§ 34-25.2-4 - Definitions.
SECTION 34-25.2-4
§ 34-25.2-4 Definitions. – The following definitions shall apply for the purposes of this chapter, unlessthe context otherwise requires:
(a) "Accelerate" means the advancing of a loan agreement'smaturity date so that payment of the entire debt is due immediately.
(b) "Affiliate" means any company that controls, iscontrolled by, or is under common control with another company, as set forth in12 U.S.C. § 1841.
(c) "Annual percentage rate" means the annual percentage ratefor the loan calculated according to the provisions of 12 C.F.R. part 226.
(d) "Bona fide discount points" means an amount knowinglypaid by the borrower for the express purpose of reducing, and which in factdoes result in a bona fide reduction of, the interest rate applicable to thehome loan; provided the undiscounted interest rate for the home loan does notexceed the conventional mortgage rate by two (2) percentage points for a homeloan secured by a first lien, or by three and one-half (3.5) percentage pointsfor a home loan secured by a subordinated lien.
(e) "Borrower" means any person obligated to repay the loan,including a co-borrower, co-signor or guarantor.
(f) "Brokering" means to act as a loan broker as defined inRhode Island general laws § 19-14-1.
(g) "Conventional mortgage rate" means the most recentlypublished annual yield on conventional mortgages published by the board ofgovernors of the Federal Reserve System, as published in statistical releaseH.15 or any publication that may supersede it, as of the applicable time setforth in 12 C.F.R. 226.32(a)(1)(i).
(h) "Conventional prepayment penalty" means any prepaymentpenalty or fee that may be collected or charged in a home loan, and that isauthorized by law other than this chapter, provided the home loan: (1) does nothave an annual percentage rate that exceeds the conventional mortgage rate bymore than two (2) percentage points; and (2) does not permit any prepaymentfees or penalties that exceed two percent (2%) of the amount prepaid.
(i) "Creditor" means any person who regularly makes availablea home loan and shall include a loan broker.
(j) "Department" means the department of business regulation.
(k) "Director" means the director of the department ofbusiness regulation.
(l) "High-cost home loan" means a home loan in which theterms of the loan meet or exceed one of more of the thresholds as defined insubsection (r) of this section.
(m) "Home loan" means a loan, including an open-end creditplan, other than a reverse mortgage transaction, where the loan is secured by:
(1) A mortgage or deed of trust on real estate in this stateupon which there is located or there is to be located a structure or structuresdesigned principally for occupancy of from one to four (4) families which is orwill be occupied by a borrower as the borrower's principal dwelling; or
(2) A security interest on a manufactured home which is orwill be occupied by a borrower as the borrower's principal dwelling.
(n) "Loan originator" means a natural person employee of alender or loan broker that is required to be licensed under Rhode Islandgeneral laws § 19-14-1 et seq., and who for or with the expectation of afee, commission or other valuable consideration and whose job responsibilitiesinclude direct contact with applicants during the loan application process,which includes soliciting, negotiating, acquiring, arranging or making mortgageloans, or who in connection with the taking of loan applications or the takingof loan pre-approval requests obtains personal financial information or otherdocuments, quotes loan rates or terms, or provides required disclosures.
(o) "Points and fees" means:
(1) All items included in the definition of finance charge in12 C.F.R. 226.4(a) and 12 C.F.R. 226.4(b) except interest or the time pricedifferential;
(2) All items described in 12 C.F.R. 226.32(b)(1)(iii);
(3) All compensation paid directly by a borrower to a loanbroker including a loan broker that originates a loan in its own name in atable-funded transaction;
(4) All compensation paid indirectly to a loan broker fromany source other than the borrower in excess of one percentage point of thetotal loan amount, including a loan broker that originates a loan in its ownname in a table-funded transaction;
(5) The cost of all premiums financed by the creditor,directly or indirectly for any credit life, credit disability, creditunemployment or credit property insurance, or any other life or healthinsurance, or any payments financed by the creditor directly or indirectly forany debt cancellation or suspension agreement or contract, except thatinsurance premiums or debt cancellation or suspension fees calculated and paidin full on a monthly basis shall not be considered financed by the creditor;
(6) The maximum prepayment fees and penalties that may becharged or collected under the terms of the loan documents; and
(7) All prepayment fees or penalties that are incurred by theborrower if the loan refinances a previous loan originated or currently held bythe same creditor or an affiliate of the creditor.
