Today's Trends in Credit Regulation

Recent State Mortgage Law Developments
By Christopher M.A. Chamness

As the memory of the turmoil caused by the mortgage crisis slowly fades, state legislatures have been less active in enacting sweeping changes to mortgage laws. Yet several states have made substantive changes in the first half of 2014.* Below is a brief survey of several recent developments.

Alabama. The Alabama Legislature passed a law affecting the requirements of fixture filings under Alabama's UCC Article 9. The new law amends Ala. Code § 7-9A-502 to provide that a mortgage used as a fixture filing sufficiently provides the name of a debtor who is an individual if the filing provides the individual's name or surname and the first personal name, even if the debtor is an individual to whom the state has issued a driver's license or identification card that has not expired. This law is effective July 1, 2014.

Connecticut. Connecticut recently passed legislation that amends the definition of a "nonprime" home loan in the Conn. Gen. Stat. § 36a-760 to add an exception for mortgages insured under Title II of the National Housing Act that meet HUD requirements for "qualified mortgages" as set forth in 78 Fed. Reg. 75215 (December 11, 2013). This definitional change becomes effective on October 1, 2014. A copy of the law is available at:

Delaware. The Delaware State Bank Commissioner published amendments to regulations governing licensed mortgage brokers and licensed lenders, including regulations for a schedule of charges and broker disclosures. The amendments impact the fee disclosures at application required to be provided by brokers and lenders, the substantive requirements of the broker's written agreement with the borrower, and disclosure of a mortgage loan originator's NMLS unique identifier on all application forms. A copy of the new regulations is available at:

Hawaii. The Hawaii Legislature passed the Uniform Power of Attorney Act that adopts a statutory form of power of attorney. A copy of the law is available at:

Iowa. The Iowa Legislature made significant changes to mortgage fees and the Iowa Consumer Credit Code (the "ICCC"). Among other amendments, the law changes the fees that can be charged related to a purchase money mortgage loan by a financial institution (which includes a state or federal bank or credit union), and also exempts first lien mortgages from the ICCC. The law also raises the exemption threshold of the ICCC from loans with an amount financed of $25,000 to the TILA threshold, which is $53,500 for 2014. A copy of the law is available at:

Kentucky. Kentucky lawmakers have passed changes to consumer loan companies, including increasing thresholds on interest rate calculations on loans by licensees under the Consumer Loan Act from $1,000 to $3,000. A copy of the law is available at:

Minnesota. Minnesota amended the spousal acknowledgment required for mortgages. The acknowledgment must indicate only that the spouses are married to each other, rather than designating the parties as either "husband" or "wife." Minn. Stat. § 358.14.

Mississippi. The law in Mississippi currently provides that each document or instrument that is presented for recording and contains certain identifying information must have that information on the first page below the three-inch margin. This list of the identifying information subject to the requirement has been changed to the following: "The name, physical business mailing address and business or employment telephone number of the individual who prepared the document; and the name, mailing address and telephone number of every grantor, grantee, borrower, beneficiary, trustee or other party to the instrument." Miss. Code Ann. § 89-5-24(2)(a).

Nebraska. Nebraska passed legislation that clarifies what debts may be secured by a mortgage. Effective July 18, 2014, any interest in real property capable of being transferred may be mortgaged to secure (a) existing debts or obligations, (b) debts or obligations created simultaneously with the execution of the mortgage, (c) future advances necessary to protect the security, even though such future advances cause the total indebtedness to exceed the maximum amount stated in the mortgage, or (d) any future advances to be made at the option of the parties in any amount unless, except as otherwise provided by Neb. Rev. Stat. § 76-238.01(2) and (3), a maximum amount of total indebtedness to be secured is stated in the mortgage. Neb. Rev. Stat § 76-238.01(1). A copy of the law is available at:

Ohio. The Ohio Department of Commerce - Division of Financial Institutions, rescinded and replaced Ohio Admin. Code § 1301:8-10-01. The rule relates to Ohio Rev. Code §§ 1349.27 and 1349.271 requirements for a Verification of Prepurchase Counseling Disclosure for "covered loans" as defined in the Ohio Predatory Lending Act. The revised rule reflects that a database of certified home ownership counselors is maintained on the Consumer Financial Protection Bureau's web site, and prohibits a person from acting as both a counselor and mortgage broker in the same transaction. The rule is effective June 9, 2014. A copy of the rule is available at:

