§ 40-23-113 — Disclosure of mortgage lender fees

(a) Within three (3) working days of taking a mortgage
loan application and prior to receiving any consideration, other
than third party fees, from the borrower, the mortgage lender
shall:
(i) Disclose the terms of the loan to the borrower in
compliance with the disclosure requirements of the federal
Truth-in-Lending Act, its associated regulations, and the
federal Real Estate Settlement Procedures Act and its associated
regulations and any other applicable federal and state
requirements;
(ii) If a prepayment penalty may be a condition of
the residential mortgage loan offered to a borrower, that fact
shall be separately disclosed in writing to the borrower and the
borrower shall agree in writing to accept that condition. The
disclosure shall state that a prepayment penalty provision
imposes a charge if the borrower refinances or pays off the
mortgage loan before the date for repayment stated in the loan
agreement. The written disclosure shall be in a form prescribed
by the commissioner and shall initially be delivered along with
the good faith estimate of settlement costs within three (3)
business days after accepting an application from the borrower.
The disclosure shall subsequently be provided by the lender and
signed by the borrower at the same time the borrower is given
the final federal Truth-in-Lending Act disclosure.
(b) With the exception of a loan cancellation fee, a
licensed mortgage lender shall not require a borrower to pay any
fees or charges prior to a residential mortgage loan closing,
except:
(i) Charges actually incurred by the licensee on
behalf of the borrower for services which have been rendered by
third parties necessary to process the application. These fees
may include, but are not limited to, fees for credit reports,
flood insurance certifications, property inspections, title
insurance commitments, uniform commercial code article 4 lien
searches, and appraisals;
(ii) A rate lock in fee; and
(iii) A commitment fee upon approval of the
residential mortgage loan.
(c) A loan cancellation fee may be charged and collected
by a licensee at any time either prior to the scheduled closing
of a residential mortgage loan transaction or subsequent
thereto.
(d) Any fees charged under the authority of this section
shall be reasonable and customary as to the type and the amount
of the fee charged.
(e) A mortgage lender shall not receive any fee that
inures to the benefit of the mortgage lender, either directly or
indirectly, if the fee exceeds the fee disclosed on the most
recent good faith estimate unless:
(i) The need to charge the higher fee was not
reasonably foreseeable at the time the good faith estimate was
written; and
(ii) The mortgage lender has provided to the
borrower, no less than three (3) business days prior to the
signing of the mortgage loan closing documents, a new good faith
estimate of settlement costs, a clear written explanation of the
increase in the fee and the reason for charging a fee that
exceeds the fee which was previously disclosed.
(f) If the fee was originally disclosed as a percentage of
the mortgage loan amount and the dollar amount of the fee
increases because the mortgage loan amount increases, but the
fee as a percentage of the mortgage loan amount does not change,
then no redisclosure shall be required unless the fee increased
by more than one thousand dollars ($1,000.00).