District of Columbia Origination Reference Guide
- Kacey Olson
Owned by Kacey Olson
| Citation | Topic | Requirement |
| Mortgage Lenders and Brokers Act / D.C. Code Ann. §26-1114(a) | Acceleration Clause Declaring Mortgage Due for Reasons other than Failure to Perform Obligations | A mortgage lender, mortgage broker, mortgage loan originator, loan officer, or person required to be licensed under the MLBA may not obtain any agreement or instrument executed by a borrower which contains an acceleration clause permitting the unpaid balance of a mortgage loan to be declared due for any reason other than failure to make timely payments of interest and principal or to perform other obligations undertaken in the agreement or instrument. |
| Mortgage Lenders and Brokers Act / D.C. Mun. Regs. tit. 26C, §1116.2 | Addendums to Mortgage Loan Application | In addition to the above required information, the following information must be included in, or attached to, a mortgage loan application if available at the time of the application: (1) the cost of the mortgage loan, including the annual percentage rate, interest rate, broker compensation, lender compensation, and finance charge; (2) the date of maturity of the proposed loan; (3) disclosure as to whether the interest rate is fixed or variable; (4) for proposed loans with a proposed variable rate of interest, disclosure of the index used for adjustments, limits on adjustments, and the adjustment period; (5) disclosure as to whether the loan may result in a balloon payment; and (6) non-conventional mortgage disclosure requirements as prescribed by the Mortgage Lenders and Brokers Act. If a mortgage loan application is approved and executed without the above required information, the mortgage loan application will be voidable by the borrower, prior to the loan closing, and any fees submitted by the borrower in connection with the application must be returned to borrower in the event the borrower voids the mortgage loan application as per D.C. Mun. Regs. tit. 26C, §1116.3. |
| Home Loan Protection Act / D.C. Code Ann. §26-1152.13 | Balloon Payments | A lender may not make a covered loan that provides for a scheduled payment that is more than twice as large as the average of earlier scheduled monthly payments unless the balloon payment becomes due and payable not less than 7 years after the date of the loan closing. This restriction does not apply if the payment schedule is adjusted to account for the seasonal or irregular income of the borrower or if the loan is a bridge loan connected with or related to the acquisition or construction of a dwelling intended to become the borrower's principal dwelling. |
| Mortgage Lenders and Brokers Act / D.C. Code Ann. §26-1114(a) | Blank Spaces | A mortgage lender, mortgage broker, mortgage loan originator, loan officer, or person required to be licensed under the MLBA may not obtain any agreement or instrument in which blanks are left to be filled in after execution. |
| Mortgage Lenders and Brokers Act / D.C. Mun. Regs. tit. 26C, §1116.5 | Borrower Repayment Ability | The current income, current debt, currents assets, current liabilities, employment, and other sources of revenue of each borrower must be verified and documented in order to determine the borrower's ability to repay a loan secured by a residential lien instrument as per D.C. Mun. Regs. tit. 26C, §1116.4. A licensee must demonstrate the preparation and use of an analysis of the borrower's ability to repay the loan and the analysis must be retained in the loan file. The licensee must act in good faith in the best interest of the borrower. |
| Mortgage Lenders and Brokers Act / D.C. Mun. Regs. tit. 26C, §1117.1 | Commitment Letter | A written commitment must include the following: (1) identification of the real property intended to secure the mortgage loan, if available; (2) the principal amount and maturity term of the mortgage loan; (3) the interest rate and points for the mortgage loan if the commitment agreement is also a lock-in agreement, or a statement that the mortgage loan will be made at the mortgage lender's prevailing rate and points for loans at the time of closing or a specified number of days prior to closing; (4) the amount of any commitment fee and the time within which the commitment fee must be paid; (5) disclosure as to whether funds will be escrowed and, if so, the purpose of the escrow; (6) disclosure as to whether private mortgage insurance or any other type of insurance is required; (7) the length of the commitment period; (8) a statement that if the mortgage loan is not closed, for any reason, within the commitment period, the mortgage lender is no longer obligated by the commitment agreement and any commitment fee paid must be refunded to the borrower; (9) a statement that the agreement is binding on both parties (the statement must be disclosed in bold-faced type and at least a font size greater than the other language in the agreement); (10) any other reasonable terms and conditions that the mortgage lender elects to disclose in the commitment agreement; and (11) the NMLS unique identifier of the mortgage lender, broker and loan originator. |
