§ 34-25.2-6. Limitations and prohibited practices regarding high-cost home loans.
A high-cost home loan shall be subject to the following additional limitations and
prohibited practices:
(a) In connection with a high-cost home loan, no creditor shall directly or indirectly
finance any points or fees which total is greater than five percent (5%) of the total
loan amount or eight hundred dollars ($800) whichever is greater.
(b) No prepayment fees or penalties shall be included in the loan documents for a high-cost
home loan.
(c) No high-cost home loan may contain a scheduled payment that is more than twice as
large as the average of earlier scheduled payments. This provision does not apply
when the payment schedule is adjusted to the seasonal or irregular income of the borrower.
(d) No high-cost home loan may include payment terms under which the outstanding principal
balance or accrued interest will increase at any time over the course of the loan
because the regularly scheduled periodic payments do not cover the full amount of
interest due.
(e) No high-cost home loan may contain a provision that increases the interest rate after
default. This provision does not apply to interest rate changes in a variable-rate
loan otherwise consistent with the provisions of the loan documents, provided the
change in the interest rate is not triggered by the event of default or the acceleration
of the indebtedness.
(f) No high-cost home loan may include terms under which more than two (2) periodic payments
required under the loan are consolidated and paid in advance from the loan proceeds
provided to the borrower.
(g) A creditor may not make a high-cost home loan without first receiving certification
from a counselor with a third-party nonprofit organization approved by the United
States Department of Housing and Urban Development that the borrower has received
counseling on the advisability of the loan transaction.
(h) A high-cost home loan shall not be extended to a borrower unless a reasonable creditor
would believe at the time the loan is closed that one or more of the borrowers will
be able to make the scheduled payments associated with the loan based upon a consideration
of his or her current and expected income, current obligations, employment status,
and other financial resources, other than the borrower's equity in the collateral
that secures the repayment of the loan. There is a rebuttable presumption that the
borrower is able to make the scheduled payments to repay the obligation if, at the
time the loan is consummated, said borrower's total monthly debts, including amounts
under the loan, do not exceed fifty percent (50%) of said borrower's monthly gross
income as verified by tax returns, payroll receipts, and other third-party income
verification.
(i) A creditor may not pay a contractor under a home-improvement contract from the proceeds
of a high-cost home loan, unless:
(1) The creditor is presented with a signed and dated completion certificate showing that
the home improvements have been completed; and
(2) The instrument is payable to the borrower or jointly to the borrower and the contractor,
or, at the election of the borrower, through a third-party escrow agent in accordance
with terms established in a written agreement signed by the borrower, the creditor,
and the contractor prior to the disbursement.
(j) A creditor may not charge a borrower any fees or other charges to modify, renew, extend,
or amend a high-cost home loan or to defer any payment due under the terms of a high-cost
home loan.
(k) A creditor shall not make available a high-cost home loan that provides for a late
payment fee except as follows:
(1) The late payment fee shall not be in excess of three percent (3%) of the amount of
the payment past due.
(2) The late payment fee shall only be assessed for a payment past due for fifteen (15)
days or more or ten (10) days or more in cases of bi-weekly mortgage payment arrangement.
(3) The late payment fee shall not be imposed more than once with respect to a single
late payment. If a late payment fee is deducted from a payment made on the loan, and
the deduction causes a subsequent default on a subsequent payment, no late payment
fee may be imposed for the default.
(4) A creditor shall treat each payment as posted on the same business day as it was received.
(l) All high-cost home loan documents that create a debt or pledge property as collateral
shall contain the following notice on the first page in a conspicuous manner: "Notice:
This a high-cost home loan subject to special rules under state law. Purchasers or
assignees of this high-cost home loan may be liable for all claims and defenses by
the borrower with respect to the home loan.