Tennessee Origination Reference Guide
- Kacey Olson
Owned by Kacey Olson
| Citation | Topic | Requirement |
| Residential Lending, Brokerage and Servicing Act / Tenn. Code Ann. §45-13-206(c) | Application Deposit Agreement | If a deposit is required in connection with an application for a residential mortgage loan, there must be a written agreement, signed by the parties, pertaining to the disposition of the deposit, whether the loan is finally consummated or not, and the term for which the agreement is to remain in force before return of the deposit for nonperformance can be required. |
Blank Spaces | A person subject to the TRLBSA or ILTC may not obtain any agreement or instrument in which blanks are left to be filled in after execution. | |
| Home Loan Protection Act / Tenn. Code Ann. §45-20-103(6) | Borrower Repayment Ability | A lender must not make a high-cost home loan unless the lender reasonably believes at the time the loan is made that 1 or more of the borrowers, when considered individually or collectively, will be able to make scheduled payments to repay the loan based upon consideration of their current and expected income, current obligations, employment status, and other financial resources. A borrower's equity in the dwelling which secures repayment of the loan must not be considered a financial resource. A borrower will be deemed to be able to make the scheduled payments if, at the time the loan is consummated, the borrower's total monthly debts as identified on the borrower's credit report and as computed by the lender's underwriting guidelines and methodology, including amounts owed under the loan, do not exceed 50% of the borrower's monthly gross income: (1) as verified by the credit application, the borrower's financial statements, tax returns, payroll receipts or third party income verification; and (2) as underwritten in accordance with the lender's underwriting guidelines and methodology. No presumption of inability to make the scheduled payments to repay a high-cost home loan will arise solely from the fact that, at the time the loan is consummated, the borrower's total monthly debts, including amounts owed under the loan, exceed 50% of the borrower's monthly gross income. |
Commitment Agreement (Optional Form) | In order to be enforceable, a loan commitment must be in writing. The term "commitment" means a written offer to make a mortgage loan signed by a mortgage lender, or by an employee authorized to sign such instruments, on behalf of a mortgage lender. The term "commitment agreement" means a commitment accepted by an applicant for a mortgage loan, as evidenced by the applicant's signature. Note that under Tennessee law, a "commitment agreement" which establishes and sets an interest rate and the discount points and commitment fees to be charged in connection with a mortgage loan that is also closed within the time period specified in the agreement is a lock-in agreement. Although Tennessee law does not provide any timing requirements or specific language which must be included in a loan commitment, if a licensee or registrant fails to return a commitment fee to an applicant pursuant to the terms of its agreement with the applicant, such action will constitute grounds to revoke the license or registration. | |
| Home Equity Conversion Mortgage Act / Tenn. Code Ann. §47-30-110(a) | Disclosure of Lender's Employee or Agent | At the closing of the reverse mortgage loan, the lender must provide to the borrower the name of the lender's employee or agent who has been designated specifically to respond to inquiries concerning reverse mortgage loans. This information must be provided by the lender to the borrower at least annually, and whenever the information concerning the designated employee or agent changes. |
Home Equity Conversion Mortgage Act & Rules / Tenn. Code Ann. §47-30-109(b) | Disclosure of Loan Terms | Within 10 business days after application is made by a borrower, but not less than 20 business days prior to the close of a reverse mortgage loan, the lender must provide the borrowers with the following information. (1) the borrower's rights, obligations, and remedies with respect to the borrower's temporary absence from the home, late payments by the lender, and payment default by the lender; (2) conditions or events that require the borrower to repay the loan obligation; (3) the right of the borrower to mortgage less than the full value of the home, if permitted by the reverse mortgage contract; (4) the projected total annual percentage rate applicable under various loan terms and appreciation rates and interest rates applicable at sample ages of borrowers; (5) standard closing costs; (6) all service fees to be charged during the term of the loan; (7) a statement explaining the unenforceability of loans not in compliance with the Home Equity Conversion Mortgage Act; (8) a statement explaining that borrowers may be required to pay certain taxes, premiums and assessments; (9) a statement disclosing all fees to be imposed under the reverse mortgage loan contract; (10) a statement explaining how the outstanding loan balance is to be calculated; (11) a statement explaining that prepayment is permitted without penalty; (12) a statement disclosing the amount owned by the borrower when the loan is due; (13) a statement designating the lender's employee or agent designated to answer borrower's inquiries and the telephone number at which the borrower may contact such employee or agent; (14) a statement explaining the rights of the parties if the lender defaults; (15) a statement listing the acts prohibited under T.C.A. §47-30-115; and (16) other information required by the Commissioner. |
