This agreement is provided pursuant to the provisions of Conn. Gen. Stat. § 36a-498(c) through (e), with Subsection 36a-498(d) requiring the agreement to contain the following elements:
“An agreement under subsection (c) of this section shall meet all of the following requirements to be valid and enforceable:
(1) The agreement shall be dated, signed by both parties, and be executed prior to the payment of any advance fee;
(2) The agreement shall expressly state the total advance fee required to be paid and any amount of the advance fee that shall not be refundable;
(3) The agreement shall clearly and conspicuously state any conditions under which the advance fee will be retained by the mortgage lender, mortgage correspondent lender or mortgage broker;
(4) The term ‘nonrefundable’ shall be used to describe each advance fee or portion thereof to which the term is applicable, and shall appear in boldface type in the agreement each time it is used; and
(5) The form of the agreement shall[:]
(A) Be separate from any other forms, contracts, or applications utilized by the mortgage lender, mortgage correspondent lender or mortgage broker,
(B) Contain a heading in a size equal to at least ten-point boldface type that shall title the form ‘AGREEMENT CONCERNING NONREFUNDABILITY OF ADVANCE FEE’,
(C) Provide for a duplicate copy which shall be given to the person paying the advance fee at the time of payment of the advance fee, and
(D) Include such other specifications as the commissioner may be regulation prescribe.” (paragraph structure intentionally modified for easier reading)
Based on informal, verbal feedback from the Connecticut Department of Banking to our questions concerning these elements – as well as our own analysis – we will be modifying Cx3751 as follows:
- The third sentence which begins with “Nonrefundable fees are subject to [etc.]” shall be modified to begin with “Nonrefundable advance fees are subject to [etc.]”;
- Change the fee name “Application Fee” to “Nonrefundable Application Fee”, since the generic text of the document states that this fee will be nonrefundable.
- Include a “Total Advance Fees:” caption after “Other Fees:”, followed by a disclosure of a sum total of the dollar amounts disclosed in the agreement. This will be done with field “Application Disclosure Fees Sum” (FI 52357).
- After the “Total Advance Fees:” caption, there will be another labelled “Total Nonrefundable Amount of Advance Fees:”, followed by a disclosure of a sum total of the dollar amounts disclosed which are not refundable. The logic for determining this amount is convoluted, but will incorporate the use of a new series of fields entitled “Third Party Fee Refundable Indicator” (FIs 121769 through 121771) with the total amount being one of the new “Application Fee Plus Third Party Fee Amounts” series (FIs 121718 through 121721), as determined by the logic. If none of the new “Third Party Fee Refundable Indicator” fields are used, the total will be “Application Fee Amount” (FI 6726), since the generic text of the document states that this fee will be nonrefundable.
- Replacing the last two paragraphs (regarding the effective timeline of the agreement and the return of documents submitted by the borrower) with the following:
“A duplicate copy of this Agreement shall be provided to you at the time you pay for these advance fees.”
- Adding the caption “- Date – “ underneath the lender’s representative’s signature line (as a reminder that the form should be dated and signed).
These changes will be in effect on July 6, 2018. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.