Florida Fair Lending Act

The Florida Fair Lending Act (the "FLFLA") became effective on October 2, 2002. Click here to view a copy of the FLFLA.

Definition of Covered Loan: The FLFLA defines a "high-cost home loan" by reference to Section 32:

1. APR Test: The loan's APR at consummation is either 8% (for first liens) or 10% (for subordinate liens) over the yield on Treasury securities having comparable periods of maturity on the 15th day of the month immediately preceding the month in which the application is received by the creditor.
2. Points and Fees Test: Total Points and Fees payable by the borrower at or before the closing exceed the greater of eight percent (8%) of the total loan amount or a specified dollar amount that is subject to change annually.

The Points and Fees Test: Points and fees are defined as follows:

	Prepaid Finance Charge - the total amount of prepaid finance charges
-	Prepaid Interest - to be deducted from prepaid finance charge
+	Other Mortgage Broker Compensation - the total amount of any non-prepaid finance charge paid to broker by borrower (does not include YSPs and other lender-paid compensation to broker)
+	Other Charges Paid to Creditor/Affiliate - the total amount of all Regulation Z Section 226.4(c)(7) charges not included as a part of the Prepaid Finance Charge if paid to the creditor or creditor affiliate
+	Optional Credit Insurance/Related Products Paid At or Before Closing - optional credit life/accident/health/loss of income/debt cancellation coverage costs, regardless of how named or paid (in cash or financed) and regardless if a single premium or initial payment
+/-	Creditor Requested Adjustments - the total amount of all customer requested overrides

Total Loan Amount: Total loan amount is defined in the Federal Reserve Board commentary to Section 32 to mean the following:

	Amount Financed - loan amount - prepaid finance charges
-	Other Charges Paid to Creditor/Affiliate and Financed - the total amount of all Regulation Z Section 226.4(c)(7) charges not included as a part of the Prepaid Finance Charge if paid to the creditor or creditor affiliate and financed
-	Optional Credit Insurance/Related Products Finance by Creditor - optional credit life/accident/health/loss of income/debt cancellation coverage costs if financed (i.e., excludes paid amounts
+/-	Creditor Requested Adjustments - the total amount of all customer requested overrides

Prohibitions: The FLFLA contains a number of substantive limitations with respect to high-cost home loans:

• Prepayment penalties. A prepayment fee may be charged only during the first 36 months after the date of execution. A lender may not include a prepayment fee in a covered loan unless it also makes available a loan product without a prepayment fee. At least 3 business days prior to consummation, the lender must provide a written disclosure of the terms of the prepayment fee to the borrower, including the benefit (which could take the form of either a reduced interest rate on the loan or reduced points or fees) the borrower will receive for accepting the prepayment fee.
• No balloon payments for a high-cost home loan with a term of less than 10 years.
• No negative amortization.
• No demand feature/call provision.
• No default rates of interest.
• No more than 2 advance payments.
• No lending without due regard to repayment ability.
• Restrictions on payments under home improvement contracts.
• No refinancing by the same creditor, affiliate or assignee within an 18-month period when the refinancing does not have a reasonable benefit to the borrower.
• HELOCs may not be used as a way to avoid the restrictions on closed-end loans.
• No recommending default.
• No door-to-door solicitations of high-cost home loans.
• Restrictions on late payment fees: not more than five percent of the amount of the payment past due after the payment is past due for 15 days or more.
• No modification or deferral fees.
• Limitations on foreclosure rights, including borrower right to cure and reinstate and restrictions on fees.

Disclosures. The lender must make the following conspicuous disclosures to a borrower not less than three business days prior to consummation of the high cost loan

a. Notice to Borrower:

If you obtain this high-cost home loan, the lender will have a mortgage on your home. You could lose your home and any money you have put into it if you do not meet your obligations under the loan.

Mortgage loan rates and closing costs and fees vary based on many factors, including your particular credit and financial circumstances, your employment history, the loan-to-value requested, and the type of property that will secure your loan. The loan rate and fees could also vary based upon which lender or broker you select. As a borrower, you should shop around and compare loan rates and fees.

You should also consider consulting a qualified independent credit counselor or other experienced financial advisor regarding the rates, fees, and provisions of this mortgage loan before you proceed. You should contact the United States Department of Housing and Urban Development for a list of credit counselors available in your area.

You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application.

Borrowing for the purpose of debt consolidation can be an appropriate financial management tool. However, if you continue to incur significant new credit card charges or other debts after this high-cost home loan is closed and then experience financial difficulties, you could lose your home and any equity you have in it if you do not meet your mortgage loan obligations.

Remember that property taxes and homeowners' insurance are your responsibility. Not all lenders provide escrow services for these payments. You should ask your lender about these services.

Also, your payments on existing debts contribute to your credit rating. You should not accept any advice to ignore your regular payments to your existing creditors.

b. Notice to Borrower: Rate and payment information. This is the same information required under Section 32.

c. Notice to Purchasers and Assignees. All high-cost home loans must contain the following notice:

Notice: This is a mortgage subject to the provisions of the Florida Fair Lending Act. Purchasers and assignees of this mortgage could be liable for all claims and defenses with respect to the mortgage that the borrower could assert against the creditor.