Section 36a-570-17 - Mortgage loans in excess of five thousand dollars(a)(1)Approval of Commissioner. Any licensee in this state may apply to the commissioner, in a manner prescribed by the commissioner, for permission to allow an affiliated entity on the same premises to make loans in excess of five thousand dollars which are secured by real estate. Upon receipt of written permission from the commissioner, the affiliated entity shall conduct its business in accordance with the requirements of this section.(2)Calculation of finance charge.(A) The total finance charge assessed against the borrower on any mortgage loan made pursuant this section may be composed of interest and a nonrefundable prepaid finance charge, provided, any such nonrefundable prepaid finance charge, when added to any commissions, gratuities, or broker's fees for which the borrower may be obligated, shall not exceed, in the aggregate, eight per cent of the loan amount in the case of a closed-end loan or eight per cent of the initial cash advance in the case of an open-end loan. (B) When computed in accordance with part III of chapter 669 of the Connecticut General Statutes, but without the tolerances contained therein, the total finance charge, expressed as an annual percentage rate, shall not exceed twenty-four per cent for the original term of the loan. (C) In the case of a closed-end loan, the interest portion of the total finance charge may be assessed on a daily basis on the actual unpaid loan amount at the simple interest rate contained in the mortgage note, or at the lender's option it may be precomputed at the same rate in accordance with the disclosed schedule of payments. In the case of an open-end loan, the interest portion of the total finance charge shall be computed in accordance with subsection (e) of section 36a-565 of the Connecticut General Statutes.(b)Other charges. In addition to the finance charge permitted under subdivision (2) of subsection (a) of this section, the commissions, gratuities, or broker's fees permitted under subsection (b) of section 36a-570-14 of these regulations, the prepayment penalty permitted under subsection (e) of this section and the costs or charges permitted under subsections (c), (i), and (k) to (n), inclusive, of this section, no other charges of any kind shall be assessed against the borrower on any mortgage loan made pursuant to this section except the actual and reasonable costs of the following: (1) Fees or premiums for title examination, abstract of title, title insurance, surveys or similar purposes.(2) Preparation of deeds, settlement statements or other documents.(3) Fees for notarizing deeds or other documents.(4) Fees paid to public officials for the filing of deeds and other documents.(5) Appraisal fees. The borrower shall not be charged for any of the services listed in subdivisions (1) to (5), inclusive, of this subsection when performed by a salaried employee of the licensee.
(c)Insurance.(1) Credit life insurance on the life of one borrower or on the lives of the borrower and the borrower's spouse if both are to be obligors on the loan may be sold in connection with a mortgage loan made pursuant to this section, if requested by any such borrower whose life is to be insured, in accordance with part III of chapter 669 of the Connecticut General Statutes. The cost of such insurance may be in addition to the finance charge and other charges permitted by this section.(2) If requested by any borrower who will be insured, as required under part III of chapter 669 of the Connecticut General Statutes, credit accident and health insurance covering one borrower may be sold in connection with the mortgage loan, providing indemnity against the risk of a borrower becoming disabled for a period of not less than fourteen days, except that such insurance may provide for retroactive coverage if the disability continues for the period stated in the policy. The cost of such insurance may be in addition to the finance charge and other charges permitted by this section.(3) If a borrower obtains credit accident and health insurance, the borrower shall have the right for a period of fifteen days after loan is made to cancel the entire insurance coverage. Notification of this right shall be made in the borrower's insurance election. All persons obligated on the loan must agree in writing to the cancellation and return all certificates upon cancellation. The lender shall, at the lender's option, either refund the insurance charges to the borrower or apply them to the unpaid balance of the loan.(4) The lender may require evidence that the mortgaged property is adequately insured against loss from physical damage, provided, no such insurance may be sold by the lender to the borrower.(d)Security. No collateral, other than a lien on real property owned by the borrower and the insurances described under subsection (c) of this section, shall be taken in connection with any mortgage loan made pursuant to this section.(e)Prepayment. In the event of prepayment in full or in part of a mortgage loan upon which the interest portion of the finance charge is assessed on a daily basis on the unpaid loan amount, the interest portion of the finance charge shall be assessed only to the date of prepayment at a simple interest rate contained in the mortgage note. In the event of prepayment in full of a mortgage loan upon which the interest portion of the finance charge is precomputed, a rebate of the unearned interest portion of the finance charge shall be credited to the borrower. Such unearned interest portion of the finance charge shall be computed by the actuarial method at the simple interest rate contained in the mortgage note on the declining principal balances scheduled to follow the date of prepayment, as originally scheduled or as deferred in accordance with subsection (l) of this section. No portion of any prepaid finance charge is required to be refunded in the event of prepayment. Except as otherwise provided in this subsection, no penalty for prepayment shall exceed five per cent of the principal balance prepaid, provided, no such penalty shall be imposed for any prepayment occurring more than three years after the date of the loan.(f)Multiple loans. A borrower may be indebted to affiliated entities for a mortgage loan made pursuant to this section and an unsecured loan made under part III of chapter 668 of the Connecticut General Statutes at the same time, provided, such loans shall not be split or divided for the purpose of obtaining a higher finance charge than would be received if a single loan had been granted. A borrower may not be indebted to affiliated entities for a mortgage loan made pursuant to this section and a mortgage loan made under part III of chapter 668 of the Connecticut General Statutes at the same time.(g)Loan amounts-repayment periods. All mortgage loans made pursuant to this section shall be for amounts in excess of five thousand dollars. The repayment period shall be determined by the borrower's ability to repay, but there shall be no maximum maturity.(h)Advertising and collection practices. All advertising and collection practices with respect to mortgage loan made pursuant to this section shall comply with sections 36a-570-2 and 36a-570-5 of these regulations.(i)Foreclosure costs. No mortgage documents prepared in connection with a mortgage loan made pursuant to this section shall provide for payment by the borrower of other than the reasonable costs of any foreclosure action, including reasonable attorney's fees, as may be determined by the court.(j)Termination of permission. The commissioner may suspend or revoke any permission granted under the provisions of section 36a-561 of the Connecticut General Statutes and this section for any violation or evasion of the provisions of section 36a-561, this section or sections 36a-570-1 to 36a-570-16, inclusive, of these regulations.(k)Late charge. If any instalment on a loan made pursuant to this section remains unpaid for ten or more consecutive days, including Sundays and holidays, after it is due, the lender may assess and collect a late charge not exceeding the lesser of ten dollars or five per cent of the amount of such scheduled instalment.(l)Deferment charge. If the lender and the borrower agree to the deferment of one or more instalments on a loan made pursuant to this section upon which the interest portion of the finance charge is precomputed, the lender may make an additional charge for such deferment. The deferment charge shall be computed on a daily basis at a rate not to exceed the simple interest rate contained in the mortgage note for the actual number of days in the deferment period. No deferment charge shall be assessed or collected without the permission of the borrower.(m)Dishonored check service charge. If the agreement between the lender and the borrower so provides, the lender may assess and collect a dishonored check service charge in accordance with the provisions of Section 52-565a of the Connecticut General Statutes.(n)Open-end loan annual fee. In the case of an open-end loan made pursuant to this section, if the agreement between the lender and the borrower so provides, the lender may assess and collect an annual fee not to exceed fifty dollars for the privileges made available to the borrower under the open-end loan agreement.Conn. Agencies Regs. § 36a-570-17
Effective July 22, 1994; Transferred April 24, 1995; Amended April 7, 2000; Amended August 16, 2000