Earlier, I mentioned how I am studying for the Mortgage test.  During Day 2 of my class, I learned some new data regarding prohibited acts on Florida mortgages that I thought I should bring to light.

The Florida Legislature passes laws regulating the practice of mortgage brokerage and mortgage lending.  These laws are found in Chapter 494, Florida Statutes.  Chapter 494.00791 deals with “Prohibited Acts”:

1)  Prepayment Penalties may only be included within the first 36 months after loan consumation (closing) if:

a.  the borrower has been offered a choice of a loan without a prepayment penalty and
b.  at three days prior to consumation, the borrower receives a written disclosure of the terms of the prepayment fee including the benefit the borrower will receive for accepting the penalty through a reduced interest rate or reduced reduced points or fees.

2)  Default Interest Rate (higher interest rate after default) may not be included.

3) Balloon Payments are not allowed on loan terms of less than 10 years for other than bridge loans or payment schedules adjusted to allow for seasonal or irregular income.

4) Extending Credit Without Regard To The Borrowers Repayment Ability is not allowed.  Collateral must be considered with regard to the borrowers current and expected income, obligations and employment.

5)  Door to Door Loans or selling a loan at a borrowers place of residence without a prearraged appointment is not allowed.  (excludes mail solicitations).

6)  Late Payment Fees
a.  may not exceed 5% of the past due payment.
b.  may only be assessed for a payment past due 15 days or more.
c.  may only be charged once with respect to a single late payment.
d.  may not be charged on payments that are late because a late fee had been deducted from a prior payment which thereby caused a default on subsequent payment(s).

Here is an example: In January, Mr. Borrowers’ $1,000 boat payment was received late.  The lender applied a $50 late fee and credits Mr Borrower’s account exactly $950.  ($1000 minus the $50 late fee equals $950).

In February,  Mr. Borrower sends his payment for $1000 on time. Because Mr. Borrower was $50 short in January, the lender attempts to take the $50 that is owed from the February payment If the additional $50 is not received on time in February, the February payment would be considered late also.  This would be stacking - one late fee into multiple late fees. THIS IS NOT ALLOWED.

Got all that? The lender can not consider the loan “late” because the lender extracted a late fee from the previous month.. Lenders can’t do that.  ONE LATE FEE that’s it.

Now, back to the classroom… 

Today we have a new instructor; his name is Mr. Bill Bates. Mr. Bates is professional, he says he’s more of a book instructor than our previous days teacher. 

We begin at Chapter 1 of the book which is:  State Laws, Doc Stamps, Maximum Fees and Mortgage Math.  After lunch we are already half way thru Chapter 2:  Contracts, Deeds & Loan Applications.  We finish on Chapter 2. I assume Day 3 will be mostly about Chapter 3 and math.

Saturday class is done, I have aquired more knowledge and made some friends.  My new friend and fellow student Mr. Roly Fernandez visits with me, and there’s some talk of cafecitos for tomorrow.  Sounds good to me.

Related:
• Day 1 - Gold Coast Schools, Studying for the Florida Mortgage Test
• Day 3 - Hard Money Loans and Required Disclosures