§14A-3-410. Subsection 10 mortgages – Limitations and restrictions
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- Preemption.
(1)Limitation on terms on subsection 10 mortgages. A subsection 10 mortgage referred to in subsection
(10)of Section 1- 301 of Title 14A of the Oklahoma Statutes shall not contain a demand
feature that permits the creditor to terminate the loan in advance of the original maturity date and to demand repayment of the entire outstanding balance, except in the following circumstances:
(a)there is fraud or material misrepresentation by the
consumer in connection with the loan;
(b)the consumer fails to meet the repayment terms of the
agreement for any outstanding balance; or
(c)there is any action or inaction by the consumer that
adversely affects the creditor's security for the loan
or, any right of the creditor in such security;
(2)Restriction on activities. In connection with a subsection 10 mortgage referred to in subsection
(10)of Section 1-301 of Title 14A of the Oklahoma Statutes:
(a)a creditor shall not replace or consolidate a zero
interest rate or other low-rate loan made by a
governmental or nonprofit creditor with a subsection
10 mortgage within the first ten
(10)years of the
zero interest or other low-rate loan unless the
current holder of the loan consents in writing to the
refinancing. For purposes of this paragraph a “low-
rate loan” is a loan that carries a current interest
rate two
(2)percentage points or more below the
current yield on United States Department of the
Treasury securities with a comparable maturity;
(b)no creditor shall recommend or encourage default on an
existing loan or other debt by an obligor before or in
connection with the closing or planned closing of a
subsection 10 mortgage that refinances all or any
portion of such existing loan or debt;
(c)a creditor extending mortgage credit subject to
subsection
(10)of Section 1-301 of Title 14A of the
Oklahoma Statutes may not engage in a pattern or
practice of extending credit subject to a consumer
based on the consumer's collateral without regard to
the consumer's repayment ability, including the
consumer's current and expected income, current
obligations, and employment. There is a presumption
that a creditor has violated this subsection if the
creditor engages in a pattern or practice of making
subsection 10 mortgages without verifying and
documenting consumers' repayment ability. A consumer
shall be presumed to be able to make the scheduled
payments to repay the obligation if, at the time the
loan is consummated, the total monthly debts of the
consumer, including amounts owed under the loan, do
not exceed fifty-five percent (55%) of the monthly
gross income of the consumer as verified by the credit
application, the financial statement of the consumer,
a credit report, financial information provided to the
creditor by or on behalf of the consumer, or any other
reasonable means; provided, no presumption of
inability to make the scheduled payments to repay the
obligation shall arise solely from the fact that, at
the time the loan is consummated, the consumer's total
monthly debts, including amounts owed under the loan,
exceed fifty-five percent (55%) of the monthly gross
income of the consumer;
(d)within one
(1)year of having extended credit subject
to subsection
(10)of Section 1-301 of Title 14A of
the Oklahoma Statutes, a creditor may not refinance
any loan subject to subsection
(10)of Section 1-301
of Title 14A of the Oklahoma Statutes to the same
borrower into another loan subject to subsection
of Section 1-301 of Title 14A of the Oklahoma
Statutes, unless the refinancing is in the borrower’s
interest. An assignee holding or servicing an
extension of mortgage credit subject to subsection
(10)of Section 1-301 of Title 14A of the Oklahoma
Statutes shall not, for the remainder of the one-year
period following the date of origination of the
credit, refinance any loan subject to subsection
of Section 1-301 of Title 14A of the Oklahoma Statutes
to the same borrower into another loan subject to
subsection
(10)of Section 1-301 of Title 14A of the
Oklahoma Statutes, unless the refinancing is in the
borrower’s interest. A creditor or assignee is
prohibited from engaging in acts or practices to evade
this provision, including a pattern or practice of
arranging for the refinancing of its own loans by
affiliated or unaffiliated creditors, or modifying a
loan agreement, whether or not the existing loan is
satisfied and replaced by the new loan, and charging a
fee;
(e)in connection with credit secured by the consumer’s
