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D.C. Municipal Regulations (Last Updated: September 13, 2017) |
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Title 26. INSURANCE, SECURITIES, AND BANKING |
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SubTilte 26-C. BANKING AND FINANCIAL INSTITUTONS |
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Chapter 26-C20. PREDATORY LENDING |
Section 26-C2099. DEFINITIONS
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2099.1For the purpose of this chapter, the following terms have the meaning ascribed:
"Act" - the Home Loan Protection Act of 2002 (D.C. Law 14-132; D.C. Official Code §§ 26-1151.01 et seq. (2001)).
"Department" - the Department of Insurance, Securities and Banking.
"District" - the District of Columbia.
"Federally regulated lender" - a lender regulated and supervised by a supervising federal agency, as defined by section 101(26) of the Act, and the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation.
APPENDIX
FORM 1 - "RED FLAG" WARNING DISCLOSURE NOTICE
FORM 2 - SAMPLE LETTER OF TRANSMITTAL
FORM 3 - NOTICE OF COVERED LOAN
FORM 1
"RED FLAG" WARNING DISCLOSURE NOTICE
This notice concerns your application for a loan to be secured by your home. Your mortgage broker or lender should provide this notice to you at least 3 days before the closing of your loan.
You should fully understand the information in this form before you close on your loan or sign any loan documents or agreements. This form will assist you in determining whether your mortgage broker or lender may be engaging in predatory lending practices in violation of District of Columbia law and provide you with information regarding mortgage loans and housing counseling.
REMEMBER:
· A MORTGAGE GIVES A LENDER THE RIGHT TO FORECLOSE ON YOUR HOME!
· IF YOU CANNOT OR DO NOT PAY THE MONTHLY MORTGAGE PAYMENTS ON TIME, YOUR HOME CAN BE SOLD AND YOU COULD LOSE YOUR EQUITY IN YOUR HOME AND BE EVICTED!
If you answer yes to one or more of the following questions, your lender may be engaging in predatory lending practices in violation of the District of Columbia Home Loan Protection Act of 2002 (D.C. Law 14-132; D.C. Official Code §§ 26-1151.01 et seq. (2001)).
Please note: This list is not exclusive and does not contain all the possible lending abuses and violations that may occur. The District of Columbia Department of Insurance, Securities and Banking ("Department") highly recommends that you seek assistance or advice from a housing counselor, your attorney, accountant or financial advisor before you sign any loan agreement. A list of housing counseling agencies is available from the Department's website which can be found at www.disbbfi@dc.gov, or from the Department at 810 First Street, N.E., Washington, D.C. 20002.
1.Red Flag Warning: Unaffordable Loan. Will you spend 50% or more of your gross monthly income for the new monthly mortgage payment or be unable to make the monthly payments on your new loan on a timely basis? If your answer is yes, your lender may be making a loan to you that you are unable to afford.
2(a).Red Flag Warning: Financed Credit Insurance. Have you purchased single-premium credit life, accident, health, or unemployment insurance with your new loan and is the single-premium credit insurance being financed through your loan? If your answer is yes, your lender may be engaging in a predatory lending activity.
2(b).Red Flag Warning: Disclosure Requirement. Have you purchased credit insurance on a basis other than a prepaid single premium basis and have you failed to receive a clear and conspicuous disclosure at least 3 days before the closing of your loan that states that the credit insurance is not a condition of the mortgage loan and that you may elect not to purchase the insurance? If your answer is yes, your lender may be engaging in a predatory lending activity.
2(c).Red Flag Warning: Insurance, Debt Cancellation, or Suspension Services. Have you purchased any insurance, debt cancellation, or suspension services and failed to receive a disclosure notice regarding the insurance, debt cancellation, or suspension services? If your answer is yes, your lender may be engaging in a predatory lending activity.
3.Red Flag Warning: Repeated Refinancings. Have you refinanced your home more than once in the last 18 months and your lender is financing points from your previous loan and other fees in your new loan in excess of $400 or 3% of the new loan principal? If your answer is yes, your lender may be engaging in repeated refinancings or "flipping" of your home in violation of the law.
4.Red Flag Warning: Encouraging Nonpayment. Have you been informed by your lender or broker that, because you are refinancing, you should not continue to pay on your existing loan? If your answer is yes, your lender or broker may be encouraging you to default on your existing loan in anticipation of refinancing in violation of the law.
5.Red Flag Warning: Unfair Steering. Do you have a new loan with an annual percentage rate greater than the rate you think you would otherwise have qualified for or did your lender or broker make a false, deceptive, or misleading statement regarding your ability to qualify for any mortgage loan based upon your credit score? If your answer is yes, your lender may be using your credit scores inaccurately or improperly in violation of the law.
6.Red Flag Warning: Failure To Report Good Payment History. Was your favorable payment history and information not reported to a nationally recognized credit reporting agency for a period of more than 12 months? If your answer is yes, your lender could be failing to report your favorable credit history and may be in violation of the law.
7(a).Red Flag Warning: Home Improvement Contracts. Will a home improvement contractor be paid from the proceeds of your loan without your approval or consent? If your answer is yes, your lender may be paying a home improvement contractor in violation of the law.
