§ 1639.
Requirements for certain mortgages
(a)
Disclosures
(1)
Specific disclosures
In addition to other disclosures required under this subchapter, for each mortgage referred to in section 1602(aa)
1
See References in Text note below.
of this title, the creditor shall provide the following disclosures in conspicuous type size:
(A)
“You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application.”.
(B)
“If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan.”.
(2)
Annual percentage rate
In addition to the disclosures required under paragraph (1), the creditor shall disclose—
(A)
in the case of a credit transaction with a fixed rate of interest, the annual percentage rate and the amount of the regular monthly payment; or
(B)
in the case of any other credit transaction, the annual percentage rate of the loan, the amount of the regular monthly payment, a statement that the interest rate and monthly payment may increase, and the amount of the maximum monthly payment, based on the maximum interest rate allowed pursuant to
section 3806 of title 12.
(b)
Time of disclosures
(2)
New disclosures required
(B)
Telephone disclosure
A creditor may provide new disclosures pursuant to subparagraph (A) by telephone, if—
(i)
the change is initiated by the consumer; and
(ii)
at the consummation of the transaction under which the credit is extended—
(I)
the creditor provides to the consumer the new disclosures, in writing; and
(II)
the creditor and consumer certify in writing that the new disclosures were provided by telephone, by not later than 3 days prior to the date of consummation of the transaction.
(3)
No wait for lower rate
(c)
No prepayment penalty
(1)
In general
2
So in original. There is no par. (2).
(d)
Limitations after default
(f)
No negative amortization
(h)
Prohibition on extending credit without regard to payment ability of consumer
(i)
Requirements for payments under home improvement contracts
A creditor shall not make a payment to a contractor under a home improvement contract from amounts extended as credit under a mortgage referred to in section 1602(aa) 1 of this title, other than—
(1)
in the form of an instrument that is payable to the consumer or jointly to the consumer and the contractor; or
(2)
at the election of the consumer, by a third party escrow agent in accordance with terms established in a written agreement signed by the consumer, the creditor, and the contractor before the date of payment.
(k)
Late fees
(1)
In general
No creditor may impose a late payment charge or fee in connection with a high-cost mortgage—
(A)
in an amount in excess of 4 percent of the amount of the payment past due;
(B)
unless the loan documents specifically authorize the charge or fee;
(C)
before the end of the 15-day period beginning on the date the payment is due, or in the case of a loan on which interest on each installment is paid in advance, before the end of the 30-day period beginning on the date the payment is due; or
(D)
more than once with respect to a single late payment.
(2)
Coordination with subsequent late fees
(3)
Failure to make installment payment
(m)
Restriction on financing points and fees
No creditor may directly or indirectly finance, in connection with any high-cost mortgage, any of the following:
(1)
Any prepayment fee or penalty payable by the consumer in a refinancing transaction if the creditor or an affiliate of the creditor is the noteholder of the note being refinanced.
(n)
Consequence of failure to comply
(p)
Discretionary regulatory authority of Bureau
(1)
Exemptions
The Bureau may, by regulation or order, exempt specific mortgage products or categories of mortgages from any or all of the prohibitions specified in subsections (c) through (i), if the Bureau finds that the exemption—
(A)
is in the interest of the borrowing public; and
(B)
will apply only to products that maintain and strengthen home ownership and equity protection.
(2)
Prohibitions
The Bureau, by regulation or order, shall prohibit acts or practices in connection with—
(A)
mortgage loans that the Bureau finds to be unfair, deceptive, or designed to evade the provisions of this section; and
(B)
refinancing of mortgage loans that the Bureau finds to be associated with abusive lending practices, or that are otherwise not in the interest of the borrower.
(q)
Civil penalties in Federal Trade Commission enforcement actions
(r)
Prohibitions on evasions, structuring of transactions, and reciprocal arrangements
A creditor may not take any action in connection with a high-cost mortgage—
(1)
to structure a loan transaction as an open-end credit plan or another form of loan for the purpose and with the intent of evading the provisions of this subchapter; or
(2)
to divide any loan transaction into separate parts for the purpose and with the intent of evading provisions of this subchapter.
(s)
Modification and deferral fees prohibited
(u)
Pre-loan counseling
(2)
Disclosures required prior to counseling
(v)
Corrections and unintentional violations
A creditor or assignee in a high-cost mortgage who, when acting in good faith, fails to comply with any requirement under this section will not be deemed to have violated such requirement if the creditor or assignee establishes that either—
(1)
within 30 days of the loan closing and prior to the institution of any action, the consumer is notified of or discovers the violation, appropriate restitution is made, and whatever adjustments are necessary are made to the loan to either, at the choice of the consumer—
(A)
make the loan satisfy the requirements of this part; or
(B)
in the case of a high-cost mortgage, change the terms of the loan in a manner beneficial to the consumer so that the loan will no longer be a high-cost mortgage; or
(2)
within 60 days of the creditor’s discovery or receipt of notification of an unintentional violation or bona fide error and prior to the institution of any action, the consumer is notified of the compliance failure, appropriate restitution is made, and whatever adjustments are necessary are made to the loan to either, at the choice of the consumer—
(A)
make the loan satisfy the requirements of this part; or
(B)
in the case of a high-cost mortgage, change the terms of the loan in a manner beneficial so that the loan will no longer be a high-cost mortgage.
([Pub. L. 90–321, title I, § 129], as added [Pub. L. 103–325, title I, § 152(d)], Sept. 23, 1994, [108 Stat. 2191]; amended [Pub. L. 111–8, div. D, title VI, § 626(c)], Mar. 11, 2009, [123 Stat. 679]; [Pub. L. 111–203, title X, § 1100A(2)], (9), title XIV, §§ 1432, 1433, July 21, 2010, [124 Stat. 2107], 2109, 2160; [Pub. L. 115–174, title I, § 109(a)], May 24, 2018, [132 Stat. 1305].)