| Mortgage Lenders and Brokers Act / D.C. Code Ann. §26-1113(b)(2) | Commitment Letter Waiver (72 Hour Notice) | Prior to execution of the financing agreement, the borrower may waive in writing the 72-hour advance presentation requirement and accept the commitment at settlement only if compliance with the 72-hour requirement is shown by the lender to be infeasible. |
| Home Loan Protection Act / D.C. Code Ann. §26-1152.02(a) | Confirmation of Intent to Contribute to Covered Loan Payments, Taxes, and Insurance | A lender may not include or add a borrower to the covered loan who did not own or reside in the property securing the covered loan prior to the covered loan transaction for the purpose of increasing the income and ability of the borrowers owning or residing in the residential real property to make all the scheduled payments of interest, principal, mortgage insurance premiums, and escrow deposits for, or direct payment of, real estate taxes and property insurance premiums, unless the included or added borrower separately confirms in writing to the lender that the borrower expects and commits to make or substantially contribute to: (1) the scheduled payments on the covered loan; and (2) escrow deposits for or direct payment of real estate taxes and property insurance premiums. |
| Mortgage Lenders and Brokers Act / D.C. Code Ann. §26-1114(b) | Disclosure of Dual Capacity | If a mortgage broker, or any person affiliated with a mortgage broker acts as a real estate broker, agent, or salesperson in connection with the sale of real estate which secures the mortgage loan and the mortgage broker or affiliated person receives compensation, this notice must be given in writing to the borrower: The notice must be at least 10-point type and the prospective borrower is required to acknowledge receipt of the written notice. The phrase “person affiliated with the mortgage broker” means any person which is a subsidiary, stockholder, partner, trustee, director, member, officer, or employee of a mortgage broker, and any corporation, 10% or more of the capital stock of which is owned by a mortgage broker or by any person which is a subsidiary, stockholder, partner, trustee, director, member, officer, or employee of a mortgage broker. |
| Mortgage Lenders and Brokers Act / D.C. Mun. Regs. tit. 26C, §1103.1 | Disclosure of Loan Originator's License Number | A mortgage loan originator must disclose the mortgage loan originator's license number to all clients and residential mortgage loan applicants in writing at the time a fee is paid or a mortgage loan application is accepted. |
| Mortgage Lenders and Brokers Act / D.C. Code Ann. §26-1115(b) | Escrow Account Statement | A mortgage lender may not require any borrower who, on the date of execution of the loan or financial transaction, has made a down payment equaling 20% or more of the total purchase price of the property or who has an equity interest in the property equal to, or greater than, 20% of the fair market value of the property, to make advance payments of the real estate taxes or casualty insurance premiums to enable the mortgage lender to have funds on hand for disbursement for payment of taxes or insurance premiums. Mortgage lenders must provide borrowers with a separate statement, in writing, which clearly and conspicuously sets forth the right to pay taxes and insurance premiums directly. |
| Mortgage Lenders and Brokers Act / D.C. Code Ann. §26-1114(a) | Exclusive Dealings or Agencies | A mortgage lender, mortgage broker, mortgage loan originator, loan officer, or person required to be licensed under the MLBA may not obtain any exclusive dealing or exclusive agency agreement from any borrower. |