| Industrial Loan and Thrift Companies Act / Tenn. Code Ann. §45-5-305 | Insurance Sales by Registrant | If the registrant offers, sells or procures insurance, at the time the loan is made the registrant must give to the borrower: (i) an insurance policy, a binder, or a certificate of insurance; or (ii) a memorandum showing the name of the insurance company, the types of insurance, a coverage description, the date of the policy (which must be the date on which the loan is made), the premium charge for each, and if issued under a group policy, the number of the master policy. |
| Home Loan Protection Act / Tenn. Code Ann. §45-20-103(17) | Loan Closing Location | A high-cost home loan may not be closed in a location other than an office of the lender, at the office of an attorney at law licensed to practice in Tennessee, or at the office of a title insurance company or title insurance agency licensed to do business in Tennessee, or the office of a settlement or closing agent, or the commercial office of a mortgage broker. |
| Home Loan Protection Act / Tenn. Code Ann. §45-20-103(21) | Loan Counseling Notice | A lender may not make a high-cost home loan without first providing to the borrower, in a separate document clearly identified, notice of availability of counselors from third-party nonprofit organizations approved by HUD, a Tennessee housing financing agency, or the regulatory agency which has jurisdiction over the lender. The document must provide either: (1) a list of counselors who are located in the county of the borrower or the nearest available county where counselors are available; or (2) a resource list for HUD, the Tennessee Housing & Development Agency or the Department of Financial Institutions (Department), including toll free numbers and website information if available to identify the counselors. This document must be provided to the borrower not later than the time that the good faith estimate of closing costs required by the Truth in Lending Act (or Real Estate Settlement Procedures Act, as applicable) must be provided to the borrower. The borrower must be afforded the opportunity to seek counseling without penalty. |
Commercial Instruments and Transactions / Tenn. Code Ann. §47-15-101 | Loan Term (non-DIDMCA loans) | In order to qualify for the interest rate available for “home loans,” the term of a loan must be more than 181 months. |
| Mortgage Lending, Loan Servicing and Loan Brokering Rules / Tenn. Comp. R. & Regs. 0180-17-.04 | Lock-In Agreement (Optional Form) | If a lock-in agreement is provided, it must include: (1) the interest rate and discount points to be paid by the borrower on the mortgage loan, and if the loan is an adjustable-rate, the initial interest rate; (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 loan is not closed within the lock-in period, the mortgage lender is no longer obligated by the lock-in agreement and that any lock-in fee paid by the applicant may not be refundable except under certain conditions (the conditions do not have to be specified); (5) a statement that any terms not locked-in by the lock-in agreement are subject to change until the loan is closed at settlement; and (6) any other terms and conditions of the lock-in agreement required by the lender. See also "Commitment Agreement". |
NMLS Unique Identifier | A mortgage loan originator must clearly show the loan originator's Nationwide Mortgage Licensing System and Registry unique identifier on all solicitations or advertisements, including business cards or websites, and any other documents and materials as established by rule of the Commissioner of Financial Institutions. | |
| Home Loan Protection Act / Tenn. Code Ann. §45-20-103(19) | Note and Security Instrument Language | A mortgage or deed of trust securing a high-cost home loan must state on the face of the instrument the following legend prominently displayed: “This instrument secures a high-cost home loan as defined in Tennessee Code Annotated, Title 45.” A note which meets the definition of a high-cost loan must state on the face of the instrument the following legend prominently displayed: “This instrument is a high-cost home loan as defined in Tennessee Code Annotated, Title 45.” |
| Home Loan Protection Act / Tenn. Code Ann. §45-20-103(16) | Notice to Borrower | A lender must not make a high-cost home loan unless the lender has given the Notice to Borrower, in at least 12-point bold type, to the borrower, acknowledged in writing and signed by the borrower, not later than 3 business days prior to the consummation of the loan. |
| Home Loan Protection Act / Tenn. Code Ann. §45-20-103(17) | Redisclosure of Loan Terms and Settlement Charges | A lender may not present a borrower with a high-cost home loan at closing with a materially different interest rate, term, type of loan, or settlement charges from the settlement charges disclosed on the last disclosures required by RESPA, without re-disclosure not less than 1 day before closing. Settlement charges are materially different if the total settlement charges disclosed on the final settlement statement would exceed previously last disclosed settlement charges by an amount equal to more than 15% in the aggregate. |
| Unfair Competition and Deceptive Acts / Tenn. Code Ann. §56-8-106(b) | Right to Choose Insurance Provider | Provided if a lender solicits insurance. Compliance with disclosures as to insurance required by TILA or comparable state laws will be deemed compliance with this requirement. |
Home Equity Conversion Mortgage Act & Rules / Tenn. Code Ann. §47-30-102(5) | Security Instrument Language | A reverse mortgage loan must be labeled clearly on the face of the note and deed of trust or mortgage: (1) if a HUD loan, "This is a Home Equity Conversion Mortgage Loan pursuant to Tennessee Code Annotated, Title 47, Chapter 30."; or (2) if a FNMA loan: (A) "Home Keeper Mortgage pursuant to Tennessee Code Annotated, Title 47, Chapter 30."; or (B) "Fannie Mae Reverse Mortgage pursuant to Tennessee Code Annotated, Title 47, Chapter 30." |