Payments to Contractor From Proceeds of Mortgage Loan for Home Improvement
Checkout our iOS App for a better way to browser and research.
A licensed mortgage lender or mortgage loan broker shall not make any payments to a contractor or home improvement contractor from proceeds of a mortgage loan for home improvement other than:
In the form of an instrument that is payable to the borrower or jointly to the borrower and the contractor or home improvement contractor; or
At the election of the borrower by a third-party escrow agent in accordance with terms established in a written agreement signed by the borrower, the licensee and the contractor or home improvement contractor prior to the date of payment.
A licensed mortgage lender or mortgage loan broker shall not permit a contractor or home improvement contractor to be a cosigner or to act as a guarantor for a mortgage loan for home improvement.
As used in this section, “mortgage loan for home improvement” means a consumer credit mortgage loan transaction involving property located within this state regardless of the amount of the loan.
The commissioner is authorized to impose a civil penalty in an amount not to exceed twenty-five thousand dollars ($25,000) for each violation of this section after notice and opportunity for a hearing.