RS 1096 - Residential mortgage loans
A. Any consumer who has contracted for a federally related mortgage loan may agree to pay fees and interest in excess of the maximum amounts authorized by the laws of this state and as such shall be prohibited from asserting a claim or defense of usury or of the taking of interest in excess of the maximum rate of conventional interest. Any person signing as a co-maker, guarantor, or endorser for such consumer shall also be prohibited from asserting any such claim or defense.
B. The parties to a residential mortgage loan, other than a federally related mortgage loan, may agree to the payment of broker and other fees and interest in connection with a closed-end credit transaction, or finance charges calculated as a monthly periodic rate over the course of a year in connection with an open-end credit transaction otherwise subject to the Louisiana Consumer Credit Law, but made contractually subject to the provisions of this Chapter, as those terms are defined in federal Regulation Z, 12 CFR Section 226.1 et seq., up to an annual percentage rate as computed pursuant to 12 CFR Section 226.22 for closed-end credit and 12 CFR Section 226.14 (c) for open-end credit in an amount not to exceed the greater of either twenty-one percent or fifteen percentage points above the Federal Reserve Board of Governors approved "Discount Rate" published semi-annually in the Wall Street Journal on the first business day in January and July in the year the loan was originated, consummated, or renewed.
C. Unless otherwise provided by federal law, variable rate or adjustable rate mortgage loans shall be governed by the provisions of R.S. 9:3504(D).
D. The general prohibition against interest upon accrued interest shall not apply to residential mortgage loans governed by this Part.
E.(1) In the absence of federal law or rules and regulations of federal agencies, a consumer may prepay in full the unpaid balance of his residential mortgage loan at any time.
(2) A mortgage lender may contract for and receive a prepayment penalty in an amount not to exceed:
(a) Five percent of the unpaid principal balance if the loan is prepaid in full during the first year of its term.
(b) Four percent of the unpaid principal balance if the loan is prepaid in full during the second year of its term.
(c) Three percent of the unpaid principal balance if the loan is prepaid in full during the third year of its term.
(d) Two percent of the unpaid principal balance if the loan is prepaid in full during the fourth year of its term.
(e) One percent of the unpaid principal balance if the loan is prepaid in full during the fifth year of its term.
(3) Notwithstanding any other provision of law to the contrary, no prepayment penalty or similar fee or charge shall be due, assessed, charged, collected, paid, held in escrow, or contracted to be paid if all or part of a prepayment of all or part of an outstanding loan balance is made from proceeds paid in full or partial satisfaction of a claim or claims made under a policy or policies of insurance insuring against casualty, flood, or other loss or damage to property securing the loan being prepaid in connection with a gubernatorially declared disaster.
F. Agreements to compensate mortgage brokers through yield spread premiums for goods, facilities, and services actually provided in connection with a residential loan transaction shall be valid and enforceable.
G.(1) No mortgage broker shall assess, contract for, or receive any type of fee, interest, or other charge in advance, except for expense deposits from a potential borrower for the procurement of a loan. An advance expense deposit shall not exceed the good faith estimate of the actual cost of any appraisal, title search, credit reports performed by an independent person and required by the originating lender for the evaluation of the potential borrower's loan application, or the actual cost of any charge of no more than twenty-five dollars assessed to a mortgage broker by Fannie Mae for "Desktop Underwriter" or Freddie Mac for "Loan Prospector". Any portion of an advance expense deposit which exceeds the actual cost of any appraisal, title search, credit reports, or charge assessed to a mortgage broker by Fannie Mae for "Desktop Underwriter" or Freddie Mac for "Loan Prospector" shall be refunded to the borrower or credited to the borrower's account at the time of the closing of the loan.
(2) No mortgage lender shall assess, contract for, or receive any advance expense deposit for third party settlement services in advance that exceeds the good faith estimate of the actual cost of the settlement service. Any portion of an advance expense deposit which exceeds the actual cost of a third party settlement service shall be refunded to the borrower or credited to the borrower's account at the time of the closing of the loan.
