This bulletin addresses risks associated with certain subprime mortgage products and lending practices and mirrors the guidance offered by the federal banking agencies. In particular, the Department is concerned about the growing use of adjustable rate mortgage (ARM) products that provide low initial payments based on a fixed introductory rate that expires after a short period, and then adjusts to a variable rate plus a margin for the remaining term of the loan. These products could result in payment shock to the borrower. The bulletin identifies many important standards for subprime lending. The bulletin includes credit risk characteristics of loans to subprime borrowers. The bulletin also identifies some typical elements of predatory lending.
This bulletin restates a January 18, 1989 memorandum issued by the Department. This bulletin reminds lenders that they may not require borrowers to insure their home for more than the value of the structures and improvements on the real property.
This guidance mirrors the guidance offered by the federal banking agencies on nontraditional mortgage products. This bulletin clarifies how mortgage brokers and licensed lenders can offer nontraditional mortgage products in a way that clearly discloses the risks that borrowers may assume. These products, referred to variously as "nontraditional," "alternative," or "exotic" mortgage loans, include, among other loans, interest-only mortgages and payment option adjustable-rate mortgages. It includes guidance on loan terms and underwriting standards, risk management practices, consumer protection issues, and recommended practices.
This bulletin: (a) specifies the form of the Vermont disclosure relating to the amount to be financed in a motor vehicle retail installment contract (including disclosures about negative equity), as required by 8 V.S.A. §2355(f)(1)(J; (b) responds to inquires regarding the calculation of "cash price" for purposes of the disclosure form and for purposes of the Department of Motor Vehicles Dealer's Vehicle Record log sheet; and (c) responds to inquiries about whether the purchase and use tax should be included in the "cash price" of the motor vehicle.
This bulletin provides guidance on the form, content, and timing of the disclosures required by 9 V.S.A. § 2603 and includes a model form of the Mobile Home Retail Installment Contract Disclosure required by 9 V.S.A. § 2603(e).
This bulletin clarifies some issues that surfaced as the mortgage broker business adjusted to the changes in the national lending market, including: (1) the form of mortgage broker agreement that a mortgage broker may use in Vermont; (2) requiring the signature of both the mortgage broker and prospective borrower on the agreement; (3) requiring the disclosure in the mortgage broker agreement of all money that will be paid to the mortgage broker, including both borrower paid fees and the lender's so-called yield-spread-premium; (4) the requirement that loans be placed only with Vermont lenders licensed or with lenders specifically exempt from Vermont's licensed lender statute; (5) prohibition on providing a rate lock, extending a rate lock, or accepting discount points or any other funds from a borrower for the purpose of buying down a rate of interest on a residential mortgage loan; (6) a prohibition on accepting and keeping escrow waiver fees or any other fees that are associated with the terms and conditions of a loan and typically are charged by the lender on a residential mortgage loan; (7) a requirement that mortgage brokers obtain prior Department approval for each individual that will act as an authorized mortgage broker under the license.
This bulletin informs lenders of a new law (effective July 1, 2001) that requires lenders to disburse loan funds to the settlement agent at or before the loan closing, or, where a right of rescission applies, prior to 2:00 p.m. Eastern Standard Time of the first day after the expiration of the rescission period.
This bulletin alerts interested parties to changes that may be necessary in their operations as a result of the adoption of the Vermont Civil Union Law. It also provides sample language for Individual Retirement Accounts ("IRAs") and residential mortgage loan applications that may be helpful as lenders adjust their operations and procedures to recognize civil unions.