75th OREGON LEGISLATIVE ASSEMBLY--2009 Regular Session
Enrolled
House Bill 2188
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Governor Theodore R.
Kulongoski for Department of Consumer and Business Services)
CHAPTER ................
AN ACT
Relating to mortgage transactions.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Sections 2 and 3 of this 2009 Act are added to
and made a part of ORS 59.840 to 59.980. + }
SECTION 2. { + (1)(a) As used in this section, 'negative
amortization loan' means a mortgage loan or mortgage banking loan
that is structured in such a way that a borrower in any period
may make a scheduled loan payment that is insufficient to pay
accruing interest.
(b) 'Negative amortization loan' does not include:
(A) A loan commonly known as a bridge loan, the terms of which
specify that:
(i) The maturity period for the loan is less than 18 months;
and
(ii) The borrower may pay only interest until a time when the
entire unpaid loan balance is due and payable.
(B) A mortgage loan in which:
(i) The principal amount is not more than $50,000; and
(ii) The combined loan to value ratio between all mortgage
loans that are secured by the same property and the value of the
securing property is not more than 50 percent.
(C) A loan commonly known as a reverse mortgage, the terms of
which specify that the loan:
(i) Is a non-recourse loan secured by real property;
(ii) Provides cash advances to the borrower based on the equity
or value in the borrower's owner-occupied principal residence;
(iii) Requires no payment of principal or interest until the
entire loan becomes due and payable; and
(iv) Is made by a mortgage lender licensed in this state or
licensed under the laws of the United States.
(D) A loan commonly known as a home equity line of credit, in
which:
(i) The amounts borrowed and the interest and other charges are
debited to an account that is secured by an interest in real
estate;
(ii) Interest on the account is computed periodically;
(iii) The borrower has the right to pay in full at any time
without penalty or to pay in installments that are specified in
the loan agreement; and
Enrolled House Bill 2188 (HB 2188-B) Page 1
(iv) The lender agrees to permit a borrower from time to time
to borrow money, with the maximum limit on the amount of each
borrowing established by the loan agreement.
(2) A mortgage banker, mortgage broker or loan originator may
not negotiate or make, or offer to negotiate or make, a negative
amortization loan without regard to the borrower's repayment
ability at the time the loan is made, including the borrower's
current and reasonably expected income, employment, assets other
than the collateral, current obligations and mortgage related
obligations. The mortgage banker, mortgage broker or loan
originator shall verify the income and assets of the borrower
that will be relied on to evaluate the borrower's repayment
ability. The borrower's repayment ability must be evaluated and
the borrower's income and assets must be verified in a manner
that is consistent with the requirements of 12 C.F.R. 226.34, as
promulgated on the effective date of this 2009 Act.
(3) A negative amortization loan may not contain a prepayment
penalty beyond the first 24 months after the date on which the
loan is made.
(4) A creditor may not collect a prepayment penalty on an
existing negative amortization loan in return for or as a
consequence of refinancing or providing funds to refinance the
negative amortization loan. + }
SECTION 3. { + (1) A mortgage banker, a mortgage broker or a
loan originator shall provide in writing the materials identified
in subsection (2) of this section to a borrower if the mortgage
banker, mortgage broker or loan originator:
(a) Communicates or causes to be communicated an advertisement
in a language other than English or otherwise solicits business
in a language other than English; and
(b) Offers to negotiate or make, or negotiates or makes, a
residential mortgage transaction in the course of which a
substantial portion of the communication with the borrower that
is related to the transaction takes place in the language other
than English that was used to communicate the advertisement or
make the solicitation.
(2) A mortgage banker, mortgage broker or loan originator that
takes an action described in subsection (1) of this section shall
provide the following materials to the borrower in English and in
the language other than English in which a substantial portion of
the communication that is related to the transaction takes place:
(a) A good faith estimate required under the Real Estate
Settlement Procedures Act, 12 U.S.C. 2601 et seq., and under
Regulation X, 24 C.F.R. part 3500, as enacted or promulgated on
January 1, 2010;
(b) The disclosures related to the transaction that are
required under the Truth in Lending Act, 15 U.S.C. 1601 et seq.,
and under Regulation Z, 12 C.F.R. part 226, as enacted or
promulgated on the effective date of this 2009 Act; and
(c) A statement notifying the borrower that loan documents
associated with the transaction will be in English and advising
the borrower to obtain appropriate assistance with any necessary
translations.
(3) The Director of the Department of Consumer and Business
Services shall develop and distribute translated versions of the
materials identified in subsection (2) of this section in the
three languages other than English that are most commonly spoken
in this state. + }
Enrolled House Bill 2188 (HB 2188-B) Page 2
SECTION 4. { + Sections 2 and 3 of this 2009 Act apply to
transactions that occur on or after the effective date of this
2009 Act. + }
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Passed by House April 1, 2009
Repassed by House June 9, 2009
...........................................................
Chief Clerk of House
...........................................................
Speaker of House
Passed by Senate June 3, 2009
...........................................................
President of Senate
Enrolled House Bill 2188 (HB 2188-B) Page 3
Received by Governor:
......M.,............., 2009
Approved:
......M.,............., 2009
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2009
...........................................................
Secretary of State
Enrolled House Bill 2188 (HB 2188-B) Page 4