For purposes of this chapter:
(1) "Affiliate" means a company that controls, is controlled by, or is under common control with another company, as described in the Bank Holding Company Act of 1956 (12 U.S.C. Section 1841, et seq.), as amended.
(2) "Annual percentage rate" means the annual percentage rate for the loan calculated according to the provisions of the federal Truth-in-Lending Act (15 U.S.C. Section 1601, et seq.) and the regulations promulgated under it by the Federal Reserve Board, both as amended.
(3) "Broker" or "mortgage broker" means a person or organization in the business of soliciting, processing, placing, or negotiating mortgage loans for others or offering to process, place, or negotiate mortgage loans for others. A broker or mortgage broker also includes a person or organization who brings borrowers or lenders together to obtain mortgage loans or renders a settlement service as described in 24 C.F.R. Part 3500.2(a)(16)(ii).
(4) "Consumer home loan" means a loan in which:
(a) the borrower is a natural person;
(b) the debt is incurred by the borrower primarily for personal, family, or household purposes; and
(c) the loan is secured by a mortgage on real estate upon which is located or is to be located a structure designed principally for occupancy of from one to four families and that is or is to be occupied by the borrower as the borrower's principal dwelling.
(5) "Conventional conforming discount points" means loan discount points knowingly paid by the borrower for the purpose of reducing, and which in fact result in a bona fide reduction of, the interest rate applicable to the loan, so long as the home loan has an annual percentage rate that does not exceed the conventional mortgage rate by more than one percentage point.
(6) "Conventional mortgage rate" means the required net yield for a ninety-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater.
(7) "Conventional prepayment penalty" means a prepayment penalty or fee that may be collected or charged in a home loan and that is authorized by law other than by this chapter, provided the home loan (a) does not have an annual percentage rate that exceeds the conventional mortgage rate by more than two percentage points; and (b) does not permit prepayment fees or penalties that exceed two percent of the amount prepaid.
(8) "Flipping" a consumer home loan means the making of a consumer home loan that refinances within forty-two months an existing consumer home loan of the borrower when the new loan does not have a reasonable, tangible net benefit to the borrower, considering all the circumstances, including the terms of both the new and refinanced loans, the cost of the new loan, and the borrower's circumstances.
(a) A rebuttable presumption of reasonable, tangible, net benefit to the borrower occurs when including, but not limited to, the following:
(i) at the time the home loan is consummated, the borrower's total monthly debts, including amounts due under the home loan, do not exceed fifty percent of the borrower's monthly income as verified by tax returns, payroll receipts, or other third-party income verification;
(ii) the borrower's monthly payment to pay the new consolidated debt is a minimum of twenty percent lower than the total of all monthly obligations being financed, taking into account costs and fees;
(iii) there is a beneficial change for the borrower in the duration of the loan;
(iv) the borrower receives a reasonable amount of cash in excess of and in relation to the cost and fees as part of the refinancing;
(v) the borrower's note rate of interest is reduced by at least two percent;
(vi) there is a change from an adjustable rate loan to a fixed rate loan, taking into account costs and fees and the costs can be recouped within two years; or
(vii) the borrower is able to recoup the costs of refinancing the loan within two years and reduces the interest rate by two points or the length of term by a minimum of five years.
(b) The home loan refinancing transaction is presumed to be a flipping if a home loan refinances an existing home loan that was consummated as a special mortgage originated, subsidized, or guaranteed by or through a state, tribal, or local government or a nonprofit organization, which either bears a below-market interest rate at the time the loan was originated or has nonstandard payment terms beneficial to the borrower, such as payments that vary with income, are limited to a percentage of income, or are not required at all under specified conditions, and if, as a result of the refinancing, the borrower loses one or more of the benefits of the special mortgage.
(9) "High-cost home loan" means:
(a) a loan, other than an open-end credit plan or a reverse mortgage transaction, in which the:
(i) principal amount of the loan does not exceed the conforming loan size limit for a single-family dwelling as established from time to time by the Federal National Mortgage Association;
(ii) borrower is a natural person;
(iii) debt is incurred by the borrower primarily for personal, family, or household purposes;
(iv) loan is secured by either a security interest in a residential manufactured home, as defined in Section 37-1-301(24) which is to be occupied by the borrower as the borrower's principal dwelling, or a mortgage on real estate upon which there is located or there is to be located a structure designed principally for occupancy from one to four families and which is or is to be occupied by the borrower as the borrower's principal dwelling; and
(v) terms of the loan exceed one or more of the thresholds as defined in item (15); or
(b) an adjustable rate mortgage at the fully indexed rate assuming a fully amortizing repayment schedule that would exceed one or more of the thresholds as defined in item (15).
(10) "Lender" includes, but is not limited to, a mortgage broker originating a loan in a tablefunded loan transaction in which the broker is identified as the original payee of the note.
(11) "Obligor" means each borrower, co-borrower, cosigner, or guarantor obligated to repay a loan.
(12) "Originator" or "loan originator" means an employee of a mortgage broker or mortgage lender whose primary job responsibilities include direct contact with or informing loan applicants of the rates, terms, disclosure, or other aspects of the mortgage. It does not mean an employee whose primary job responsibilities are clerical in nature, such as processing the loan.
