Cx3318 is provided pursuant to the provisions of La. Rev. Stat. Ann. §§ 9:3572.10 & 9:3527.11 (2013), sections of the Louisiana Consumer Credit Law which require a loan broker to provide to borrowers, in connection with a consumer or federally related mortgage loan, a “Loan Brokerage Agreement and Disclosure Statement,” with content (and, in some cases, language) prescribed by such statutes.
A “consumer loan” is loosely defined to mean any loan made by a supervised financial organization, licensed lender, or lender, which is made for a personal, family, or household purpose (see Ibid. § 9:3516). A “federally related mortgage loan” is defined as an extension of credit secured by a first mortgage which is either:
* A lender whose deposits or accounts are insured by any agency of the Federal government
* Made by any lender regulated by any agency of the Federal government
* Insured, guaranteed, or supplemented by any Federal agency, or made in connection with a housing program.
* Is intended to be sold by the originating lender to FNMA, GNMA, FHLMC, or any institutions from which the loan will be purchased by FHLMC.
* Made by a creditor who makes or invests in consumer real estate loans aggregating more than one million dollars per year. (see Ibid. §§ 6:1083 & 9:3516)
While the definition of a “federally related mortgage loan” would seem to indicate that Cx3318 should be provided for nearly all primary lien loans, such types of loans are actually excluded from the provisions of the Louisiana Consumer Credit Law, unless such loans are “specifically subject to the Louisiana Consumer Credit Law by contract” (see Ibid. § 9:3512).
As such, nearly all primary lien loans are excluded from the sections requiring Cx3318. As a result and, pursuant to our yearly audit of state-specific disclosures, the following edits will be made to this document:
1. It will be configured to print when “Lender is a Broker” equals “Yes” and “Lien Position” equals “SecondLien” and will print in lieu of Cx4828 (LA Mortgage Loan Origination Agreement) for junior lien loans. Cx4828, which is provided pursuant to Ibid. § 6:1098 (a section of the Louisiana S.A.F.E. Residential Mortgage Lending Act) and currently printing for everyone regardless of lien position, will be restricted to print only for primary lien loans.
Cx4828 has also been formatted to comply with the provisions of Ibid., so if it does print for a junior lien loan governed by the Louisiana S.A.F.E. Residential Mortgage Lending Act rather than the Louisiana Consumer Credit Law, there will be no compliance issues.
2. The terms “Lender” in the document heading and “Broker/Originator” in the first sentence will be changed to “Loan Broker.”
3. Clause 6 of the document will be modified to be as follows:
“Compensation for the Loan Broker’s services rendered on your behalf shall be equal to [specify]% of the principal loan amount with said fees to be paid directly to Loan Broker from the loan proceeds (and/or paid directly, either in part or in whole, by the seller of the property [if any] according to a separate agreement entered into by the Loan Broker and seller) or indirectly by your lender at the time of settlement. This fee is not imposed by the mortgage lender or investor; however, it may be disclosed by the mortgage lender or investor in connection with other services. If the mortgage loan is denied or does not close by the expiration of this contract, you are only liable for actual expenses incurred for the appraisal, credit check and title search, unless applicable law provides otherwise.”
4. Clause 7 includes an additional checklist item, which can be used by clients to include additional terms into the broker agreement, as they see fit.
5. The citation in the document will print in bold.
6. The last clause in the Acknowledgment recital section will be revised to the following:
“. . . agree to the terms, considerations, and conditions thereof.”
7. Minor grammatical and punctuation edits throughout the document.
Clients who regularly make primary lien loans subject to the Louisiana Consumer Credit Law should contact their Account Manager or Client Support immediately to custom configure Cx3318 to print for such loans.
These changes take effect on December 27, 2013. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
December 19, 2013