Current through Register Vol. 56, No. 18, September 16, 2024
(a) Before a lender
or broker accepts any application fee in whole or in part, any credit report
fee, appraisal fee or any fee charges as reimbursement for third party fees,
the lender or broker shall make written disclosure to the borrower (which
disclosure may be contained in the application) as required by this section or
3:1-16.1 0, respectively, setting
forth:
1. A description and the amount of
each such fee;
2. Whether all or
any part of such fees are refundable;
3. The terms and conditions for the refund,
if all or any part of the fees are refundable, provided that, where applicable,
the terms and conditions may be disclosed by making reference to these rules
with proper citation;
4. A
realistic estimate of the number of calendar days required to issue a
commitment following receipt of such fees by the lender. If the lender
subsequently determines that the estimate is unrealistic, it may return the
application and all fees paid and offer the borrower the opportunity to reapply
subject to a new estimate;
5. The
name or title of a person within the lender's organization to whom the borrower
may address written questions, comments, or complaints and who will be required
to promptly respond to such inquiries; and
6. For correspondent mortgage lenders, a
statement indicating that the licensee is a correspondent mortgage lender and
as such does not hold mortgage loans or service mortgage loans for more than 90
days in the regular course of business.
(b) The disclosures required in (a) above
shall be acknowledged in writing by the borrower and maintained by the lender
or broker and a copy of such acknowledgment shall be given to the
borrower.
(c) Except where
explicitly authorized to return an application, or for other reasons consistent
with due diligence, a lender is obligated to process an application submitted
to it and to exert conscientious effort to either grant or deny the application
within the realistic estimate disclosed as required in (a) above.
(d) Not later than three business days after
the lender receives the borrower's application, or before closing of the loan,
whichever is earlier, the lender shall provide the borrower with a good faith
estimate as a dollar amount or range of each fee for a settlement service which
the borrower is likely to incur.
1. For the
purpose of this subsection, "settlement service" shall mean a service related
to the origination, processing, or closing of a mortgage loan, and for which
the lender anticipates the borrower will pay a fee at or before settlement
based upon the lender's general experience.
2. With respect to the settlement service
fees imposed on a borrower by the lender (and not by third parties), the lender
shall indicate which, if any, of such fees are refundable in whole or in part
and the terms and conditions for such refund.
3. Good faith estimates of fees for
settlement services which are made pursuant to, and conform to, Federal
Regulation X shall satisfy the disclosure requirement of this subsection,
provided that the lender also makes the disclosures required by (d)2
above.
(e) The borrower
may, without penalty or responsibility to pay additional fees, withdraw an
application at any time prior to acceptance of a commitment. Upon such
withdrawal, the lender or broker shall be responsible to refund to the borrower
only those fees to which the borrower may be entitled pursuant to the terms set
forth in the written disclosure required by (a) above, except that:
1. Where the lender or broker has failed to
provide the borrower with the written disclosure required by (a) above, the
lender or broker shall promptly refund to the borrower all funds paid to the
lender or broker;
2. Where the
lender has failed to issue a commitment or justifiable credit denial and its
realistic estimate of the time needed to do so has expired through no
substantial fault of the borrower and the borrower has withdrawn his or her
application as a result, the lender shall promptly refund to the borrower all
funds paid to the lender;
3. Where
an application is denied, or a commitment is issued on terms and conditions
substantially dissimilar to those for which the application was submitted and
which are unacceptable to the borrower, for reasons (other than bona fide
underwriting considerations) which the lender knew or should have known at the
time of application from the facts disclosed on the face of the application,
the lender shall promptly refund to the borrower all funds paid to the lender.
For purposes of this paragraph, a commitment is issued on terms and conditions
which are "substantially dissimilar" to those for which the application was
submitted if the interest rate, discount points or commitment fee as set forth
in the commitment is higher than, or the term of the loan as set forth in the
commitment is different than, the corresponding terms of the loan for which
application was made.
