Maine Anti-Predatory Lending Legislation

Effective January 1, 2008
Summary
The state of Maine recently amended its High Cost Statute. The new law amends the high cost points and fees threshold and expands the definition of points and fees. The law is effective January 1, 2008 for all owner- and nonowner-occupied (including second homes), first and second liens, open- and closed-end, purchase and refinance loans that do not exceed the FNMA conforming loan limits for a 1-4 single family dwelling and applies to loan applications taken on or after the effective date.
Maine's Anti-Predatory Lending Legislation includes requirements for brokers regarding residential mortgage loans. Brokers originating any owner or non-owner occupied (including second homes) first or second lien, open or closed-end loan that does not exceed the FNMA conforming loan limits for a 1-4 single family dwelling are subject to the new requirements which include documenting a net tangible benefit by signature of the lender, broker, and borrower on Maine's Reasonable, Tangible Net Benefit Disclosure Form.
High Cost Home Loan Defined
Under the amended High Cost Statute, the following loans are subject to the Maine annual percentage rate (APR) and points and fees thresholds to determine whether the loan is a high cost loan:
􀂉 Closed and open-end loans
􀂉 Purchase and refinances
􀂉 Owner-occupied and nonowner occupied, including second homes
􀂉 First and second lien loans
􀂉 At or below FNMA conforming loan limits for a 1-4 single family dwelling
Points and Fees Threshold
The points and fees threshold for a High Cost Home Loan has been amended. WaMu will not originate or purchase home loans with a principal amount that does not exceed the FNMA conforming loan limits for a 1-4 single family dwelling, where the total points and fees payable by the consumer at or before closing:
􀂉 Exceed 5% of the total loan amount if the loan amount is $40,000 or more, or
􀂉 Exceed 6% of the total loan amount if the loan amount is less than $40,000.
Points and Fees Threshold,
continued
Points and Fees Include:
􀂉 All HOEPA points and fees
􀂉 All finance charges
􀂉 All compensation paid directly or indirectly to the broker (including yield spread premium [YSP])
􀂉 The maximum prepayment fee charged under the proposed loan, and
􀂉 All prepayment fees incurred if the loan is a refinance of WaMu or WaMu-affiliate loan.
Total Loan Amount is Defined as:
􀂉 Principal amount of loan minus the points and fees that are included in the principal amount of the loan (further defined as the amount financed under Truth-in-Lending Act [TILA]).
􀂉 For open-end loans, the total loan amount must be calculated using the total line of credit allowed under the residential mortgage loan at closing.
Maine Anti-Predatory Lending Legislation:
Net Tangible Benefit
Lenders and brokers originating any owner- and nonowner-occupied (including second homes) first and second liens, open- and closed-end loans, purchase and refinance loans with a conforming loan amount for a 1-4 single family dwelling are prohibited from knowingly or intentionally making a loan to a borrower who refinances an existing mortgage when the new loan does not have a reasonable, net tangible benefit to the borrower.
WaMu will require documentation of a net tangible benefit following WaMu's existing Net Tangible Benefit (NTB) Policy on all owner- and nonowner-occupied (including second homes) first and second liens, open- and closed-end loans, purchase and refinance loans with a conforming loan amount for a 1-4 single family dwelling.
WaMu, the broker, and the borrower(s) will sign the required State of Maine Reasonable, Tangible Net Benefit Disclosure Form.
Maine Anti-Predatory Lending Legislation:
Broker Procedures -
NTB Additional Documentation
The following documents are required from brokers on all applicable loans in Maine:
􀂉 Broker Loan Submission Form Addendum for Net Tangible Benefit (form 31897) - Existing Form
The Broker Loan Submission Form Addendum for Net Tangible Benefit (form 31897) must be completed and executed by the broker at the time of application and submitted with the loan application for WaMu to perform the Net Tangible Benefit Analysis.
The Broker Loan Submission Form Addendum for Net Tangible Benefit (form 31897) has been updated to include Maine and attached to this announcement.   Maine Anti-Predatory Lending Legislation
Broker Procedures -
NTB Additional Documentation, continued
􀂉 The State of Maine Reasonable, Tangible Net Benefit Disclosure Form - New Form
The State of Maine Reasonable, Tangible Net Benefit Disclosure Form (available to the broker by the State of Maine) must be included in the loan file at time of submission. If the State of Maine Reasonable, Tangible Net Benefit Disclosure Form is not in the loan file at the time of submission, the loan will include a condition that the loan cannot close without a State of Maine Reasonable, Tangible Net Benefit Disclosure Form signed by the broker. The Disclosure Form must be in our loan file prior to sending docs out for closing.
It is not necessary for the broker to complete the Disclosure Form. WaMu will fax the broker a completed Disclosure Form after approval and commitment. (See "Additional Broker Requirements" below.)
Maine Anti-Predatory Lending Legislation:
Net Tangible Benefit - Additional Broker Requirements
In addition to WaMu's existing NTB documentation, which requires the broker to submit to WaMu a Broker Loan Submission Form Addendum for Net Tangible Benefit (form 31897), the broker will now be required to submit to WaMu the State of Maine Reasonable, Tangible Net Benefit Disclosure Form on applicable loans in Maine.
The following are required for the broker to complete:
Step
Action
1
Obtain the "State of Maine Reasonable, Tangible Net Benefit Disclosure Form" from the State of Maine.
2
Explain to the borrower(s) that they will be contacted at a later date by the broker and the lender to verbally explain the net tangible benefit(s). Also advise the borrower(s) that they will be required to sign the Disclosure Form at closing.
3
Submit the blank Disclosure Form along with the application package to WaMu.
4
WaMu will fax the completed Disclosure Form to broker after loan has been approved and a net tangible analysis has been successfully completed with a pass decision.
Upon receipt of completed Disclosure Form from WaMu via fax, contact the borrower(s) and verbally explain the net tangible benefit(s) of the loan to the borrower(s).
5
Sign the Disclosure Form.
6
Fax the Disclosure Form back to WaMu.
Important: If the terms of the refinance change after the broker has explained the net tangible benefit to the borrower(s) and signed the form, the broker must submit a new Disclosure Form to the Lender.   ...Thats all I've got.
:-)
It seems to me that it really is not that much different from what we are doing NOW...just, yet another BTB disclosure to keep on hand.

  ...by the way... Who do you know that is looking to purchase a home or re-finance in the near future?
 www.IMCALLINGKRIS.com
Kris Krajecki
11291 Devon Lane · Huntley, IL 60142630-347-6321 Fax: 847-669-9650
http://www.imcallingkris.com/
Huntley's #1 Mortgage Man for new home purchase, refinance, cash-out home equity.