Sec. 36a-760c. Prohibition against making nonprime home loan when proceeds used to pay off special mortgage.
Sec. 36a-760c. Prohibition against making nonprime home loan when proceeds used to pay off special mortgage. (a) No lender shall make a nonprime home
loan where all or a portion of the proceeds are used to fully or partially pay off a special
mortgage on the same property unless the borrower has obtained a written certification
from a counselor with an independent third-party nonprofit organization approved by
the United States Department of Housing and Urban Development that the borrower
has received mortgage counseling. For purposes of this section, "special mortgage"
means a loan originated, subsidized or guaranteed by or through a state, federal, tribal
or local government, or nonprofit organization.
(b) The prohibition in subsection (a) of this section shall not apply where the borrower provides the lender with a statement from an organization described in subsection
(a) of this section, on the organization's letterhead, stating that the required counseling
is not available for at least thirty days from the date of the request for counseling.
(c) For purposes of this section, a lender shall make a good-faith effort to determine
whether the loan to be refinanced is a special mortgage, but shall not be required to
obtain the certification in subsection (a) of this section if the lender: (1) Makes a good-faith inquiry to the current holder or servicer of the loan and to the borrower as to whether
the loan is a special mortgage; and (2) does not receive an affirmative response from
either the current holder or servicer of the loan or the borrower indicating that it is a
special mortgage.
(P.A. 08-176, S. 24.)
History: P.A. 08-176 effective July 1, 2008.