Limitations of Home Loans

  1. Law
  2. Georgia Code
  3. Banking and Finance
  4. Georgia Fair Lending Act
  5. Limitations of Home Loans

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All home loans shall be subject to the following limitations and prohibited practices:

  1. No creditor shall make a home loan that finances, directly or indirectly:
    1. Any credit life, credit accident, credit health, credit personal property, or credit loss-of-income insurance, debt suspension coverage, or debt cancellation coverage, whether or not such coverage is insurance under applicable law, that provides for cancellation of all or part of a borrower's liability in the event of loss of life, health, personal property, or income or in the case of accident written in connection with a home loan; or
    2. Any life, accident, health, or loss-of-income insurance without regard to the identity of the ultimate beneficiary of such insurance;

      provided, however, that for the purposes of this Code section, any premiums or charges calculated and paid on a monthly basis shall not be considered financed directly or indirectly by the creditor;

  2. No creditor or servicer shall recommend or encourage default on an existing loan or other debt prior to and in connection with the closing or planned closing of a home loan that refinances all or any portion of such existing loan or debt;
  3. No creditor or servicer may charge a borrower a late payment charge unless the loan documents specifically authorize the charge, the charge is not imposed unless the payment is past due for ten days or more, and the charge does not exceed 5 percent of the amount of the late payment. A late payment charge may not be imposed more than once with respect to a particular late payment. If a late payment charge is deducted from a payment made on the home loan and such deduction results in a subsequent default on a subsequent payment, no late payment charge may be imposed for such default. A lender may apply any payment made in the order of maturity to a prior period's payment due even if the result is late payment charges accruing on subsequent payments due; and
  4. No creditor or servicer may charge a fee for informing or transmitting to any person the balance due to pay off a home loan or to provide a release upon prepayment. When such information is provided by facsimile or if it is provided upon request within 60 days of the fulfillment of a previous request, a creditor or servicer may charge a processing fee up to $10.00. Payoff balances shall be provided within a reasonable time but in any event no more than five business days after the request.

(Code 1981, §7-6A-3, enacted by Ga. L. 2002, p. 455, § 1; Ga. L. 2003, p. 1, § 1.)

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 2002, in paragraph (1), a colon was substituted for a comma in the introductory paragraph and "Any" was substituted for "any" at the beginning of subparagraphs (1)(A) and (1)(B).

JUDICIAL DECISIONS

Improper late fees.

- Mortgage borrower stated a claim under O.C.G.A. § 7-6A-3(3) by alleging that a loan servicer improperly assessed late fees even though the borrower made all contractually required payments in a timely manner. However, the borrower could not recover statutory damages under O.C.G.A. § 7-6A-7 for a violation of § 7-6A-3(3). Stroman v. Bank of Am. Corp., 852 F. Supp. 2d 1366 (N.D. Ga. 2012).

Litigation following denial of borrowers' request to modify loan.

- Summary judgment was improperly denied to the lender on the borrowers' claim for alleged violations of the Georgia Fair Lending Act (GFLA), O.C.G.A. § 7-6A-1 et seq., because the evidence did not establish that there was a planned refinance of the loans as the lender denied the borrowers' request for modification of the loans. Further, even if the borrowers' application for a modification could be characterized as a "planned closing" under the GFLA, because there was no ensuing loan, there was no scheduled payment under the loan triggering the time period for bringing an action, nor was there any interest paid on the loan under which statutory damages could be assessed. Oconee Fed. S&L Ass'n v. Brown, 351 Ga. App. 561, 831 S.E.2d 222 (2019), cert. dismissed, No. S20C0074, 2020 Ga. LEXIS 201 (Ga. 2020).


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