New Mexico Origination Reference Guide
- Kacey Olson
Owned by Kacey Olson
Aug 29, 2017
9 min read
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| Citation | Topic | Requirement |
| Mortgage Loan Company Regulations / N.M. Admin. Code tit. 12, §19.8.8(D) | Advance Fee Agreement | If a mortgage loan company requires a deposit in connection with an application for a mortgage loan, there must be a written agreement between the applicant and the mortgage loan company setting forth the disposition of the deposit, whether the loan is finally consummated or not. |
| Mortgage Loan Originator Licensing Act / N.M. Stat. Ann. §58-21B-20(A) | All Qualified Loan Products | A mortgage loan originator must disclose to the borrower the existence of all loans available to the mortgage loan originator, for which the borrower qualifies, that have terms that are as favorable or more favorable than those loans offered to the borrower by the mortgage loan originator. |
ARM Loan Prohibitions | A lender may not make or originate an adjustable rate home loan, except a home equity line of credit, where the interest rate and payment may change more frequently than annually during the term of the loan. In addition, a lender may not make an adjustable rate home loan, except a home equity line of credit, where: (1) the initial interest rate may be increased by more than 2% for loans with initial periods less than 5 years and 6% for loans with initial periods equal to or greater than 5 years; (2) a periodic interest rate may be increased by more than 2%; and(3)a lifetime interest rate cap is more than 6% over the initial rate. “Home loan” means a loan, including an open-end credit plan, but not including a reverse mortgage transaction or a bridge loan, where the principal amount does not exceed the conforming loan size limit for a single-family dwelling as established by Fannie Mae and where the loan is secured by: (1) a mortgage or deed of trust on real estate in New Mexico upon which a structure resides or will reside: (A) designed principally for occupancy by 1 to 4 families; and (B) that is or will be occupied by a borrower as the borrower's principal residence; or (2) a security interest on a manufactured home that is or will be occupied by a borrower as the borrower's principal residence. | |
| Home Loan Protection Act Regulations / N.M. Admin. Code tit. 12, §15.3.12(D) | ARM Qualifying Rate | When calculating the interest rate for adjustable rate loans, the creditor may not use any introductory rate. The interest rate will be based on the loan's disclosed index plus the margin, which is the fully indexed rate, at the time the loan is made. As an example, if the index is 2% and the margin is 3% for a first lien mortgage, the interest rate is 5% (fully indexed rate). |
| Insurance Regulations / N.M. Admin. Code tit. 13, §7.2.9 | Authorization for Lender to Obtain Insurance | If after the Freedom to Choose Insurance Company and Insurance Professional disclosure is executed (if executed) by the applicant, and the applicant authorizes the lender to obtain this insurance, the lender must obtain authorization. |
Balloon Loans Prohibited | A lender may not make or originate a home loan that includes terms under which more than 2 periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the borrower. “Home loan” means a loan, including an open-end credit plan, but not including a reverse mortgage transaction or a bridge loan, where the principal amount does not exceed the conforming loan size limit for a single-family dwelling as established by Fannie Mae and where the loan is secured by: (1) a mortgage or deed of trust on real estate in New Mexico upon which a structure resides or will reside: (A) designed principally for occupancy by 1 to 4 families; and (B) that is or will be occupied by a borrower as the borrower's principal residence; or (2) a security interest on a manufactured home that is or will be occupied by a borrower as the borrower's principal residence. | |
| Home Loan Protection Act / N.M. Stat. Ann. §58-21A-5(D) | Credit Counseling Certification | A lender may not make a high-cost home loan without first receiving certification from a third-party, nonprofit counselor approved by HUD or the New Mexico Mortgage Finance Authority that the borrower has received counseling on the advisability of the loan transaction. |
Credit Insurance Financing | In connection with a home loan, a lender may not directly or indirectly finance credit life, credit disability, credit unemployment insurance, credit property insurance, any other life or health insurance, or any payments directly or indirectly for any debt cancellation or suspension agreement or contract. This does not prohibit the payment or receipt of insurance premiums or debt cancellation or suspension fees calculated on the unpaid balance of a home loan and paid on a monthly basis. “Home loan” means a loan, including an open-end credit plan, but not including a reverse mortgage transaction or a bridge loan, where the principal amount does not exceed the conforming loan size limit for a single-family dwelling as established by Fannie Mae and where the loan is secured by: (1) a mortgage or deed of trust on real estate in New Mexico upon which a structure resides or will reside: (A) designed principally for occupancy by 1 to 4 families; and (B) that is or will be occupied by a borrower as the borrower's principal residence; or (2) a security interest on a manufactured home that is or will be occupied by a borrower as the borrower's principal residence. | |
| Mortgage Loan Company Act / N.M. Stat. Ann. §58-21-23.2(A) | Delivery of Net Funds | Unless the net loan funds necessary to complete a purchase of real property have been previously delivered to the seller or to the closing agent, a lender must deliver the required net loan funds within 2 business days of the time that the lender deems the closing agent has fulfilled the requirements of the closing agent's duties, except for the recordation of documents. |
| State Bar v. Guardian Abstract & Title Co., Inc., 575 P.2d 943, 949 (N.M. 1978) | Document Preparation Fee | “[T]he making of separate additional charges to fill in the blanks would be considered the ‘practice of law,’ for the reason that it would place emphasis on conveyancing and legal drafting as a business rather than on the business of the title company.” |
