Ohio Origination Reference Guide
- Kacey Olson
Owned by Kacey Olson
Aug 29, 2017
15 min read
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| Citation | Topic | Requirement |
| Consumer Protection / Ohio Admin. Code §109:4-3-29 | Acknowledgement of Receipt of Home Mortgage Loan Information Document | A nonbank mortgage lender, mortgage broker, or loan officer who takes a mortgage loan application must provide the applicant an “Informational Document” published by the Attorney General and “Acknowledgement of Receipt” form, free of cost: (1) at the time of application when the loan application is submitted by the applicant in person; or (2) within 5 business days after taking the loan application if the application is not submitted in person. If the “Acknowledgement of Receipt” form is provided other than in person, the applicant must also be provided with instructions on completing the form and a cost-free method by which the applicant can return the signed original. The “Acknowledgement of Receipt” form may be provided to the applicant with other disclosures or forms required to be provided by federal or state law. The “Acknowledgement of Receipt” form must be in writing, in duplicate, in at least 14-point type, signed and dated by the applicant. The “Acknowledgement of Receipt” form must be maintained in the borrower's loan file for a period of at least 2 years from the date of closing, or as required by other applicable state or federal law, whichever time period is greater. The “Acknowledgement of Receipt form may be retained in an electronic format. Mortgage brokers registered under the MBA and mortgage lenders registered under the MLA have longer retention periods. |
| Mortgage Loan Act / Ohio Rev. Code Ann. §1321.59(J) | Blank Documents | No registrant or licensee may knowingly instruct, solicit, propose, or otherwise cause a borrower to sign in blank a loan related document in connection with a residential mortgage loan. |
| Consumer Protection / Ohio Rev. Code Ann. §1349.27 | Borrower Interest Worksheet (Optional Form) | Within 1 year after having made a covered loan, a lender is prohibited from refinancing a covered loan to the same borrower into another covered loan, unless the refinancing is in the borrower's interest. |
| Mortgage Broker Act / Ohio Rev. Code Ann. §1322.075(A) | Business Relationship Disclosure Notice | A mortgage broker or loan officer must not refer a borrower to any settlement service provider, including any title insurance company, without providing the borrower with written notice disclosing all of the following: (1) any business relationship that exists between the mortgage broker or loan officer and the provider to which the borrower is being referred, and any financial benefit that the mortgage broker or loan officer may be provided because of the relationship; (2) the percentage of ownership interest the mortgage broker or loan officer has in the provider to which the borrower is being referred; (3) the estimated charge or range of charges for the settlement service listed; and (4) the following statement, printed in at least 16-point boldface type: “There are frequently other settlement service providers available with similar services. You are free to shop around to determine that you are receiving the best services and the best rate for these services.” Proof of the disclosure must be evidenced by the borrower's signature with date, which signature must be requested at the time of disclosure. This disclosure must be made as an addendum to any affiliated business relationship disclosure required by 24 C.F.R. Part 1024.15 and 12 U.S.C. §2607. If an affiliated business relationship disclosure is not required and applicable under the federal law, the above disclosure must be provided on a separate form. The mortgage broker or loan officer must retain a signed copy of this disclosure as proof that the borrower received the above written disclosure for 4 years. |
| Mortgage Broker Act / Ohio Rev. Code Ann. §1322.065 | Computerized Loan Originations | A person registered as a mortgage broker solely to sell leads of potential buyers to residential mortgage lenders or mortgage brokers, or solely to match buyers with residential mortgage lenders or mortgage brokers through a computerized loan origination system recognized by HUD, are required to make only those disclosures that apply to the portion of the transaction during which they have direct buyer contact, and are subject to all fair conduct and prohibition requirements in their dealing with buyers. |
| Mortgage Broker Act / Ohio Rev. Code Ann. §(C) | Copies of Documents | A mortgage broker must deliver to the borrower, immediately upon receipt, a copy of any nonproprietary or publicly available credit score and report obtained regarding the borrower by the mortgage broker for the purpose of the mortgage loan application. Additionally, if the loan officer or mortgage broker uses an automated valuation model to determine an appraisal report, the mortgage broker also must include a copy of the automated valuation model report. |
| Commercial Transactions — Ohio Uniform Commercial Code / Ohio Rev. Code Ann. §1349.26 | Covered Loan Disclosure | A lender must provide, for each covered loan, both of the following disclosures. The disclosures must be in conspicuous type size and be in substantially the following form: (1) “You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application.” (2) “If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan.” This must be provided at least 3 business days prior to the close of a covered loan. |
| Department of Insurance / Ohio Admin. Code §3901-1-14(B) | Disclosure for Optional Credit Insurance | A disclosure must be provided to the borrower at the time of application for credit life or credit accident or health insurance in connection with a credit transaction and prior to the borrower becoming obligated to purchase insurance. |
