Sec. 36a-706. (Formerly Sec. 36-442a). Mortgage rate lock-in.
Sec. 36a-706. (Formerly Sec. 36-442a). Mortgage rate lock-in. (a) Duration.
(1) No mortgage lender shall commit to a first mortgage loan applicant or the applicant's
representative that the lender will make the loan at a specified rate if the loan is closed
by the expiration of a specified period of time except by issuing a mortgage rate lock-in, and the period for which the terms are locked in is at least as long as the mortgage
lender's good faith estimate of the anticipated time from when the mortgage loan application is submitted to the lender to the time when such lender will be ready to close such
loan, taking into consideration current market conditions and the processing requirements for the type of first mortgage loan in question. (2) In the event a mortgage rate
lock-in is issued after the mortgage loan application is submitted to the lender, the
minimum period for which the terms may be locked in shall be the period determined
in accordance with subdivision (1) of this subsection, less the number of days elapsed
since the application was submitted to the lender.
(b) Closing required in accordance with lock-in. Exceptions. Any first mortgage
loan application for which a mortgage rate lock-in has been issued shall, unless it is
denied in accordance with the mortgage lender's standards of creditworthiness, be closed
at the terms specified in the mortgage rate lock-in regardless of whether the specified
lock-in date has expired, unless the failure to close the first mortgage loan is the result
of the following: (1) The applicant has failed to provide information or documentation
required by the lender in a timely manner; (2) the applicant or the applicant's attorney
has failed to close the first mortgage loan on or before the date specified by the mortgage
lender; (3) the applicant has failed to produce, at or before the closing, all of the documentation specified by the mortgage loan commitment as being required for closing; or (4)
the applicant has provided or omitted any information, in the application or subsequently, which upon verification proves to be significantly inaccurate causing the need
for review or further investigation by the lender. Information is significantly inaccurate
if the information as verified would cause the applicant to be disqualified for the type
of first mortgage loan for which the applicant has applied or would cause the secondary
market source for which the first mortgage loan is being originated to refuse to purchase
the loan.
(c) Refund of fees. In any case where a first mortgage loan has not been closed,
and the application has not been rejected in accordance with the mortgage lender's
standards of creditworthiness, ninety days after the filing of an application for a first
mortgage loan with an initial loan to value ratio of eighty per cent or less or one hundred
twenty days after filing an application for a first mortgage loan with an initial loan to
value ratio of more than eighty per cent, or a first mortgage loan to be insured or guaranteed by any agency of the federal government, or any state or municipal government,
or any quasi-governmental agency, whether or not there has been a mortgage rate lock-in, the applicant shall be entitled upon written request, which shall be made not later
than thirty days after the expiration of the ninety or one-hundred-twenty-day period, as
applicable, to a full refund of all funds paid to the mortgage lender unless the failure to
close was caused by the applicant for one of the reasons set forth in subdivisions (1) to
(4), inclusive, of subsection (b) of this section or the applicant has requested a closing
date which is later than ninety days after application for a first mortgage loan with an
initial loan to value ratio of eighty per cent or less or one hundred twenty days for a first
mortgage loan with an initial loan to value ratio of more than eighty per cent or which
is to be insured or guaranteed by any agency of the federal government, or any state or
municipal government, or any quasi-governmental agency.
(d) Mortgage rate lock-in generally. Information requested by lender. For the
purposes of subsections (b) and (c) of this section:
(1) An applicant shall be deemed to have provided information or documentation
in a timely manner if such information or documentation is delivered to the mortgage
lender or a representative of the mortgage lender not later than seven calendar days after
it is requested.
(2) If a written first mortgage loan commitment issued by a mortgage lender contains
any conditions to be satisfied by the applicant, the mortgage lender shall specify a closing
date no sooner than seven calendar days after the issuance of such commitment unless
an earlier date is requested by the applicant.
(3) Any new information or documentation requested by the mortgage lender within
seven calendar days before the expiration of any rate lock-in period shall serve to extend
the rate lock-in period by seven calendar days from the date of such request. Information
or documentation is not new if the request is made necessary by inaccuracies in or
omissions from previously provided information, by changes in the information previously provided by the applicant, or questions raised as the result of appraisals, pest
inspections, water or sewer tests, engineering reports or reports of a similar nature.
(4) If an applicant chooses to change the type or amount of a first mortgage loan
for which application is made, or does not qualify for a particular type or amount of
first mortgage loan and chooses to apply for another, any mortgage rate lock-in shall
be void and any subsequent rate lock-in shall be evidenced by a new mortgage rate lock-in and the application shall be considered a new application for the purposes of sections
36a-705 to 36a-707, inclusive.
(5) A mortgage rate lock-in shall not be binding on the mortgage lender in connection with the application for any first mortgage loan which is to be insured or guaranteed
by any agency of the federal government or any state or municipal government or quasi-governmental agency in the event the loan program for which the applicant has applied
becomes unavailable subsequent to filing an application because of actions taken by
that governmental agency. In such cases the applicant shall be entitled to a refund of
all funds paid by the applicant which have not actually been expended by the mortgage
lender.
(6) If the mortgage lender requires that the closing of the first mortgage loan be
conducted by a particular attorney or law firm, and that attorney or law firm is not
available to conduct the closing before a first mortgage loan commitment period or
rate lock-in period expires, the mortgage lender shall extend the first mortgage loan
commitment or rate lock-in period until the designated attorney is available to conduct
the closing.
(P.A. 87-73, S. 2; P.A. 88-364, S. 54, 123; P.A. 04-105, S. 2.)
History: P.A. 88-364 made a technical change; Sec. 36-442a transferred to Sec. 36a-706 in 1995; P.A. 04-105 amended
Subsec. (a)(1) to substitute requirement that no mortgage lender shall commit to a first mortgage loan applicant or the
applicant's representative that lender will make the loan at a specified rate if loan is closed by expiration of specified time
period except by issuing a mortgage rate lock-in for requirement that no mortgage lender shall "enter into a mortgage rate
lock-in agreement unless such agreement is in writing", amended Subsec. (a)(2) to substitute "is issued" for "agreement
is executed", amended Subsec. (b) to eliminate references to "agreement", to substitute "date" for "period" and to make
a technical change, amended Subsecs. (c) and (d)(1) to make technical changes, amended Subsec. (d)(2) to insert "first
mortgage loan" to qualify "written commitment" and to make a technical change, amended Subsec. (d)(4) to substitute
"mortgage rate lock-in" for "rate lock-in agreement" and "written agreement" and to make a technical change, amended
Subsec. (d)(5) to eliminate reference to "agreement", and amended Subsec. (d)(6) to insert "first mortgage loan" to qualify
"commitment", effective May 21, 2004.