Title 40 Trade and Commerce

40-23-113. Disclosure of mortgage lender fees.

(a) Within three (3) working days of taking a mortgage loan application and prior to receiving any consideration, other than third party fees, from the borrower, the mortgage lender shall: (i) Disclose the terms of the loan to the borrower in compliance with the disclosure requirements of the federal Truth-in-Lending Act, its associated regulations, and the federal Real Estate Settlement Procedures Act and its associated regulations and any other applicable federal and state requirements; (ii) If a prepayment penalty may be a condition of the residential mortgage loan offered to a borrower, that fact shall be separately disclosed in writing to the borrower and the borrower shall agree in writing to accept that condition. The disclosure shall state that a prepayment penalty provision imposes a charge if the borrower refinances or pays off the mortgage loan before the date for repayment stated in the loan agreement. The written disclosure shall be in a form prescribed by the commissioner and shall initially be delivered along with the good faith estimate of settlement costs within three (3) business days after accepting an application from the borrower. The disclosure shall subsequently be provided by the lender and signed by the borrower at the same time the borrower is given the final federal Truth-in-Lending Act disclosure. (b) With the exception of a loan cancellation fee, a licensed mortgage lender shall not require a borrower to pay any fees or charges prior to a residential mortgage loan closing, except: (i) Charges actually incurred by the licensee on behalf of the borrower for services which have been rendered by third parties necessary to process the application. These fees may include, but are not limited to, fees for credit reports, flood insurance certifications, property inspections, title insurance commitments, uniform commercial code article 4 lien searches, and appraisals; (ii) A rate lock in fee; and (iii) A commitment fee upon approval of the residential mortgage loan. (c) A loan cancellation fee may be charged and collected by a licensee at any time either prior to the scheduled closing of a residential mortgage loan transaction or subsequent thereto. (d) Any fees charged under the authority of this section shall be reasonable and customary as to the type and the amount of the fee charged. (e) A mortgage lender shall not receive any fee that inures to the benefit of the mortgage lender, either directly or indirectly, if the fee exceeds the fee disclosed on the most recent good faith estimate unless: (i) The need to charge the higher fee was not reasonably foreseeable at the time the good faith estimate was written; and (ii) The mortgage lender has provided to the borrower, no less than three (3) business days prior to the signing of the mortgage loan closing documents, a new good faith estimate of settlement costs, a clear written explanation of the increase in the fee and the reason for charging a fee that exceeds the fee which was previously disclosed. (f) If the fee was originally disclosed as a percentage of the mortgage loan amount and the dollar amount of the fee increases because the mortgage loan amount increases, but the fee as a percentage of the mortgage loan amount does not change, then no redisclosure shall be required unless the fee increased by more than one thousand dollars ($1,000.00).