2006 Regular Session
To: Banking and Financial Services
By: Representative Baker (74th)
AN ACT TO AMEND SECTION 81-18-27, MISSISSIPPI CODE OF 1972, TO ALLOW LICENSED OR REGISTERED MORTGAGE COMPANIES TO COLLECT FROM A BORROWER A FEE TO BE PAID TO A LENDER TO LOCK IN AN INTEREST RATE AND/OR A CERTAIN NUMBER OF POINTS ON A MORTGAGE LOAN; TO CREATE A NEW CODE SECTION TO PROVIDE A MAXIMUM AMOUNT THAT MAY BE COLLECTED AS A LOCK-IN FEE AND TO PRESCRIBE THE CONTENTS OF A LOCK-IN FEE AGREEMENT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 81-18-27, Mississippi Code of 1972, is amended as follows:
81-18-27. (1) No person required to be licensed or registered under this chapter shall:
(a) Misrepresent the material facts or make false promises intended to influence, persuade or induce an applicant for a mortgage loan or mortgagee to take a mortgage loan or cause or contribute to misrepresentation by its agents or employees.
(b) Misrepresent to or conceal from an applicant for a mortgage loan or mortgagor, material facts, terms or conditions of a transaction to which the mortgage company is a party.
(c) Fail to disburse funds in accordance with a written commitment or agreement to make a mortgage loan.
(d) Improperly refuse to issue a satisfaction of a mortgage loan.
(e) Fail to account for or deliver to any person any personal property obtained in connection with a mortgage loan, such as money, funds, deposits, checks, drafts, mortgages or other documents or things of value that have come into the possession of the mortgage company and that are not the property of the mortgage company, or that the mortgage company is not by law or at equity entitled to retain.
(f) Engage in any transaction, practice, or course of business that is not in good faith, or that operates a fraud upon any person in connection with the making of or purchase or sale of any mortgage loan.
(g) Engage in any fraudulent residential mortgage underwriting practices.
(h) Induce, require, or otherwise permit the applicant for a mortgage loan or mortgagor to sign a security deed, note, or other pertinent financial disclosure documents with any blank spaces to be filled in after it has been signed, except blank spaces relating to recording or other incidental information not available at the time of signing.
(i) Make, directly or indirectly, any residential mortgage loan with the intent to foreclose on the borrower's property. For purposes of this paragraph, there is a presumption that a person has made a residential mortgage loan with the intent to foreclose on the borrower's property if all of the following circumstances are proven:
(i) Lack of substantial benefit to the borrower;
(ii) The probability that full payment of the loan cannot be made by the borrower;
(iii) That the person has made a significant proportion of loans foreclosed under similar circumstances;
(iv) That the person has provided an extension of credit or collected a mortgage debt by extortion;
(v) That the person does business under a trade name that misrepresents or tends to misrepresent that the person is a bank, trust company, savings bank, savings and loan association, credit union, or insurance company.
(j) Charge or collect any direct payment, compensation or advance fee from a borrower unless and until a loan is actually found, obtained and closed for that borrower, and in no event shall that direct payment, compensation or advance fee exceed seven and ninety-five one-hundredths percent (7.95%) of the original principal amount of the loan, and any such direct payments, compensation or advance fees shall be included in all annual percentage rate (APR) calculations if required under Regulation Z of the federal Truth in Lending Act (TILA). A direct payment, compensation or advance fee as defined in this section shall not include:
(i) Any direct payment, compensation or advance fee collected by a licensed mortgage company to be paid to a nonrelated third party;
(ii) Any indirect payment to a licensed mortgage company by a lender if those fees are not required to be disclosed under the Real Estate Settlement Procedures Act (RESPA); (iii) Any indirect payment or compensation by a lender to a licensed mortgage company required to be disclosed by the licensed mortgage company under RESPA, provided that the payment or compensation is disclosed to the borrower by the licensed mortgage company on a good faith estimate of costs, is included in the APR if required under Regulation Z of TILA, and is made pursuant to a written agreement between the licensed mortgage company and the borrower as may be required by Section 81-18-33; * * *
(iv) A fee not to exceed one percent (1%) of the principal amount of a loan for construction, provided that a binding commitment for the loan has been obtained for the prospective borrower; or
(v) An advance fee collected by a licensed or registered mortgage company to be paid to a lender to lock in an interest rate and/or a certain number of points on a mortgage loan from the lender as provided in Section 2 of House Bill No. 681, 2006 Regular Session.
(k) Pay to any person not licensed or registered under the provisions of this chapter any commission, bonus or fee in connection with arranging for or originating a mortgage loan for a borrower, except that a registered loan originator may be paid a bonus, commission, or fee by his or her licensed employer.
(l) Refuse to provide the loan payoff within three (3) business days of an oral or written request from a borrower or third party. Proof of authorization of the borrower shall be submitted for a third-party request.
(2) A mortgage company shall only broker a residential mortgage loan to a mortgage company licensed or registered under this chapter or to a person exempt from licensure under the provisions of this chapter.
SECTION 2. (1) A mortgage broker may enter into lock-in agreements and collect a lock-in fee from a borrower on the lender's behalf. The lock-in fee shall not exceed the following:
(a) No fee may be collected to lock in for sixty (60) days or less;
(b) One percent (1%) of the principal amount of the loan to lock in for more than sixty (60) days, but not to exceed one hundred eighty (180) days;
(c) One and one-half percent (1-1/2%) of the principal amount of the loan to lock in for more than one hundred eighty (180) days, but not to exceed two hundred seventy (270) days; or (d) Two percent (2%) of the principal amount of the loan to lock in for more than two hundred seventy (270) days.
(2) Before the collection of a lock-in fee, the applicant must be provided a copy of the lock-in fee agreement. This agreement shall contain at least the following:
(a) Identification of the property that is being purchased with the loan;
(b) The principal amount and term of the loan;
(c) The initial interest rate and/or points, whether the interest rate is fixed or variable, and if variable, the index and margin, or the method by which an interest rate change for the mortgage loan will be calculated;
(d) The amount of the lock-in fee, whether the fee is refundable or nonrefundable, the time by which the lock-in fee must be paid to the lender, and if the fee is refundable, the terms and conditions necessary to obtain the refund; and
(e) The length of the lock-in period that the agreement covers.
SECTION 3. This act shall take effect and be in force from and after July 1, 2006.