(8) For open-end loans, the points and fees are calculated byadding the total points and fees known at or before closing, including themaximum prepayment penalties which may be charged or collected under the termsof the loan documents, plus the minimum additional fees the borrower would berequired to pay to draw down an amount equal to the total credit line.
(9) Points and fees shall not include:
(i) Points and fees up to and including one percent (1%) ofthe total loan amount attributable to bona fide fees paid to a federal or stategovernment agency that insures payment of some portion of a home loan plus anamount not to exceed two percent (2%) of the total loan amount attributable toa bona fide discount points or a conventional prepayment penalty. In no caseshall the total excluded points and fees in connection with a home loan exceedthree percent (3%) of the total loan amount;
(ii) Taxes, filing fees, recording and other charges and feespaid or to be paid to public officials for determining the existence of or forperfecting, releasing or satisfying a security interest; or
(iii) Bona fide and reasonable fees paid to a person otherthan the creditor or an affiliate of the creditor for the following: fees fortax payment services; fees for flood certification; fees for pest infestationand flood determination; appraisal fees; fees for inspections performed priorto closing; credit reports; surveys; attorneys' fees; notary fees; escrowcharges, so long as not otherwise included under subparagraph (1) of thisparagraph; title insurance premiums; and fire and hazard insurance and floodinsurance premiums, provided that the conditions in 12 C.F.R. 226.4(d)(2) aremet; or
(p) "Predatory lending" means any act and practice which isfound in violation of those acts and practices prohibited by §§34-25.2-5 and 34-25.2-6 of this chapter.
(q) "Tangible, net benefit" means at the time of refinancinga home loan(s), the new home loan(s) meet, at a minimum, one of the following:
(1) The borrower's new monthly payment(s) is lower than thetotal of all monthly obligations being financed, taking into account the costsand fees as disclosed on the HUD-1 settlement statement;
(2) There is a beneficial change in the amortization periodof the new loan(s);
(3) The borrower receives cash in excess of the costs andfees, as disclosed on the HUD-1 settlement statement, as part of therefinancing;
(4) The borrower's current note rate of interest is reduced,or in the event more than one loan in being refinanced, the weighted averagenote rate of the current loans is reduced;
(5) There is a change from an adjusted rate loan(s) to afixed rate loan(s); or
(6) The refinancing is necessary to respond to a bona fidepersonal need or an order of a court of competent jurisdiction.
(r) "Threshold" means any one of the following two (2) items,as defined:
(1) "Rate threshold" means:
(i) For a first lien mortgage home loan, an interest rateequal to eight (8) percentage points over the yield on comparable United Statestreasury securities on the fifteenth (15th) day of the month immediatelypreceding the month in which the loan application was received by the lender;and
(ii) For a subordinate mortgage lien, an interest rate equalto nine (9) percentage points over the yield on comparable United Statestreasury securities on the fifteenth (15th) day of the month immediatelypreceding the month in which the loan application was received by the lender;
(2) "Total points and fees threshold" means:
(i) For loans in which the total loan amount is fiftythousand dollars ($50,000) or more, the total points and fees payable inconnection with the home loan less any excluded points and fees exceed fivepercent (5%) of the total loan amount; and
(ii) For loans in which the total loan amount is less thanfifty thousand dollars ($50,000) the total points and fees payable inconnection with the home loan less any excluded points and fees exceed eightpercent (8%) of the total loan amount.
(s) "Total loan amount" means the total amount the consumerwill borrow, as reflected by the face amount of the note. For open-end loans,the total loan amount shall be calculated using the total line of creditallowed under the home loan at closing.