| Mortgage Lenders and Brokers Act / D.C. Code Ann. §26-1113(a) | Financing Agreement | A licensee who offers to make or procure a loan secured by a first or subordinate mortgage or deed of trust on a 1- to 4-family home to be occupied by the borrower must provide the borrower with a financing agreement executed by the lender. The financing agreement must provide: (1) the term and principal amount of the loan; (2) an explanation of the type of mortgage loan being offered; (3) the rate of interest that will apply to the loan and, if the rate is subject to change, or is a variable rate, or is subject to final determination at a future date based on some objective standard, a specific statement of those facts; (4) the points and all fees, if any, to be paid by the borrower or the seller, or both; and (5) the term during which the financing agreement remains in effect. If all the provisions of the financing agreement are not subject to future determination, change, or alteration, the financing agreement constitutes a final binding agreement between the parties as to the items covered by the financing agreement. |
| Mortgage Lenders and Brokers Act / D.C. Mun. Regs. tit. 26C, §1117.5 | Lock-In Agreement | The lock-in agreement must include the following: (1) the interest rate and points for the mortgage loan, and if the rate is an adjustable rate, disclosure of the initial rate, the index used for adjustments, limits on adjustments, and the adjustment period; (2) the amount of any lock-in fee and the time within which the lock-in fee must be paid; (3) the length of the lock-in period; (4) a statement that if the mortgage loan is not closed within the lock-in period, for any reason, the mortgage lender is no longer obligated by the lock-in agreement and any lock-in fee paid by the borrower must be refunded; (5) a statement that any terms not locked-in by the lock-in agreement are subject to change until the mortgage loan is closed at settlement; and (6) any other reasonable terms and conditions of the lock-in agreement required by the lender. |
| Mortgage Lenders and Brokers Act / D.C. Code Ann. §26-1114(b) | Mortgage Broker Compensation | A mortgage broker may not: (1) receive compensation from a mortgage lender of which he is a principal, partner, trustee, director, member, officer, or employee; (2) receive compensation from a borrower in connection with any mortgage loan transaction in which he is the lender or a principal, partner, trustee, director, member, officer, or employee of the mortgage lender. |
| Mortgage Lenders and Brokers Act / D.C. Mun. Regs. tit. 26C, §1116.1 | Mortgage Loan Applications | Each application for a proposed mortgage loan must be signed and dated by each borrower on each page of the mortgage loan application and must contain, or have attached to the application, at a minimum, the following information: (1) the name, social security number, address, telephone number, and source of income of each borrower; (2) the address and legal description, if available, of the real property that is being secured by the loan; (3) the principal amount of the loan requested; (4) the current income and current debt of each borrower as provided by each borrower; (5) the current assets and current liabilities of each borrower as provided by each borrower; (6) disclosure as to whether the loan will refinance a prior loan secured by the same real property; (7) if the loan will refinance a prior loan secured by the same real property, the purpose of the refinancing, and the amount of the loan that is being refinanced; and (8) the Nationwide Mortgage Licensing System and Registry unique identifier of the mortgage loan originator. |
| Mortgage Lenders and Brokers Act / D.C. Code Ann. §26-1113(a-1) | Non-Conventional Mortgage Disclosure Form | A “non-conventional mortgage loan” is any mortgage loan that is not a fixed-rate mortgage loan with an amortization period of 30 years or less. Within 3 business days of an application for a non-conventional mortgage loan, the licensee must provide to the borrower a Non-Conventional Mortgage Disclosure Form. The disclosure (including the required definitions and explanations) must be given to the borrower in a prominent form, separate from other disclosures, in either electronic or physical form and: (1) in a 12-point font; (2) in plain English or in the language of the mortgage lender's presentation to the borrower; and (3) if given to the borrower on a physical piece of paper, must be printed on a red piece of paper measuring 8.5 inches by 11 inches. Within 5 business days of receiving the disclosure from the lender, the borrower may cancel the application for a mortgage loan with no loss of any security deposit or any other funds applied to guarantee an interest rate, not including reasonable fees incurred to process the application. The borrower must be notified of this right to cancel at the time the mortgage lender provides the disclosure. A non-conventional mortgage loan may not be consummated unless the borrower has signed the disclosure and returned it to the mortgage lender. |
