Bill Text: MS SB2605 | 2010 | Regular Session | Introduced

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Bill Title: Home mortgages; prohibit certain mortgage lending practices.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2010-02-02 - Died In Committee [SB2605 Detail]

Download: Mississippi-2010-SB2605-Introduced.html

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MISSISSIPPI LEGISLATURE

2010 Regular Session

To: Business and Financial Institutions

By: Senator(s) Jackson (11th)

Senate Bill 2605

AN ACT TO PROVIDE CONSUMER PROTECTIONS FROM CERTAIN MORTGAGE LENDING PRACTICES RELATING TO BALLOON PAYMENTS, NEGATIVE AMORTIZATION AND PREPAYMENT PENALTIES; AND FOR RELATED PURPOSES.

     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

     SECTION 1.  (1)  Definitions.  In this act:

          (a)  "Bridge loan" means temporary or short-term financing requiring payment of only interest until the entire unpaid balance is due.

          (b)  "Home loan" means a loan that is:

              (i)  Made to one or more individuals for personal, family, or household purposes; and

              (ii)  Secured in whole or part by:

                   1.  A manufactured home, as defined under Mississippi law, used or to be used as the borrower's principal residence; or

                   2.  Real property improved by a dwelling designed for occupancy by four (4) or fewer families and used or to be used as the borrower's principal residence.

          (c)  "Restructure" means a change in the payment schedule or other terms of a home loan as a result of the borrower's default.

          (d)  "High-cost home loan" means a loan that:

              (i)  Is made to one or more individuals for personal, family, or household purposes;

              (ii)  Is secured in whole or part by:

                   1.  A manufactured home as defined under Mississippi law, used or to be used as the borrower's principal residence; or

                   2.  Real property improved by a dwelling designed for occupancy by four (4) or fewer families and used or to be used as the borrower's principal residence;

              (iii)  Has a principal amount equal to or less than one-half (1/2) of the maximum conventional loan amount for first mortgages as established and adjusted by the Federal National Mortgage Association;

              (iv)  Is not:

                   1.  A reverse mortgage; or

                   2.  An open-end account.

              (v)  Is a credit transaction described by 12 CFR, Section 226.32, as amended, except that the term includes a residential mortgage transaction, as defined by 12 CFR, Section 226.2, as amended, if the total loan amount is Twenty Thousand Dollars ($20,000.00) or more and:

                   1.  The annual percentage rate exceeds the rate indicated in 12 CFR, Section 226.32(a)(1)(i), as amended; or

                   2.  The total points and fees payable by the consumer at or before loan closing will exceed the amount indicated in 12 CFR, Section 226.32(a)(1)(ii), as amended.

          (e)  "Points and fees" has the meaning assigned by 12 CFR, Section 226.32(b), as amended.

     (2)  Applicability.  This act does not apply to:

          (a)  A reverse mortgage; or

          (b)  An open-end account.

     (3)  Limitations.  (a)  Balloon payment.  A high-cost home loan may not contain a provision for a scheduled payment that is more than twice as large as the average of earlier scheduled monthly payments, unless the balloon payment becomes due not less than sixty (60) months after the date of the loan.  This prohibition does not apply if the payment schedule is adjusted to account for the seasonal or otherwise irregular income of the borrower or if the loan is a bridge loan in connection with the acquisition or construction of a dwelling intended to become the borrower's principal dwelling.

          (b)  Negative amortization.  A high-cost home loan may not provide for a payment schedule with regular periodic payments that cause the principal balance to increase, except that this section does not prohibit negative amortization as a consequence of a temporary forbearance, bridge loan, or restructure sought by the borrower.

          (c)  Prepayment penalties.  A lender may not make a high-cost home loan containing a provision for a prepayment penalty.

          (d)  Lending without home-ownership counseling.  A lender may not make a high-cost home loan without first receiving certification from an approved counselor that the borrower has received counseling on the advisability of the loan transaction and the appropriate loan for the borrower.

     SECTION 2.  This act shall take effect and be in force from and after July 1, 2010.