Arizona Laws 6-449. General loan contract provisions
A. Each loan, and any agreement for securing the same, shall be evidenced by one or more written instruments, consistent with sound lending practices in the locality, and whenever recording of such an agreement is necessary to establish priority over the claim of any third party, the agreement shall be recorded.
Terms Used In Arizona Laws 6-449
- Account: means withdrawable capital deposited with or invested in an association in accordance with any plan authorized by this chapter unless such term is otherwise designated or qualified. See Arizona Laws 6-401
- Appraisal: A determination of property value.
- Association: means every association to which this chapter applies as defined in the section concerning scope of chapter. See Arizona Laws 6-401
- Bank: means a corporation that holds a banking permit issued pursuant to chapter 2 of this title. See Arizona Laws 6-101
- Contract: A legal written agreement that becomes binding when signed.
- Credit report: A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. Source: OCC
- Deputy director: means the deputy director of the financial institutions division of the department. See Arizona Laws 6-101
- 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
- Lien: A claim against real or personal property in satisfaction of a debt.
- Month: means a calendar month unless otherwise expressed. See Arizona Laws 1-215
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: includes a corporation, company, partnership, firm, association or society, as well as a natural person. See Arizona Laws 1-215
- Property: includes both real and personal property. See Arizona Laws 1-215
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
- United States: includes the District of Columbia and the territories. See Arizona Laws 1-215
B. The loan contract terms shall afford full protection to the association and shall include, among other things, provisions for:
1. The payment of taxes, assessments, other governmental levies, maintenance and repairs, granting the association the right to make payments thereon or for any other item which, if unpaid, would create a lien prior to that of the loan contract.
2. Adequate insurance to cover the usual risks on the property offered as security for the loan, and in such form, coverage and amounts and in such company or companies as the board of directors may approve.
3. The right to repay the loan in whole or in part at any time, but the association may require payment of not more than six months’ advance interest on that part of the aggregate amount of all prepayments on a loan in one year that exceeds the amount otherwise payable in such year under the terms of the loan.
C. The loan contract may provide for:
1. An assignment of rents.
2. Additional or future advances to be made at the option of the parties up to a total amount stated in the recorded security instrument.
3. Regular periodical payments to create a separate trust fund in the association to pay when due all taxes, assessments, insurance premiums, ground rents, and other current charges against the real estate security, and the application or crediting of such payments. All such funds so collected shall be promptly deposited in a separate trust bank account.
4. The payment or deduction of a premium charge for property insurance, life insurance or health and accident insurance assigned as collateral, mortgage guaranty insurance or insurance of mortgages by the United States or any instrumentality thereof, actual costs of title examination or title insurance, appraisal, credit report, survey, drawing of papers, closing of loan, and other necessary incidental services in such reasonable amounts as are actually charged and as may be fixed by the board of directors, all of which shall be itemized on a loan settlement sheet delivered to the borrower at the time of closing the loan. No person regularly serving the association shall receive from the association or other source any fee or compensation of any kind in connection with procuring a particular loan from or by such association.
5. A single initial service charge, premium or discount and a charge or penalty for nonpayment when due of agreed payments on any loan, but the charges, penalties or discount, when added to the interest charge of the loan, over the contractual term of the loan, shall not exceed in the aggregate the applicable interest rate of this state, and the charge or penalty shall not be either compounded or cumulated. All such charges and penalties shall be accounted for as a part of the receipts of the association.
6. Any other covenant or agreement that the association may deem necessary or that is customary in the locality.
7. The charges herein authorized to be made shall be in addition to interest authorized by law and shall not be deemed as included therein, except as prohibited by section 44-1205 and subsection C, paragraph 5 of this section.
D. If any payment required to be made by the borrower to discharge the performance of any obligation under the loan contract is not made, or if any fund created for such payment is insufficient to discharge the obligation completely, the association may advance the same and add the required amount to the unpaid balance of the loan as of the first day of the month during which such advance was made, and the advance and interest thereon shall be secured by the security instrument.
E. The first payment on any regular installment loan, a construction loan, insured loan, or guaranteed loan shall begin at such time as fixed by rules and regulations of the deputy director.