This bill imposes certain disclosure requirements on lenders, loan originators,
and closing agents with respect to residential mortgage loans. The bill applies only
to loans secured by a real estate mortgage on, or an equivalent security interest in,
a one-family to four-family dwelling which the borrower uses as his or her principal
place of residence. When a borrower applies for a loan, the loan originator for the
loan must, prior to the time that the borrower submits the completed loan
application, provide to the borrower a copy of written informational materials
developed by the Division of Banking in the Department of Financial Institutions
(division). These informational materials must contain information about various
types of loans and their respective risks and benefits and must be designed to educate
individuals regarding loan options and terminology. When a lender has made a loan
commitment to a borrower, the loan originator for the loan must, not later than the
time that the loan commitment is delivered to the borrower, provide to the borrower
a written disclosure, on a form prescribed by the division, that contains all of the
following information relating to the loan:

1. Identification of the type of loan, loan amount, and loan term.

2. If the loan is a fixed rate loan, the annual percentage rate of interest to be
paid on the loan.

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3. If the loan is a variable rate loan, the annual percentage rate of interest
initially to be paid on the loan; the applicable index for the loan; the maximum
frequency with which the loan can be adjusted and the maximum amount of the
increase with each adjustment; and, if the loan is adjusted at the maximum
frequency and maximum amount for the first five years of the loan, the initial
monthly payment of principal and interest on the loan and the new monthly payment
of principal and interest on the loan, after each adjustment, for this five-year period.

4. Whether the borrower's monthly payments will include amounts for the
escrow of property taxes or property insurance or both.

5. Whether there is any prepayment penalty applicable to the loan and, if so,
under what circumstances the prepayment penalty would apply.

6. Whether the loan terms include mandatory arbitration of disputes between
the lender and borrower.

Before the loan closing, the lender or loan originator must provide to the
borrower an update of this disclosure document identifying, in a clear and
conspicuous manner, any changes. At the time of the loan closing, the closing agent
must provide the updated disclosure document to the borrower and the borrower
must sign and date the document to acknowledge receipt of it.

Any lender, loan originator, or closing agent that violates these requirements
may be required to forfeit up to $100 for each violation except that the forfeiture is
from $100 to $1,000 if the lender, loan originator, or closing agent willfully or
knowingly committed the violation. In addition, any person aggrieved by a violation
may bring a civil action to recover three times the amount of actual damages caused
by the violation or $500, whichever is greater, along with attorney fees and costs.

The division must promulgate rules necessary to implement, administer, and
enforce the provisions of the bill. The division must also make available to lenders
and the public, including through the Internet, the disclosure forms and
informational materials required under the bill.