(3)(a) No mortgage lender shall finance or include in the original principal balance of a residential mortgage loan of more than fifty thousand dollars the premium amount for any single premium credit life, dismemberment, health and accident, mortgage life and disability, involuntary unemployment, or debt cancellation insurance sold in connection with a residential mortgage loan transaction unless that portion of original principal balance attributable to such insurance premium is scheduled to be fully amortized no later than the coverage expiration date of such insurance product. Nothing in this Paragraph shall prohibit a lender from the financing of private mortgage insurance paid on a single premium basis in connection with a residential mortgage loan transaction.
(b)(i) Notwithstanding Subparagraph (a) of this Paragraph, it shall not be a violation of this Paragraph for a mortgage lender to finance or include in the original principal balance of a residential mortgage loan the premium amount for any single premium credit life, dismemberment, health and accident, mortgage life and disability, involuntary unemployment, or debt cancellation insurance sold in connection with a residential mortgage loan transaction, provided such premium amount was financed or included in the original principal balance of a residential mortgage loan during the period beginning on August 15, 2006, and ending on August 14, 2007.
(ii) Notwithstanding Subparagraph (a) of this Paragraph, no residential mortgage loan executed during the period beginning on August 15, 2006, and ending on August 14, 2007, shall be deemed invalid or unenforceable due to the inclusion of a premium amount for any single premium credit life, dismemberment, health and accident, mortgage life and disability, involuntary unemployment, collateral protection, or debt cancellation insurance financed in connection with and made a part of the principal balance of such residential mortgage loan.
H.(1) A residential mortgage lender shall provide the consumer, within five days of the date a written request is received from the consumer, with the amount necessary to prepay the account in full, and if the amount disclosed includes an amount which is required to be refunded, the amount of such refund.
(2) A consumer shall be entitled to receive one such disclosure of information statement each year without charge. Thereafter, the extender of credit may impose a reasonable fee to cover the cost of providing an additional disclosure statement; however, the charge imposed must be disclosed to the consumer before furnishing such disclosure statement.
I.(1) The person acting as originator in a residential loan transaction shall sign the original mortgage loan application and if applicable, shall include in the original mortgage loan application the unique identifier assigned to that person.
(2) An originator may only originate residential mortgage loans for one employer.
J.(1) It is the purpose of this Subsection to provide for parity among persons engaging in residential mortgage loan transactions in this state by permitting persons licensed pursuant to this Chapter to charge a reasonable application fee in connection with a residential loan transaction if, prior to collecting the fee, the licensee provides the consumer a written disclosure stating the amount of the fee and informing the consumer that the application fee shall be refundable at any time prior to the licensee ordering any service required by the lender to evaluate the potential borrower's loan application. In the event that the lender is unable to approve the loan, after all requested documentation has been provided by the borrower to the lender, the application fee shall be refunded to the borrower.
(2) Notwithstanding the provisions of this Section or any other law to the contrary, persons licensed to engage in residential mortgage loan transactions pursuant to this Chapter may charge a reasonable application fee, not to exceed five hundred dollars, in connection with a residential mortgage loan. The application fee may be charged only once in connection with a single loan to one borrower. The application fee shall not be considered as an advance expense deposit as provided for herein, or as interest or loan finance charge, nor shall it be included in the calculation of interest.
Acts 1999, No. 1098, §1, eff. July 9, 1999; Acts 2000, 1st Ex. Sess., No. 34, §1, eff. April 14, 2000; Acts 2001, No. 617, §1, eff. June 22, 2001; Acts 2003, No. 875, §1; Acts 2003, No. 924, §1; Acts 2006, No. 188, §1; Acts 2006, No. 237, §1; Acts 2006, 2nd Ex. Sess., No. 3, §1, eff. Dec. 21, 2006; Acts 2007, No. 12, §1, eff. June 18, 2007; Acts 2009, No. 522, §1, eff. July 31, 2009.