dwelling that does not meet the definition of open-end
credit defined at 12 C.F.R. Section 226.2(a)(20), a
creditor shall not structure a home-secured loan as an
open-end plan to evade the requirements of subsection
(10)of Section 1-301 of Title 14A of the Oklahoma
Statutes;
(f)a subsection 10 mortgage referred to in subsection
(10)of Section 1-301 of Title 14A of the Oklahoma
Statutes shall not contain a mandatory arbitration
provision that:
does not comply with rules set forth by a
nationally recognized arbitration organization
such as the American Arbitration Association,
(ii)does not require the arbitration proceeding to be
conducted:
(aa)within the federal judicial district in
which the subject property is located,
(bb)in the city nearest the obligor's residence
where a federal district court is located,
or
(cc)at such other location as may be mutually
agreed upon by the parties,
(iii)does not require the creditor to contribute at
least fifty percent (50%) of the amount of any
filing fee, and
(iv)does not require the creditor to pay standard
daily arbitration fees, both its own and those of
the obligor, for at least the first day of
arbitration;
(g)a creditor or its servicer shall report at least
quarterly both the favorable and unfavorable payment
history information of the obligor on payments due to
the creditor on a subsection 10 mortgage to a
nationally recognized consumer credit reporting
agency. This subsection shall not prevent a creditor
or its servicer from agreeing with the obligor not to
report payment history information in the event of a
resolved or unresolved dispute with the obligor and
shall not apply to subsection 10 mortgages held or
serviced by a creditor for less than ninety
(90)days.
(3)Preemption. The laws of this state relating to the brokering, originating, making, servicing and collecting of mortgage loans subject to Title 14A of the Oklahoma Statutes prescribe rules of conduct on citizens generally, comprise a comprehensive regulatory framework intended to operate uniformly throughout the state under the same circumstances and conditions and constitute general laws of this state. Silence in the statutes of this state with respect to any act or practice in the brokering, originating, making, servicing or collecting of mortgage loans subject to Title 14A of the Oklahoma Statutes shall not be interpreted to mean that the state has not completely occupied the field or has only set minimum standards in its regulation of brokering, originating, making, servicing or collecting of mortgage loans subject to Title 14A of the Oklahoma Statutes. It is the intent of the Legislature to entirely preempt political subdivisions from the regulation and licensing of persons engaged in the brokering, originating, making, servicing or collecting of mortgage loans subject to Title 14A of
the Oklahoma Statutes in this state. No political subdivision shall enact any ordinance, resolution, local regulation, rule or law that regulates, directly or indirectly, the brokering, originating, making, servicing or collecting of mortgage loans subject to Title 14A of the Oklahoma Statutes, the terms of mortgage loans subject to Title 14A of the Oklahoma Statutes or that makes the eligibility of any person or entity to do business with the political subdivision dependent on the terms of mortgage loans subject to Title 14A of the Oklahoma Statutes originated or serviced by such person or entity or that imposes any reporting requirements or other obligations on a person, or its subsidiaries or affiliates engaged in the brokering, originating, making, servicing or collecting of mortgage loans subject to Title 14A of the Oklahoma Statutes in this state.
For purposes of this section, "political subdivision" means any county, city, town, school district, or other local governmental or public entity, located within this state.
(4)Nothing in this section shall be construed to invalidate or prohibit any ordinance, resolution, regulation, rule or law by a political subdivision to establish and administer voluntary neighborhood reinvestment programs in furtherance of the goals and purposes of the "Community Reinvestment Act of 1977", 91 Stat. 1147, 12 U.S.C.A. 2901, as amended.
(5)Nothing in this section shall be construed to invalidate any ordinance, resolution, local regulation, rule or law by a political subdivision that is required to meet the criteria for adequacy of law established by the United States Department of Housing and Urban Development in order to obtain certification as a fair housing assistance program. Added by Laws 2003, c. 330, § 10, eff. Jan. 1, 2004.