Protect Yourself And Your Clients—Make Sure You Understand The Changes Made
To The Florida Fair Lending Act and similar laws in other states!
An article written by Matthew Weiner, attorney at law, His contact information
and credentials are at the bottom of this article.
NOTE. The following only affects Florida mortgages. But similar legislation is
being enacted in other states. For information on all other states, go to our
resources page and click on
Mortgage Lending Law (on the right of page).
California now has a law on it's books that says a lender can only collect
interest from the date the loan is recorded, not when the money is lent. This
flies in the face of common sense and federal regulations. Why shouldn't a
borrower pay interest on the money the borrow from the day they borrow it? Wells
Fargo Bank and Quicken Loans filed a law suit against the State of California in
February 2003.
Georgia also has enacted law against what it terms predatory lending.
Make sure your loans comply with the law!
In the final hours of the 2002 Legislative Session, the legislature passed a
bill which makes dramatic changes and adds important new requirements to certain
hard equity loans. These changes, which take effect October 2, 2002, include the
following -
Prepayment Penalty- A lender making specified loans may include a prepayment
penalty for up to the first 36 months after the date of the consummation of the
loan, but only if the borrower has also been offered a choice of another product
without a prepayment penalty and the borrower has been given, at least three
business days prior to the loan consummation, a written disclosure of the terms
of the prepayment fee, including the benefit the borrower will receive for
accepting the prepayment fee through either a reduced interest rate or reduced
points or fees.
Default Interest Rate- A specified loan may not provide for a higher interest
rate after default on the loan.
Balloon Payments- A specified loan with a term of less than 10 years may not
contain terms under which the aggregate amount of the payments would not fully
amortize the outstanding principal balance.
Prepaid Payments- A specified loan may not include terms which demand more than
two advance monthly payments.
Payments to Home Contractor- A lender cannot make any payments to a contractor
unless the form of payment is payable to both the borrower and contractor or
unless the borrower and lender execute a written agreement signed by both the
borrower, lender and contractor which specifies what work will be performed and
the cost of such work.
Due on Demand Clause- a loan may not give the lender the right to unilaterally
demand payment of the note, except that a lender may accelerate the note upon
default or fraud by the borrower.
No Refinancing With 18 Months- No lender or its affiliate may refinance a loan
to the same borrower within the first 18 months when doing so does not
reasonably benefit the borrower.
Late Payment Fees- A lender may not charge a late payment fee which exceeds five
percent of the amount of the payment past due and this fee may only be assessed
when a payment is due for 15 days or more.
Disclosures- All high cost loans must contain several statutorily-mandated
notices and disclosures.
Right to Reinstate- If a lender accelerates a note, the lender must reinstate
the note if the borrower cures the default within 45 days. The lender must give
the borrower notice of the right to cure the default prior to instituting a
foreclosure proceeding.
Fees- A borrower may not be required to pay any charge, fee or penalty
attributable to the exercise of the right to cure a default.
Violations of the Act are punishable by fines up to $5,000 for each violation up
to an aggregate fine of $500,000.00. These fines are in addition to fines and
punishments which may be assessed for violations of the federal companion to
this Florida law. The list of changes in this article is not comprehensive and
readers are strongly encouraged to consult with a knowledgeable attorney before
executing any hard equity loans after October 2, 2002.
Matthew D. Weidner, Attorney At Law
1229 Central Avenue,
St. Petersburg, Florida 337605
727/894-3159 Fax 727/894-2953
Email to - weidnerlaw@yahoo.com
Mr. Weidner practices civil litigation and real estate law statewide out of
offices in St. Petersburg, Florida. Mr. Weidner is admitted to the Florida Bar
and is admitted to practice in Federal Court, the Middle District of Florida and
the Federal 11th Circuit Court of Appeals in Atlanta, Georgia.
[Introduction] [Investment indirectly via Fannie Mae] [Growth compared to other investments] [Our role, your need to research] [Frequently Asked Questions] [Evaluate the mortgage collateral] [Lender Guidelines, Credit, Capacity] [The borrowers commitment] [Is your borrower an A+ or an F?] [Current and Historic Mortgage Rates] [Loan to Value for Non-owner occupied] [Loan to Value for Owner occupied] [Hard money mortgage qualifier] [Documents to Use] [Create legally binding mortgages] [Minimum Documents needed] [Steps when closing a loan] [First or Second Mortgage] [Foreclosure law state by state] [Evaluating potential foreclosure losses] [Mortgage fraud] [Mortgage fraud screening] [Escrow real estate taxes hazard insurance] [Florida fair lending law] [Why people lose their homes in foreclosure] [Free Excel Spreadsheets]
