higher-priced mortgage loans, high-cost mortgage loans, and residential mortgage loans as defined in tit. 9-A, § 8-506. Does not apply to supervised financial organizations (tit. 9-A, § 8-506).

Net Tangible Benefit Requirement for Refinancings: Refinancing of an existing residential mortgage loan with a high-cost or higher-priced mortgage loan prohibited when new loan does not have reasonable, tangible net benefit to borrower (tit. 9-A, § 8-506).

Mortgage Lending: MARYLAND

Md. Code Ann., Com. Law §§ 12-127, 12-401 to 12-415, 12-1029 (West); Md. Code Regs. 09.03.06.19

Scope: Mortgage loans as defined in §§ 12-127, 12-1029, secondary mortgage loans as defined in § 12-401.

Net Tangible Benefit Requirement for Refinancings: None.

Ability to Repay: Lender may not make a mortgage loan or secondary mortgage loan without giving due regard to borrower’s ability to repay (§§ 12-127, 12-1029, 12-409.1).

Mortgage Lending: MASSACHUSETTS

Mass. Gen. Laws ch. 183, §§ 28C, 56, 59, 66; Mass. Gen. Laws ch. 183C, §§ 1 to 19; 209 Mass. Code Regs. § 32.34

Scope: Some provisions limited to high-cost home mortgage loans as defined in ch. 183C, § 2, others applicable more broadly.

Net Tangible Benefit Requirement for Refinancings: Refinancing of home loan that was consummated within prior 60 months prohibited unless the refinancing is in borrower’s interest (ch. 183, § 28C).

Mortgage Lending: MICHIGAN

Mich. Comp. Laws §§ 445.1631 to 445.1645

Scope: Covered non-purchase money mortgage loans as defined in § 445.1632.

Net Tangible Benefit Requirement for Refinancings: None.

Ability to Repay: None.

Loan Counseling: None. (The provision requiring loan counseling was repealed in 2016.)

Mortgage Lending: MINNESOTA

Minn. Stat. §§ 58.02, 58.13, 58.137, 58.18

Scope: Residential mortgage loans and subprime loans as defined in § 58.02.

Net Tangible Benefit Requirement for Refinancings: Knowingly or intentionally making a residential mortgage loan when new residential mortgage loan does not provide a reasonable, tangible net benefit to the borrower is prohibited (§ 58.13).

Mortgage Lending: NEBRASKA

Neb. Rev. Stat. §§ 45-1007, 45-1024

Scope: Installment loans made pursuant to Installment Loan Act.

Net Tangible Benefit Requirement for Refinancings: None.

Ability to Repay: None.

Loan Counseling: None.

Disclosures: None.

Negative Amortization: None.

Limits on Points and Fees: None.