(13) "Points and fees" means:
(a) items required to be disclosed pursuant to Sections 226.4(a) and 226.4( b) of Title 12 of the Code of Federal Regulations, as amended, except interest or the time-price differential;
(b) charges for items listed in Section 226.4(c)(7) of Title 12 of the Code of Federal Regulations, as amended from time to time, but only if the lender receives direct or indirect compensation in connection with the charge or the charge is paid to an affiliate of the lender; otherwise, the charges are not included within the meaning of the phrase "points and fees";
(c) compensation paid directly by the borrower to a mortgage broker not otherwise included in subitem (a) or (b);
(d) the maximum prepayment fees and penalties that may be charged or collected pursuant to the terms of the loan documents. Interest that may accrue in advance of payment in full of a loan made under a local, state, or federal government-sponsored mortgage insurance or guaranty program, including a Federal Housing Administration program, is not considered a prepayment fee or penalty;
(e) premiums or other charges paid at or before closing for credit life, accident, health, or loss-of-income insurance or debt-cancellation coverage that provides for cancellation of all or part of the consumer's liability in the event of the loss of life, health, or income or in the case of accident. This subsection does not apply after January 1, 2005; and
(f) "points and fees" does not include:
(i) taxes, filing fees, recording, and other charges and fees actually paid or to be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest;
(ii) bona fide and reasonable fees actually paid to a person, other than a lender or an affiliate of the lender or to the mortgage broker or an affiliate of the mortgage broker, who has received no direct or indirect compensation for the following: fees for tax payment services, fees for flood certification, fees for pest infestation and flood determinations, appraisal fees, fees for inspections performed before closing, credit reports, surveys, attorney's fees if the borrower has the right to select the attorney, notary fees, escrow charges, and flood insurance premiums not otherwise included pursuant to subitem (a);
(iii) premiums for insurance against title defects. Premiums for insurance against loss of or damage to property or against liability arising out of the ownership or use of property may be excluded from the points and fees if the insurance coverage may be obtained from a person of the borrower's choice and this fact is disclosed and if the coverage is obtained from or through the lender or its affiliate, the premium for the initial term of insurance coverage is disclosed. If the term of insurance is less than the term of the transaction, the term of insurance must be disclosed also. The premium may be disclosed on a unit-cost basis only in open-end credit transactions, closed- end credit transactions by mail or telephone pursuant to Section 226.17(g) of Title 12 of the Code of Federal Regulations, and certain closed-end credit transactions involving an insurance plan that limits the total amount of indebtedness subject to coverage;
(iv) commissions and other compensation paid to licensed real estate brokers and agents;
(v) fees or charges payable or paid by a party in connection with a local, state, or federal government-sponsored mortgage insurance or guaranty program including, but not limited to, Federal Housing Administration, Veterans Administration, South Carolina Housing Finance and Development Authority programs, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal Home Loan Bank, or price adjustment;
(14) "Table-funded transaction" means a settlement at which a mortgage loan is funded by an advance of loan funds to a lender who closes the loan in his name followed by an assignment of the loan from the person identified as the lender in the loan documents to the person advancing the initial loan funds.
(15) "Threshold" means either (A) or (B) in a loan transaction, whichever is applicable:
(A) without regard to whether the loan transaction is a " residential mortgage transaction" as the term " residential mortgage transaction" is defined in Section 226. 2(a)(24) of Title 12 of the Code of Federal Regulations, as amended, the annual percentage rate of the loan at the time the loan is consummated is such a rate that the loan is considered to be a "mortgage" pursuant to Section 152 of the Home Ownership and Equity Protection Act of 1994 (Pub. Law 103-25, [15 U.S.C. Section 1602(aa)]), as amended, and regulations adopted pursuant to it by the Federal Reserve Board, including Section 226.32 of Title 12 of the Code of Federal Regulations, as amended, except with regard to a mortgage or loan secured by a nonreal estate manufactured housing lien, the term "threshold" means the annual percentage rate of the nonreal estate secured manufactured housing lien at the time the mortgage or loan is consummated exceeds by more than ten percentage points the yield on United States Treasury securities having comparable periods of maturity as of the fifteenth day of the month immediately preceding the month in which the application of the extension of credit is received by the lender;
(B) the total points and fees payable by the borrower at or before the loan closing exceed:
(i) five percent of the total loan amount if the total loan amount is twenty thousand dollars or more;
(ii) the lesser of eight percent of the total loan amount or one thousand dollars if the total loan amount is less than twenty thousand dollars; or
(iii) three percent of the total loan amount for nonreal estate secured manufactured housing transactions if the total loan amount in the nonreal estate secured housing transaction is twenty thousand dollars or more;
(C) except that the following discount points and prepayment fees and penalties are excluded from the calculation of the total points and fees payable by the borrower:
(i) up to and including two conventional conforming discount points payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan's interest rate is discounted does not exceed by more than one percentage point the required net yield for a ninety-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater; or
(ii) up to and including one conventional conforming discount point payable by the borrower in connection with the loan transaction, but only if the interest rate from which the loan's interest rate is discounted does not exceed by more than two percentage points the required net yield for a ninety-day standard mandatory delivery commitment for a reasonably comparable loan from either the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, whichever is greater;
(iii) a conventional prepayment penalty.
(16) "Total loan amount" means the same as the term " total loan amount" means in Section 226.32 of Title 12 of the Code of Federal Regulations and must be calculated in accordance with the Federal Reserve Board's Official Staff Commentary to that section.
(17) An adjustable rate mortgage (ARM) is a mortgage in which the interest rate and monthly payment may vary over time.
HISTORY: 2003 Act No. 42, Section 1, eff January 1, 2004, and applying to loans for which the loan applications were taken on or after that date; 2009 Act No. 67, Sections 4.D, 4.E, eff January 1, 2010.