Disclosure of Right Not to Close | Effective July 20, 2017 - The 'Disclosure of Right Not to Close', in compliance with the Appendix A model form, must be provided, in duplicate, to each consumer before signing of any other documents at the closing of the loan, to inform the consumer he or she is not required to complete a consumer transaction merely because the consumer has received prior estimates of closing costs or has signed an application and should not close a loan transaction that contains different terms and conditions than those the consumer was promised. | |
| Supreme Court of Ohio, Advisory Opinion UPL 2008-02, 2 (2008) | Document Preparation and Loan Closings | “[A] form mortgage document prepared by a bank or lender has an obvious direct and primary benefit to the party that prepared it. Therefore, the completion of a form mortgage document by a bank or a licensed lender to lend its money and secure property as collateral is not the preparation of a legal instrument for another and consequently the Board concludes it is not the practice of law in Ohio. A nonattorney of a bank or lending institution may perform the act of completing a standard form mortgage document by filling in blanks for his/her mortgagee employer without the supervision of an attorney admitted to practice law in Ohio. However, neither a bank nor its employees may advise another about the legal effect of a mortgage or the legal rights and duties of the parties. Nor may a bank or lending institution rely on a third party document preparer that has no direct and primary interest in the transaction to prepare a mortgage instrument for its use. In the latter example, the preparation is the act of preparing a legal instrument for another and clearly constitutes the unauthorized practice of law.” |
| Civil Rights Commission / Ohio Rev. Code Ann. §4112.021(B) | Equal Credit Opportunity Notice | Lenders and brokers are required to print on or attach to each application for credit, in type no smaller than that used in the application form, the following notice: The Ohio laws against discrimination require that all creditors make credit equally available to all creditworthy customers, and that credit reporting agencies maintain separate credit histories on each individual upon request. The Ohio Civil Rights commission administers compliance with this law. This disclosure does not need to be included in applications that have a multi-state distribution if the notice is mailed to the applicant with the notice of acceptance or rejection of the application. |
| Mortgage Loan Act / Ohio Admin. Code §1301:8-3-07(H) | Federal or State Statutory Authority Disclosure | Lenders must clearly indicate the federal or state statutory authority pursuant to which a loan is made by prominently disclosing the information on, or in, the loan documents. For purposes of the Mortgage Loan Act (MLA), lenders are required to provide this prominent disclosure on loans made: (1) solely in reliance on the provisions of the MLA; (2) partially in reliance on the provisions of the MLA; or (3) in reliance on any combination of federal or state provisions that do not include the MLA. |
Mortgage Loan Act & Mortgage Broker Act / Ohio Rev. Code Ann. §1321.592(B) | High Loan to Value Disclosure | If a residential mortgage loan applied for will exceed 90% of the value of the real property, the licensee must provide a statement to the borrower within 3 business days after taking the loan application, printed 16-point boldface type, as follows: “You are applying for a loan that is more than 90% of your home's value. It will be hard for you to refinance this loan. If you sell your home, you might owe more money on the loan than you get from the sale.” For mortgage brokers - this statement is already included on the promulgated Mortgage Loan Origination Disclosure Statement. |
| Consumer Protection / Ohio Admin. Code §109:4-3-29 | Homebuyers' Protection Act Informational Document | Must be provided at the time a loan application is submitted. If the application is not submitted in person, this document must be provided within 5 business days after taking the application. |
| Mortgage Loan Act / Ohio Rev. Code Ann. §1321.59(A) | Indebtedness | No registrant may permit any borrower to be indebted for a loan made under the MLA at any time while the borrower is also indebted to an affiliate or agent of the registrant for a loan made under the MLA for the purpose or with the result of obtaining greater charges than otherwise would be permitted. |
| Consumer Protection / Ohio Admin. Code §109:4-3-29 | Informational Document | A nonbank mortgage lender, mortgage broker, or loan officer who takes a mortgage loan application must provide the applicant an “Informational Document” published by the Attorney General and “Acknowledgement of Receipt” form, free of cost: (1) at the time of application when the loan application is submitted by the applicant in person; or (2) within 5 business days after taking the loan application if the application is not submitted in person. If the “Informational Document” form is provided other than in person, the applicant must also be provided with instructions on completing the form and a cost-free method by which the applicant can return the signed original. The “Informational Document” form may be provided to the applicant with other disclosures or forms required to be provided by federal or state law. |