7(b).Red Flag Warning: Bonded and Licensed Home Improvement Contractors. Is the home improvement contractor working on your home not licensed with the District of Columbia Government? If your answer is yes, your lender or broker may be working with an unlicensed home improvement contractor in violation of the law.
8.Red Flag Warning: Increased Interest Rate On Default. Do you have a loan that includes a provision that increases the loan's interest rate upon default? If your answer is yes, your lender may be engaging in a predatory lending activity.
9.Red Flag Warning: Improper Fees. Have you been charged fees for services that are not actually performed or charged loan discount points that do not reduce your interest rate? If your answer is yes, your lender or broker may be engaging in a predatory lending activity.
10.Red Flag Warning: Failure To Provide Notice. Did you fail to receive a copy of this "Red Flag Warning Disclosure Notice" from your lender or broker at least 3 days prior to closing your loan? If your answer is yes, your lender or broker may have failed to timely send you a required disclosure notice in violation of the law.
11.Red Flag Warning: Prepayment Penalty. Have you been charged a prepayment premium, fee or charge payable more than 3 years after the closing of your loan? If your answer is yes, your lender may be engaging in a predatory lending activity.
12.Red Flag Warning: Balloon Payment. Do you have a loan with a scheduled balloon payment in less than 7 years? If your answer is yes, your lender may be engaging in a predatory lending activity.
13.Red Flag Warning: Call Provision. Does your loan contain a provision that permits your lender to accelerate your debt? If your answer is yes, your lender may be engaging in a predatory lending activity.
14.Red Flag Warning: Negative Amortization. Does your loan include a payment schedule with regular periodic payments that causes the principal balance to increase? If your answer is yes, your lender may be engaging in a predatory lending activity.
15.Red Flag Warning: Advance Payment. Does your loan include terms under which your regular periodic payments required by your loan are paid in advance using proceeds from your loan? If your answer is yes, your lender may be engaging in a predatory lending activity.
16.Red Flag Warning: Advance Waiver. Have you waived a violation of law with respect to any provision of your new loan in advance of finalizing your loan? If your answer is yes, your lender may be imposing an advance waiver provision on you in violation of the law.
17.Red Flag Warning: Oppressive Mandatory Arbitration. Does your new home loan contain any oppressive mandatory arbitration clauses? If your answer is yes, your lender may be engaging in a predatory lending activity.
18.Red Flag Warning: Homeownership Counseling. Has your lender failed to inform you of your right to obtain counseling in connection with your loan and failed to provide this notice to you within 3 days of the closing of your loan? If your answer is yes, your lender may be engaging in a predatory lending activity.
REMEMBER
A MORTGAGE GIVES A LENDER THE RIGHT TO
FORECLOSE ON YOUR HOME!
IF YOU CANNOT OR DO NOT PAY THE MONTHLY
PAYMENTS ON TIME, YOUR HOME CAN BE SOLD AND YOU
COULD LOSE YOUR EQUITY IN YOUR HOME AND BE
EVICTED!Please sign below to acknowledge that you have received this notice and provide the date the lender or broker provided you with this notice:
I hereby certify that this form was delivered to me.
_____________________
Signature
____________________
Name (Please Print)
____________________
Date
FORM 2
SAMPLE LETTER OF TRANSMITTAL
SUBMISSION OF LOAN DOCUMENTS TO
THE DEPARTMENT OF BANKING
AND FINANCIAL INSTITUTIONSGennet Purcell
Acting Commissioner
Department of Insurance, Securities and Banking, 810 First Street, N.E., Suite 701
Washington, D.C. 20002
Dear Commissioner Purcell:
Pursuant to section 221 of the Home Loan Protection Act of 2002 and 26A DCMR § 2008, I am submitting the attached loan documents for the following loan:
Name of borrower:
Address of property:
Lot and Square No.
Loan Identification No.
The attached loan documents include a copy of the settlement statement; the FP 7/C Form filed with the Office of the Recorder of Deeds; the final Truth-in-Lending Act disclosure; and the note. I hereby certify that the attached documents are true copies of the original documents.
Thank you for your assistance.
Ann Jones
Compliance Officer
ABC Mortgage Company
Anywhere City, Anywhere State Zip code
Telephone #
Fax #
E-Mail address
FORM 3
NOTICE OF COVERED LOAN
REGARDING SALE OR ASSIGNMENT OF A COVERED LOAN
THE ATTACHED LOAN HAS BEEN DETERMINED TO
BE A "COVERED LOAN" UNDER DISTRICT OF
COLUMBIA LAW
PLEASE NOTE THAT "COVERED LOANS" ARE ENTITLED TO VARIOUS PROTECTIONS UNDER THE HOME LOAN PROTECTION ACT OF 2002 (LAW 14-132; D.C. OFFICIAL CODE §§ 26-1151.01 et seq (2001)) ("ACT") AND ASSIGNEES MAY BE LIABLE UNDER THE ACT FOR VIOLATIONS OF THE ACT.