ORS 86A.195
Restrictions on negative amortization loans

  • verification of borrower income
  • prepayment penalties

(1)

Intentionally left blank —Ed.

(a)

As used in this section, “negative amortization loan” means a mortgage loan or mortgage banking loan that is structured in such a way that a borrower in any period may make a scheduled loan payment that is insufficient to pay accruing interest.

(b)

“Negative amortization loan” does not include:

(A)

A loan commonly known as a bridge loan, the terms of which specify that:
(i)
The maturity period for the loan is less than 18 months; and
(ii)
The borrower may pay only interest until a time when the entire unpaid loan balance is due and payable.

(B)

A mortgage loan in which:
(i)
The principal amount is not more than $50,000; and
(ii)
The combined loan to value ratio between all mortgage loans that are secured by the same property and the value of the securing property is not more than 50 percent.

(C)

A loan commonly known as a reverse mortgage, the terms of which specify that the loan:
(i)
Is a non-recourse loan secured by real property;
(ii)
Provides cash advances to the borrower based on the equity or value in the borrower’s owner-occupied principal residence;
(iii)
Requires no payment of principal or interest until the entire loan becomes due and payable; and
(iv)
Is made by a mortgage lender licensed in this state or licensed under the laws of the United States.

(D)

A loan commonly known as a home equity line of credit, in which:
(i)
The amounts borrowed and the interest and other charges are debited to an account that is secured by an interest in real estate;
(ii)
Interest on the account is computed periodically;
(iii)
The borrower has the right to pay in full at any time without penalty or to pay in installments that are specified in the loan agreement; and
(iv)
The lender agrees to permit a borrower from time to time to borrow money, with the maximum limit on the amount of each borrowing established by the loan agreement.

(2)

A mortgage banker, mortgage broker or mortgage loan originator may not negotiate or make, or offer to negotiate or make, a negative amortization loan without regard to the borrower’s repayment ability at the time the loan is made, including the borrower’s current and reasonably expected income, employment, assets other than the collateral, current obligations and mortgage related obligations. The mortgage banker, mortgage broker or mortgage loan originator shall verify the income and assets of the borrower that will be relied on to evaluate the borrower’s repayment ability. The borrower’s repayment ability must be evaluated and the borrower’s income and assets must be verified in a manner that is consistent with the requirements of 12 C.F.R. 226.34, as promulgated on January 1, 2010.

(3)

A negative amortization loan may not contain a prepayment penalty beyond the first 24 months after the date on which the loan is made.

(4)

A creditor may not collect a prepayment penalty on an existing negative amortization loan in return for or as a consequence of refinancing or providing funds to refinance the negative amortization loan. [2009 c.603 §2; 2009 c.863 §38]

Source: Section 86A.195 — Restrictions on negative amortization loans; verification of borrower income; prepayment penalties, https://www.­oregonlegislature.­gov/bills_laws/ors/ors86A.­html.

86A.095
Short title
86A.100
Definitions
86A.103
License required to engage in residential mortgage transactions as mortgage banker or mortgage broker
86A.106
Procedures for licensing
86A.109
Expiration of initial license
86A.112
Licensees to keep records
86A.115
Grounds for denying, suspending, conditioning or revoking license
86A.118
Action against applicant or licensee for act or omission of associate
86A.121
Cancellation of license or application
86A.124
Supervisory authority of director over mortgage bankers, mortgage brokers and mortgage loan originators
86A.127
Investigations
86A.130
Enjoining violations
86A.133
Procedures where assets or capital of mortgage banker or mortgage broker found impaired
86A.136
Rules
86A.139
Notice of orders
86A.142
Judicial review of orders
86A.145
Oaths and subpoenas in proceedings before director
86A.148
Copies of documents
86A.151
Liability of person that employs mortgage loan originator
86A.154
Fraud and deceit with respect to mortgage banker or mortgage broker business
86A.157
Clients’ Trust Account
86A.160
Notice to bank regarding Clients’ Trust Account
86A.163
Prohibited advertisements
86A.166
Designation of principal place of business
86A.169
Disclosure required before closing mortgage loan or mortgage banking loan
86A.172
Advisory committee
86A.175
Servicing or collecting mortgage banking loan or mortgage loan by mortgage banker or mortgage broker
86A.178
Legislative findings regarding mortgage loan originators
86A.183
Prohibited conduct for mortgage bankers, mortgage brokers and mortgage loan originators
86A.186
Mortgage loan originator criminal records checks
86A.195
Restrictions on negative amortization loans
86A.196
Notice of reverse mortgage prohibition in homestead property tax deferral program
86A.198
Materials in languages other than English
86A.200
Definitions
86A.203
License and unique identifier for mortgage loan originator
86A.206
Application for license
86A.209
Interim license
86A.212
Findings required for issuing license
86A.215
Education and testing requirements for license
86A.218
License renewal
86A.221
Continuing education requirements for mortgage loan originator
86A.224
Denying, suspending, conditioning, revoking or declining to renew license
86A.227
Corporate surety bond required
86A.230
Contracts or agreements with Nationwide Mortgage Licensing System and Registry and other agencies
86A.233
Production of records
86A.236
Prohibited activities
86A.239
Display of license and unique identifier
86A.242
Rules
86A.300
Short title
86A.303
Definitions
86A.306
License requirement
86A.309
Application for license
86A.312
Licensee’s principal place of business
86A.315
Required liquidity, operating reserves and tangible net worth
86A.318
Required notices to director
86A.321
Director’s supervisory authority
86A.324
Duties of mortgage loan servicer
86A.327
Complaints
86A.330
Violations
86A.333
Additional duties of licensee
86A.336
Suspension or removal of licensee’s director or officer
86A.339
Additional duties of mortgage loan servicer
86A.990
Criminal penalties for violations of ORS 86A.095 to 86A.198
86A.992
Civil penalties for violations of ORS 86A.095 to 86A.198
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