| Mortgage Broker Act / Ohio Rev. Code Ann. §1322.062(A) | Mortgage Loan Origination Disclosure Statement | Within 3 business days after taking an application for a residential mortgage loan from a buyer, a registrant or licensee must deliver to the buyer a residential mortgage loan origination disclosure statement that contains all of the following: (a) the name, address, and telephone number of the buyer; (b) the typewritten name of the loan originator and the number designated on the loan originator’s license; (c) the street address, telephone number, and facsimile number of the registrant and the number designated on the registrant’s certificate of registration; (d) the signature of the loan originator or registrant; (e) a statement indicating whether the buyer is to pay for the services of a bona fide third party if the registrant is unable to assist the buyer in obtaining a mortgage; (f) a statement that describes the method by which the fee to be paid by the buyer to the registrant will be calculated and a good faith estimate of the total amount of that fee; (g) a statement that the lender may pay compensation to the registrant; (h) a description of all the services the registrant has agreed to perform for the buyer; (i) a statement that the buyer has not entered into an exclusive agreement for brokerage services; (j) if the residential mortgage loan applied for will exceed 90% of the value of the real property, a statement, printed in boldface type of the minimum size of sixteen points, as follows: “You are applying for a loan that is more than 90% of your home’s value. It will be hard for you to refinance this loan. If you sell your home, you might owe more money on the loan than you get from the sale.” To acknowledge receipt, the signature of the buyer. If the loan is a covered loan, the registrant must also deliver a copy of the residential mortgage loan origination disclosure statement to the lender. |
| Mortgage Broker Act / Ohio Rev. Code Ann. §1322.062(D) | Mortgage Loan Origination Disclosure Statement Addendum | A registrant or licensee must deliver to the buyer, at the same time that the registrant or licensee delivers the residential mortgage loan origination disclosure statement, both of the following documents: (1) A Loan Estimate (or Good Faith Estimate, as applicable) that discloses the amount of or range of charges for the specific settlement services the buyer is likely to incur in connection with the residential mortgage loan. The Loan Estimate (or Good Faith Estimate, as applicable) must meet the requirements of the Truth in Lending Act (or “Real Estate Settlement Procedures Act,” 88 Stat. 1724 (1974), 12 U.S.C.A. 2601 et seq., as applicable); and (2) the Mortgage Loan Origination Disclosure Statement Addendum. See Ohio Rev. Code Ann. §1322.062(D) for additional information. |
| Mortgage Loan Act / Ohio Rev. Code Ann. §1321.594 | Notice of Change in Mortgage Terms | In connection with making a non-brokered residential mortgage, no registrant or licensee may fail to do either of the following: Timely inform the borrower of any material change in the terms of the residential mortgage loan. “Material change” means the following: (a) a change in the type of residential mortgage loan being offered, such as a fixed or variable rate loan or a loan with a balloon payment; (b) a change in the term of the loan, as reflected in the number of monthly payments due before a final payment is scheduled to be made; (c) a change in the interest rate of more than 0.15%; (d) a change in the regular total monthly payment, including principal, interest, any required mortgage insurance, and any escrowed taxes or property insurance, of more than 5%; (e) a change regarding whether the escrow of taxes or insurance will be required; and (f) a change regarding whether private mortgage insurance will be required. Timely inform the borrower if any fees payable by the borrower to the licensee, registrant, or lender increase by more than 10% or $100, whichever is greater. If an increase in the total amount of the fee to be paid by the borrower to the registrant or licensee is not disclosed, the registrant or licensee must refund to the borrower the amount by which the fee was increased. If the fee is financed into the loan, the registrant or licensee must also refund to the borrower the interest that would accrue over the term of the loan on that excess amount. |
| Mortgage Broker Act / Ohio Rev. Code Ann. §1322.064(A) | Notice of Change in Mortgage Terms | A mortgage broker or loan officer must: (1) timely inform the borrower of any material change in the terms of a loan, which means: (A) a change in the type of loan being offered, such as a fixed or variable rate loan or a loan with a balloon payment; (B) a change in the term of the loan, as reflected in the number of monthly payments due before a final payment is scheduled to be made; (C) a change in the interest rate of more than 0.15%; (D) a change in the regular monthly payment of principal and interest of more than 5%; (E) a change regarding the escrow of taxes or insurance; or (F) a change regarding the payment of private mortgage insurance; and (2) timely inform the borrower if any fees payable by the buyer to the mortgage broker or lender increase by more than 10% or $100, whichever is greater. For additional information, see Ohio Rev. Code Ann. §1322.064(A) and Ohio Admin. Code §1301:8-7-15(D). |
| Mortgage Loan Act / Ohio Admin. Code §1301:8-3-17(B) | Notice of Right to Cancel Optional Insurance | If a lender furnishes or places credit life insurance, credit accident and health insurance or unemployment insurance on behalf of the borrower at the borrower's expense, the lender must give written notice to the borrower at the time the loan is made. The notice must disclose: (1) the borrower's right to cancel the insurance within 25 days of the purchase of the insurance with a full refund of the premium or identifiable charge for the insurance; and (2) that the cancellation may be effected upon the written request of the borrower together with the return of the policy or certificate of insurance to the registrant. |