| Home Loan Protection Act / D.C. Code Ann. §26-1152.03 | Optional Insurance Disclosure | A lender may not sell any individual or group credit life, accident, health, or unemployment insurance product on a prepaid single premium basis in conjunction with a covered loan. Credit insurance sold by a lender on a basis other than a prepaid single premium must be accompanied by a clear and conspicuous disclosure, provided at least 3 days before closing, stating that the credit insurance is not a condition to the extension of mortgage credit and that the borrower may elect not to purchase the insurance. Insurance premiums or debt cancellation or suspension fees calculated and paid on a monthly or bi-weekly basis will not be considered financed by the lender if the disclosure is provided to the borrower for any insurance, debt cancellation, or suspension services purchased by the borrower. |
| Interest and Usury / D.C. Code Ann. §28-3311(a) | Optional Insurance Request Form | Premiums for credit life, accident, health, or loss-of-income insurance will not be considered interest if: (1) the insurance coverage is in fact not required by the lender and this fact is clearly and conspicuously disclosed; (2) the borrower signs or initials an affirmative written request for the insurance after receiving the disclosures specified in item (1); and (3) the terms of and premiums for the insurance coverage are disclosed. |
| Home Loan Protection Act / D.C. Code Ann. §26-1152.12 | Prepayment Penalties | A lender may not include in a covered loan or collect or attempt to collect any prepayment premium, fee, or charge in violation of D.C. Code Ann. §28-3301. |
| Mortgage Lenders and Brokers Act / D.C. Code Ann. §26-1114(d) | Property Insurance in Excess of Replacement Cost | A mortgage loan originator or loan officer required to be licensed under the MLBA may not cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer. |
| Mortgage Lenders and Brokers Act / D.C. Code Ann. §26-1114(a) | Receipt of Compensation Prior to Providing Written Commitment to Make a Mortgage Loan | A mortgage lender, mortgage broker, mortgage loan originator, loan officer, or person required to be licensed under the MLBA may not receive compensation from a borrower until a written commitment to make a mortgage loan is given to the borrower by a mortgage lender which written commitment must be given not less than 72 hours prior to the closing of the mortgage loan, unless this time period is waived by the borrower. This restriction does not apply to an application fee in an amount not to exceed 1% of the original principal amount of the mortgage loan applied for, and documented costs of credit reports and appraisals. |
| Home Loan Protection Act / D.C. Code Ann. §26-1152.11 | Red Flag Warning Disclosure Notice | A lender must send a Red Flag Warning Disclosure Notice to the borrower when making a covered loan and the notice must be received by the borrower at least 3 business days prior to closing of the loan. If the loan is originated with the assistance of a mortgage broker, the mortgage broker must provide the Red Flag Warning Disclosure Notice. Only 1 Red Flag Warning Disclosure Notice must be provided to each borrower. |
| Home Loan Protection Act / D.C. Code Ann. §26-1152.04 | Refinancing Restrictions | If a lender refinances a loan secured by the same residential real property to the same borrower which was made 18 months or less before the covered loan is made, the same lender may not finance, directly or indirectly, any portion of the covered loan's origination/discount points and fees or other fees payable to the lender or any third party in excess of the greatest of: (1) 3% of the new covered loan principal amount actually funded; (2) $400; or (3) the amount as the Department may establish by regulation. This restriction on the financing of origination/discount points and fees or other fees payable to the lender or any other third party does not include: (A) reasonable charges described in 12 C.F.R. §1026.4(c); and (B) bona fide loan discount points. |
| Insurance and Securities / D.C. Code Ann. §31-2231.20(c) | Right to Choose Insurance Provider | A person who lends money or extends credit and who solicits insurance on real and personal property must explain to the borrower in writing that the insurance related to the credit extension may be purchased from an insurer or agent of the borrower's choice, subject only to the lender's right to reject a given insurer or agent. Compliance with disclosures as to insurance required by truth in lending laws or comparable state laws also constitutes compliance. Lenders are not prohibited from placing insurance on real or personal property if the mortgagor, borrower, or purchaser has failed to provide required insurance in accordance with the terms of the loan or credit document. |