Connecticut General Statutes 36a-760 – Nonprime home loans: Definitions; applicability
(a) As used in this section and sections 36a-760a to 36a-760j, inclusive:
Terms Used In Connecticut General Statutes 36a-760
- Commissioner: means the Banking Commissioner and, with respect to any function of the commissioner, includes any person authorized or designated by the commissioner to carry out that function. See Connecticut General Statutes 36a-2
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Finance charge: The total cost of credit a customer must pay on a consumer loan, including interest. The Truth in Lending Act requires disclosure of the finance charge. Source: OCC
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Loan: includes any line of credit or other extension of credit. See Connecticut General Statutes 36a-2
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC
- Person: means an individual, company, including a company described in subparagraphs (A) and (B) of subdivision (12) of this section, or any other legal entity, including a federal, state or municipal government or agency or any political subdivision thereof. See Connecticut General Statutes 36a-2
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- State: means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the trust territory of the Pacific Islands, the Virgin Islands and the Northern Mariana Islands. See Connecticut General Statutes 36a-2
(1) “APR” has the same meaning as provided in section 36a-746a;
(2) “CHFA loan” means a loan made, insured, purchased, subsidized or guaranteed by the Connecticut Housing Finance Authority;
(3) “FHA loan” means a loan made, insured, purchased, subsidized or guaranteed by the Federal Housing Administration;
(4) “First mortgage loan” has the same meaning as provided in section 36a-485;
(5) “Lender” means any person engaged in the business of the making of mortgage loans who is (A) required to be licensed by the commissioner under chapter 668, or such person’s successors or assigns, or (B) exempt from licensing pursuant to subdivisions (1) to (3), inclusive, of subsection (a) of section 36a-487, and their successors and assigns, but does not include any mortgage broker, as defined in this section, or any mortgage loan originator, as defined in section 36a-485;
(6) “Mortgage broker” means a mortgage broker, as defined in section 36a-485, who is required to be licensed by the commissioner under chapter 668, or such person’s successors or assigns;
(7) “Nonprime home loan” means any loan or extension of credit, excluding an open-end line of credit, any mortgage insured under Title II of the National Housing Act, 12 USC 1701 et seq., as amended from time to time, that satisfies the requirements for a qualified mortgage set forth in 24 C.F.R. § 203.19(b), as amended from time to time, and a reverse mortgage transaction, as defined in 12 C.F.R. § 1026.33, as amended from time to time:
(A) In which the borrower is a natural person;
(B) The proceeds of which are to be used primarily for personal, family or household purposes;
(C) In which the loan is secured by a mortgage upon any interest in one-to-four family residential real property located in this state which is, or when the loan is made, intended to be used or occupied by the borrower as a principal residence;
(D) In which the principal amount of the loan does not exceed four hundred seventeen thousand dollars;
(E) Where the loan is not a CHFA loan; and
(F) In which the conditions set forth in subparagraph (F)(i) of this subdivision apply, subject to any adjustments made pursuant to subparagraph (F)(ii) of this subdivision:
(i) The difference, at the time of consummation, between the APR for the loan or extension of credit and the average prime offer rate for a comparable transaction, as of the date the interest rate is set, is greater than one and one-half percentage points if the loan is a first mortgage loan or three and one-half percentage points if the loan is a secondary mortgage loan. For purposes of this subparagraph, “average prime offer rate” has the meaning as provided in 12 C.F.R. § 1026.35, as amended from time to time. For purposes of this clause, the date the interest rate is set is the last date the interest rate is set, provided the rate is adjusted on or before consummation.
(ii) The commissioner shall have the authority, after consideration of the relevant factors, to increase the percentages set forth in subparagraph (F)(i) of this subdivision. For purposes of this clause, the relevant factors to be considered by the commissioner shall include, but not be limited to, the existence and amount of increases in fees or charges in connection with purchases of mortgages by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and increases in fees or charges imposed by mortgage insurers and the impact, including the magnitude of the impact, that such increases have had, or will likely have, on APRs for mortgage loans in this state. When considering such factors, the commissioner shall focus on those increases that are related to the deterioration in the housing market and credit conditions. The commissioner may refrain from increasing such percentages if it appears that lenders are increasing interest rates or fees in bad faith or if increasing the percentages would be contrary to the purposes of sections 36a-760 to 36a-760f, inclusive. No increase authorized by the commissioner to a particular percentage shall exceed one-quarter of one percentage point, and the total of all increases to a particular percentage under this clause shall not exceed one-half of one percentage point. No increase shall be made unless: (I) The increase is noticed in the Banking Department Bulletin and the Connecticut Law Journal, and (II) a public comment period of twenty days is provided. Any increase made under this clause shall be reduced proportionately when the need for the increase has diminished or no longer exists. The commissioner, in the exercise of his discretion, may authorize an increase in the percentages with respect to all loans or just with respect to a certain class or classes of loans;
(8) “Open-end line of credit” means a mortgage extended by a lender under a plan in which: (A) The lender reasonably contemplates repeated transactions; (B) the lender may impose a finance charge from time to time on an outstanding unpaid balance; (C) the amount of credit that may be extended to the consumer during the term of the plan, up to any limit set by the lender, is generally made available to the extent that any outstanding balance is repaid; and (D) none of the proceeds of the open-end line of credit are used at closing to (i) purchase the borrower’s primary residence, or (ii) refinance a mortgage loan that had been used by the borrower to purchase the borrower’s primary residence;
(9) “Secondary mortgage loan” has the same meaning as provided in section 36a-485.
(b) The provisions of sections 36a-760a to 36a-760i, inclusive, shall be applicable to nonprime home loans and mortgages, as appropriate, for which applications have been received on or after August 1, 2008.