Escrow Account Required | A lender may not make a home loan with an 80% or higher loan-to-value ratio for an owner-occupied residence if the lender has failed to establish an escrow account for the payment of real estate taxes and property insurance. “Home loan” means a loan, including an open-end credit plan, but not including a reverse mortgage transaction or a bridge loan, where the principal amount does not exceed the conforming loan size limit for a single-family dwelling as established by Fannie Mae and where the loan is secured by: (1) a mortgage or deed of trust on real estate in New Mexico upon which a structure resides or will reside: (A) designed principally for occupancy by 1 to 4 families; and (B) that is or will be occupied by a borrower as the borrower's principal residence; or (2) a security interest on a manufactured home that is or will be occupied by a borrower as the borrower's principal residence. | |
Insurance Code & Insurance Regulations / N.M. Stat. Ann. §59A-16-14(A) | Freedom to Choose Insurance Company and Insurance Professional | A lender may not require a borrower to negotiate any policy of insurance or renewal of insurance through a particular insurer, agent, solicitor or broker as a condition to making a loan. The lender must inform the borrower of these rights. |
| Mortgage Loan Originator Licensing Act / N.M. Stat. Ann. §58-21B-20(B) | Mortgage Loan Summary | If not provided by the mortgage loan company, a mortgage loan originator shall, in addition to all other disclosures required by statute or common law: (1) disclose at least two days prior to closing of the loan the total amount of any compensation the mortgage loan company expects to receive specific to the loan being offered, including origination fees, broker fees, yield spread premiums and other fees payable to the mortgage loan company by the lender or other third party at the time the loan is funded to the borrower; and (2) clearly and conspicuously disclose in writing a mortgage loan summary, as specified by the director by rule. |
| Loan Originator Licensing Act / N.M. Stat. Ann. §58-21B-24 | NMLS Unique Identifier | The NMLS unique identifier of any person originating a residential mortgage loan must be clearly shown on all residential mortgage loan application forms, solicitations or advertisements, including business cards or web sites, and on any other documents as established by rule or order of the Director. |
| Home Loan Protection Act / N.M. Stat. Ann. §58-21A-3 | Notice of Right to Select Attorney | Attorney’s fees are excluded from the definition of “Points and Fees” if the borrower has the right to select the attorney from an approved list or otherwise. |
| Home Loan Protection Act / N.M. Stat. Ann. §58-21A-5(E) | Notice to Borrower | A lender may not make a high-cost home loan unless this disclosure has been issued at least 3 days prior to closing. See High Cost Determination. |
| Commercial Instruments and Transactions / N.M. Stat. Ann. §56-8-30 | Prepayment Penalty Restrictions | Prepayment penalties are prohibited on "home loans" in NM. “Home loan” means a loan, including an open-end credit plan, but not including a reverse mortgage transaction or a bridge loan, where the principal amount does not exceed the conforming loan size limit for a single-family dwelling as established by Fannie Mae and where the loan is secured by: (1) a mortgage or deed of trust on real estate in New Mexico upon which a structure resides or will reside: (A) designed principally for occupancy by 1 to 4 families; and (B) that is or will be occupied by a borrower as the borrower's principal residence; or (2) a security interest on a manufactured home that is or will be occupied by a borrower as the borrower's principal residence |
Rate Lock Agreement | Mortgage loan companies must provide rate lock disclosures to and enter into signed lock-in agreements with borrowers. The borrower may choose to: (1) rate float, which means that a loan rate has not been locked in and the borrower is responsible for instructing the mortgage loan company when to lock in the loan rate; or (2) lock in a rate, which means the mortgage loan originator must lock in a loan rate (the rate lock-in must include the loan interest rate, pricing, terms, lock-in period and any fees required for an extension of the lock-in period). The mortgage loan company may use a rate lock disclosure form of the mortgage loan company's choosing; however, the rate lock disclosure must include: (1) a rate float option, which means that a loan rate has not been locked in and the borrower is responsible for instructing the mortgage loan company when to lock in the loan rate; (2) the lock-in loan interest rate, which means the mortgage loan originator must lock in a loan rate; (3) the loan pricing for the lock-in interest rate; (4) the loan terms; (5) the loan lock-in period; and (6) any fees required for an extension of the lock-in period. | |
Reasonable Tangible Net Benefit Worksheet (Optional Form) | A lender may not knowingly and intentionally engage in the unfair act or practice of flipping a home loan. “Flipping a home loan” means the making of a home loan to a borrower that refinances an existing home loan when the new loan does not have reasonable, tangible net benefit to the borrower considering all of the circumstances, including the terms of both the new and refinanced loans, the cost of the new loan, and the borrower's circumstances. “Home loan” means a loan, including an open-end credit plan, but not including a reverse mortgage transaction or a bridge loan, where the principal amount does not exceed the conforming loan size limit for a single-family dwelling as established by Fannie Mae and where the loan is secured by: (1) a mortgage or deed of trust on real estate in New Mexico upon which a structure resides or will reside: (A) designed principally for occupancy by 1 to 4 families; and (B) that is or will be occupied by a borrower as the borrower's principal residence; or (2) a security interest on a manufactured home that is or will be occupied by a borrower as the borrower's principal residence. | |
| Home Loan Protection Act Regulations / N.M. Admin. Code tit 12, §15.3.15 | Subordinate Lien Escrow Accounts | An escrow account for real estate taxes and property insurance is not required to be established for a subordinate mortgage lien if a creditor confirms in writing that an escrow account has been established for the first mortgage lien. If the proposed subordinate mortgage lien combined with any other mortgage lien(s) on the same property results in a combined loan to value ratio of 80% or greater, an escrow account is required to be established. |