Mortgage Loan Act & Mortgage Broker Act / Ohio Rev. Code Ann. §1321.59(L) | Original Documents | No registrant or licensee may willfully retain original documents provided to the registrant or licensee by the borrower in connection with the residential mortgage loan application, including income tax returns, account statements, or other financial related documents. |
| Mortgage Loan Act / Ohio Admin. Code §1301:8-3-17(A) | Placed Insurance | When, in connection with a loan, a registrant furnishes or places insurance written on behalf of the borrower at the borrower's expense, a policy or certificate of insurance properly executed must be furnished to the borrower within 15 days of the closing date of the loan. The policy or certificate must state the name of the insurance company, the nature of the insurance, the extent of the coverage, the amount of the premium, and the effective and expiration dates of the policy. |
| Interest / Ohio Department of Commerce Notice §1343.011 | Prepayment Penalty Restrictions | No penalties may be imposed on prepayment or refinancing of a residential mortgage loan of less than $87,772 (2016 figure). |
| Consumer Protection / Ohio Rev. Code Ann. §1349.27(J) | Refinancing Restrictions | A lender is prohibited from replacing or consolidating a zero interest rate or other low-rate loan made by a governmental or nonprofit lender with a covered loan within the first 10 years of the low-rate loan unless the current holder of the loan consents in writing to the refinancing. A “low-rate loan” means a loan that carries a current interest rate 2 percentage points or more below the current yield on United States Treasury securities with a comparable maturity. If the loan's current interest rate is either a discounted introductory rate or a rate that automatically steps up over time, the fully indexed rate or the fully stepped-up rate, as applicable, must be used to determine whether a loan is a low-rate loan. |
| Superintendent of Insurance / Ohio Rev. Code Ann. §3901.211(C) | Right to Choose Insurance Provider | If an application for a loan is pending before a person that lends money and that also solicits insurance primarily for personal, family, or household purposes in connection with that loan, that person must disclose to the borrower, in writing, that the insurance related to the loan 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. Further, the disclosure must inform the borrower that the borrower's choice of an insurer or agent will not affect the credit decision or credit terms in any way. Additionally, that person must obtain a written acknowledgement of the receipt of the disclosure at the time the borrower receives the disclosure or at the time of the initial purchase of the insurance policy. If the solicitation is conducted by telephone, the person must obtain an oral acknowledgement of receipt of the disclosure, maintain sufficient documentation to show that the acknowledgement was given by the borrower, and make reasonable efforts to obtain a written acknowledgement from the borrower. If a borrower affirmatively consents to receiving the disclosures electronically and the disclosures are provided in a format that the borrower may retain or obtain later, the person may provide the disclosure and obtain acknowledgement of the receipt of the disclosure from the borrower using electronic media. |
| Superintendent of Insurance / Ohio Rev. Code Ann. §3901.211(D) | Right to Choose Insurance Provider Disclosure | Any person that solicits, sells, advertises, or offers insurance on behalf of a depository institution or on the premises of a depository institution, must disclose to the borrower in writing, where practicable and in a clear and conspicuous manner, prior to a sale, that the insurance: (1) is not a deposit; (2) is not insured by the federal deposit insurance corporation or any other federal government agency; (3) is not guaranteed by the depository institution, and, when applicable, that the insurance is not guaranteed by an affiliate of the depository institution or by any person that is soliciting, selling, advertising, or offering insurance; and (4) involves investment risk including the possible loss of value, if applicable. Any person that solicits, sells, advertises, or offers insurance on behalf of a depository institution or on the premises of a depository institution, must obtain written acknowledgement of the receipt of the disclosure from the borrower at the time the customer receives the disclosure or at the time of the initial purchase of the insurance policy. |
| Uniform Commercial Code / Ohio Rev. Code Ann. §1345.031(B) | Tangible Net Benefit | It is considered an unconscionable act or practice to knowingly or intentionally engage in flipping a mortgage loan. “Flipping” a mortgage loan is making a mortgage loan that refinances an existing mortgage 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. |
Verification of Pre-Purchase Counseling and Acknowledgement of Risk | A lender is prohibited from making a covered loan if, at the time the loan was consummated, the borrower's total monthly debt, including amounts owed under the loan, exceed 50% of the borrower's monthly gross income, as verified by the credit application, the borrower's financial statement, a credit report, financial information provided to the person originating the loan by or on behalf of the borrower, or any other reasonable means, unless the borrower submits both of the following: (1) verification that the borrower received pre-purchase counseling from: (A) credit counseling services approved by HUD to assist borrowers in understanding and obtaining “FHA” or “VA” loans, provided it does not directly or indirectly through any affiliate make or broker loans; or (B) a not-for-profit counseling service approved by an agency of the federal government; and (2) a disclosure signed by the borrower that acknowledges the risk of entering into a loan. |