§ 14A-3-309.4. Additional disclosures for subsection 10 mortgages.

(1)  In addition to other disclosures required under this title, for each subsection 10 mortgage referred to in subsection (10) of Section 1-301 of this title, the creditor shall provide the following disclosures in conspicuous type size:

(a)"You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application";

(b)"If you obtain this loan, the lender will have a mortgage on your home.  You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan”;

(c)in the case of a credit transaction with a fixed rate of interest, the annual percentage rate and the amount of the regular monthly payment;

(d)in the case of any other credit transaction, the annual percentage rate of the loan, the amount of the regular monthly payment, the amount of any balloon payment, a statement that the interest rate and monthly payment may increase, and the amount of the maximum monthly payment, based on the maximum interest rate allowed pursuant to Section 1204 of the Competitive Equality Banking Act of 1987.  The regular payment disclosed under this paragraph shall be treated as accurate if it is based on an amount borrowed that is deemed accurate and is disclosed under subparagraph (e) of this section;

(e)for a mortgage refinancing, the total amount the consumer will borrow, as reflected by the face amount of the note; and where the amount borrowed includes premiums or other charges for optional credit insurance or debt-cancellation coverage, that fact shall be stated, grouped together with the disclosure of the amount borrowed.  The disclosure of the amount borrowed shall be treated as accurate if it is not more than One Hundred Dollars ($100.00) above or below the amount required to be disclosed; and

(f)“mortgage loan rates, closing costs and fees vary based on many factors.  These include your credit history and financial circumstances, your employment history, the loan-to-value that is represented by your home and the amount of the loan you have requested, and the type of property that will secure your loan.  The loan rate and fees could also vary based on which creditor or broker you select.  As a borrower, you should shop around and compare loan rates and fees.  You should also consider talking to a qualified, independent credit counselor or other experienced financial advisor regarding the rate, fees and provisions of this mortgage loan before you proceed.  A list of qualified, independent counselors is available by calling the Oklahoma Department of Consumer Credit or the Oklahoma State Banking Department.  Remember:  property taxes and homeowner’s insurance are your responsibility, and not all creditors provide escrow services that enable them to make those payments on your behalf.  You should ask your creditor about these services.  Your payments on existing debts contribute to your credit ratings.  You should not accept any advice to ignore your regular payments to your existing creditors."

(2)(a)              The disclosures required by this section shall be given not less than three (3) business days prior to consummation of the transaction.

(b)(i)              After providing the disclosures required by this section, a creditor may not change the terms of the extension of credit if such changes make the disclosures inaccurate, unless new disclosures are provided that meet the requirements of this section.

(ii)A creditor may provide new disclosures pursuant to subparagraph (i) of this paragraph by telephone, if:

(aa)the change is initiated by the consumer; and

(bb)at the consummation of the transaction under which the credit is extended:

(I)the creditor provides to the consumer the new disclosures, in writing; and

(II)the creditor and consumer certify in writing that the new disclosures were provided by telephone, by not later than three (3) days prior to the date of consummation of the transaction.

(c)The Administrator may, if the Administrator finds that such action is necessary to permit homeowners to meet bona fide personal financial emergencies, prescribe regulations authorizing the modification or waiver of rights created under this subsection, to the extent and under the circumstances set forth in the regulations.

(3)(a)(i)              A subsection 10 mortgage referred to in subsection (10) of Section 1-301 of this title may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal before the date on which the principal is due.

(ii)For purposes of this subsection, any method of computing a refund of unearned scheduled interest is a prepayment penalty if it is less favorable to the consumer than the actuarial method, as that term is defined in Section 933(d) of the Housing and Community Development Act of 1992.