Oklahoma. The Oklahoma Legislature passed HB 3346, amending the Oklahoma Uniform Consumer Credit Code to add Section 3-301.1. The section requires certain disclosures to a debtor. In addition, HB 3346 removes the requirement for the Administrator of the Oklahoma Department of Consumer Credit to adopt rules that are not inconsistent with the Federal Consumer Credit Protection Act. On and after July 1, 2014, a creditor will be required to disclose to the debtor to whom credit is extended the information required by the Federal Consumer Credit Protection Act (Truth in Lending Act and Regulation Z), rather than the information required by the UCCC. Finally, HB 3346 repeals the general disclosure requirements found prior in 14A Okla. Stat. § 3-302. The amendments are effective July 1, 2014, and are available at:

Pennsylvania. The Pennsylvania Department of Banking and Securities no longer requires a lender to provide the application disclosure previously required under 10 Pa. Code § 46.2(b). A copy of the advisory letter, issued on January 16, 2014, is available at: (see link under the "News & Updates" tab).

South Dakota. South Dakota has adopted the Uniform Real Property Electronic Recording Act, revising certain electronic provisions. The legislation also added a provision requiring the original signatures of: 1) the parties who execute a recorded instrument, 2) any notary public, 3) witnesses, or 4) any other officer taking acknowledgment. The law is effective July 1, 2014. A copy of the new law is available at:

Texas. The Texas Loan Status Forms regulation was amended to revise the standard forms for a conditional qualification letter and a conditional approval letter. These letters are provided, when applicable, by loan originators for a residential mortgage loan company prior to closing. The language in the revised forms did not change. The revision was made to correct the placement of language in the standard forms. The revised conditional qualification letter is currently available online at The revised conditional approval letter is currently available online at

Virginia. The Virginia legislature passed legislation that modifies state recordation requirements for deeds of trust and credit line deeds of trust, and requires the Virginia Supreme Court to develop an optional cover sheet to comply with recordation requirements. Credit line deeds of trust must identify the beneficiary, rather than the noteholder. Also, the legislation modifies the requirements for recordation cover sheets. A copy of the new law is available at:

Washington. The Washington Department of Financial Institutions issued several amendments to the Consumer Loan Act (CLA) Regulations and the Mortgage Broker Practices Act Regulations. The CLA regulatory changes include changes to rate lock agreement disclosures, origination fees, brokering fees, and third-party fees. The CLA regulations were also amended to reflect the amendment to Wash. Admin. Code § 208-620-550(3), authorizing licensees to collect at the time of the loan closing up to but not exceeding 45 days of prepaid interest. The broker practices regulations include changes to the rate lock agreement and disclosures, and the one-page disclosure summary. A copy of the rule changes is available at:

Wisconsin. The Wisconsin legislature voted to modify the definition of "points and fees" in the Responsible High Cost Mortgage Lending Act to exclude reasonable interest fees paid to affiliates or non-affiliates of the lender for the bona fide services listed in 12 CFR 226.4(c)(7). A copy of the new law is available at:

Wyoming. The Wyoming Legislature repealed Wyo. Stat § 13-3-401, a statute that prohibited banks from making real estate loans with a loan to value ratio in excess of 90% unless the amount of the loan that exceeded a 90% loan to value ratio was insured by a mortgage insurance corporation. Wyo. Stat. § 13-3-401(b). The statute also prohibited banks from issuing real estate loans with a loan to value ratio in excess of 95% even if the loan was insured by a mortgage insurance corporation. Wyo. Stat. § 13-3-401(b). A copy of the new law is available at:

*This survey of state law changes should not be viewed as a comprehensive list. Please see the state sections of HouseLaw for additional legislation.

Christopher M. A. Chamness is an associate in the Maryland office of Hudson Cook, LLP. Chris can be reached at 410-782-2321 or by email at

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