SENATE BILL REPORT

SB 6416

BYSenator McCaslin

Revising provisions on residential mortgage loans.

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 2, 1988

Senate Staff:Benson Porter (786-7470)

AS OF FEBRUARY 2, 1988

BACKGROUND:

A lender is not required to inform a residential mortgage borrower of its guidelines used to determine the interest rate for a lock-in agreement or the fees associated with a residential mortgage loan.  This can create a situation where the borrower lacks sufficient information to anticipate the interest rate used in a lock-in agreement and other costs associated with a residential mortgage loan agreement.

SUMMARY:

A lender is required to supply a written disclosure to the borrower itemizing the expected fees and costs associated with the residential mortgage loan.  Such disclosure shall contain an estimate of the loan processing time, the current interest rate and points associated with the type of mortgage loan for which application is made, a statement stipulating the interest rate that is to be used in a lock-in agreement or a statement specifying when the interest rate will be locked in if a lock-in agreement is to be used, and a statement informing the borrower that the interest rate is subject to change unless there is a lock-in agreement currently established.

Any original disclosure made by the lender may be amended by the lender with written consent by the borrower.

A lender may not impose conditions or terms less favorable than those contained in the original disclosure unless the mortgage loan agreement expires at the fault of the borrower and the lender has not placed excessive conditions or requirements on the borrower for completion of the agreement.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Effective Date:July 1, 1988