(b)Notwithstanding the provisions of subparagraph (a) of this paragraph, a subsection 10 mortgage referred to in subsection (10) of Section 1-301 of this title may contain a prepayment penalty, including terms calculating a refund by a method that is not prohibited under Section 933(d) of the Housing and Community Development Act of 1992 for the transaction in question if:

(i)at the time the subsection 10 mortgage is consummated:

(aa)the consumer is not liable for an amount of monthly indebtedness payments, including the amount of credit extended or to be extended under the transaction, that is greater than fifty percent (50%) of the monthly gross income of the consumer; and

(bb)the income and expenses of the consumer are verified by a financial statement signed by the consumer, by a credit report, and in the case of employment income, by payment records or by verification from the employer of the consumer, which verification may be in the form of a copy of a pay stub or other payment record supplied by the consumer;

(ii)the penalty applies only to a prepayment made with amounts obtained by the consumer by means other than a refinancing by the creditor under the subsection 10 mortgage, or an affiliate of that creditor;

(iii)the penalty does not exceed in the aggregate more than:

(aa) two percent (2%) of the loan amount prepaid in the first twelve (12) months after the subsection 10 mortgage is consummated, or

(bb) one percent (1%) of the loan amount prepaid in the second twelve (12) months after the subsection 10 mortgage is consummated;

(iv)the penalty does not apply after the end of the two-year period beginning on the date on which the subsection 10 mortgage is consummated; and

(v)the penalty is not prohibited under other applicable law.

(c)Notwithstanding the provisions of subparagraph (a) or (b) of this paragraph, a subsection 10 mortgage referred to in subsection (10) of Section 1-301 of this title consummated with funds advanced directly or indirectly from a Federal Home Loan Bank may contain a prepayment penalty.

(4)  A subsection 10 mortgage referred to in subsection (10) of Section 1-301 of this title may not provide for an interest rate applicable after default that is higher than the interest rate that applies before default.  If the date of maturity of a subsection 10 mortgage referred to in subsection (10) of Section 1-301 of this title is accelerated due to default and the consumer is entitled to a rebate of interest, that rebate shall be computed by any method that is not less favorable than the actuarial method, as that term is defined in Section 933(d) of the Housing and Community Development Act of 1992.

(5)  A subsection 10 mortgage referred to in subsection (10) of Section 1-301 of this title having a term of less than five (5) years may not include terms under which the aggregate amount of the regular periodic payments would not fully amortize the outstanding principal balance.

(6)  A subsection 10 mortgage referred to in subsection (10) of Section 1-301 of this title may not include terms under which the outstanding principal balance will increase at any time over the course of the loan because the regular periodic payments do not cover the full amount of interest due.

(7)  A subsection 10 mortgage referred to in subsection (10) of Section 1-301 of this title may not include terms under which more than two periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the consumer.

(8)  A creditor shall not make a payment to a contractor under a home improvement contract from amounts extended as credit under a subsection 10 mortgage referred to in subsection (10) of Section 1-301 of this title, other than:

(a)in the form of an instrument that is payable to the consumer or jointly to the consumer and the contractor; or

(b)at the election of the consumer, by a third party escrow agent in accordance with terms established in a written agreement signed by the consumer, the creditor, and the contractor before the date of payment.

(9)  Any subsection 10 mortgage that contains a provision prohibited by this section shall be deemed a failure to deliver the material disclosures required under this title, for the purpose of Section 5-204 of this title.

(10)  For purposes of this section, the term "affiliate" has the same meaning as in Section 2(k) of the Bank Holding Company Act of 1956.

(11)(a)The Administrator may, by regulation or order, exempt specific subsection 10 mortgage products or categories of subsection 10 mortgages from any or all of the prohibitions specified in subsections (3) through (8) of this section, if the Administrator finds that the exemption:

(i)is in the interest of the borrowing public; and

(ii)will apply only to products that maintain and strengthen home ownership and equity protection.

(b)The Administrator, by regulation or order, shall prohibit acts or practices in connection with:

(i)subsection 10 mortgage loans that the Board of Governors of the Federal Reserve System has found to be unfair, deceptive, or designed to evade the provisions of this section; and

(ii)refinancing of subsection 10 mortgage loans that the Board of Governors of the Federal Reserve System has found to be associated with abusive lending practices, or that are otherwise not in the interest of the borrower.

Added by Laws 2000, c. 217, § 12, eff. July 1, 2000.  Amended by Laws 2003, c. 330, § 8, eff. Jan. 1, 2004.