Bill Text: AZ SB1288 | 2010 | Forty-ninth Legislature 2nd Regular | Engrossed
Bill Title: High-cost home loans; regulations
Spectrum: Partisan Bill (Republican 1-0)
Status: (Engrossed - Dead) 2010-04-29 - House Committee of the Whole action: Do Pass Amended [SB1288 Detail]
Download: Arizona-2010-SB1288-Engrossed.html
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House Engrossed Senate Bill |
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State of Arizona Senate Forty-ninth Legislature Second Regular Session 2010
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SENATE BILL 1288 |
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AN ACT
amending title 6, chapter 9, article 1, Arizona Revised Statutes, by adding section 6‑912; amending title 33, chapter 6, Arizona Revised Statutes, by adding article 4; amending section 33‑1126, Arizona Revised Statutes; relating to property.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 6, chapter 9, article 1, Arizona Revised Statutes, is amended by adding section 6-912, to read:
6-912. Conversion to commercial mortgage broker license
Notwithstanding section 6‑903, a person who holds a mortgage broker license may convert it to a commercial mortgage broker license by applying in a manner prescribed by the superintendent by rule. The approval of the conversion is at the discretion of the superintendent.
Sec. 2. Title 33, chapter 6, Arizona Revised Statutes, is amended by adding article 4, to read:
ARTICLE 4. HIGHER PRICED HOME LOANS
33-761. Definitions
In this article, unless the context otherwise requires:
1. "Front‑end debt to income" means the ratio of pitia to monthly gross income.
2. "Higher priced home loan":
(a) Means a loan that:
(i) Is made to one or more individuals for personal, family, or household purposes.
(ii) Is secured in whole or part by either a manufactured home, used or to be used as the borrower's principal residence, or real property improved by a dwelling designed for occupancy by four or fewer families and used or to be used as the borrower's principal residence.
(iii) Is a credit transaction described by 12 Code of Federal Regulations section 226.35(a).
(b) Does not include:
(i) A reverse mortgage.
(iii) a loan brokered by a commercial mortgage broker licensed pursuant to section 6-903.
3. "Pitia" means principal, interest, taxes, insurance, including homeowners' insurance and hazard and flood insurance, and homeowners' association or condominium fees but does not include mortgage insurance premiums.
33-762. Balloon payment
A higher priced home loan may not contain a provision for a scheduled payment that is more than twice as large as the average of earlier scheduled monthly payments, unless the balloon payment becomes due not less than sixty months after the date of the loan. This prohibition does not apply if the payment schedule is adjusted to account for the seasonal or otherwise irregular income of the borrower, the loan is a commercial loan, a commercial loan with one to four single family residences used as additional collateral, a home equity line of credit, a land loan, a construction loan, a loan with more than one dwelling as collateral or if the loan is a bridge loan in connection with the acquisition or construction of a dwelling intended to become the borrower's principal dwelling. END_STATUTE
33-763. Negative amortization
A higher priced home loan may not provide for a payment schedule with regular periodic payments that cause the principal balance to increase, except that this section does not prohibit negative amortization if the monthly payments under the higher priced mortgage loan, if fully amortized, would not exceed thirty‑one per cent of the borrower's front‑end debt to income. This section also does not prohibit negative amortization as a consequence of a temporary forbearance, bridge loan or restructure sought by the borrower.
33-764. Consideration of obligor's payment; definition
A. A lender may not engage in a pattern or practice of extending credit to consumers under higher priced home loans based on the consumers' collateral without regard to the obligor's repayment ability, including the obligor's current and expected income, current obligations, employment status and other financial resources other than the obligor's equity in the dwelling that secures repayment of the loan.
B. For the purposes of this section, "obligor" means a person obligated to pay a loan, including a borrower, cosigner or guarantor. If more than one person is obligated to pay a loan, the term refers to those persons collectively. END_STATUTE
33-765. Prepayment penalties
A higher priced home loan may not include a penalty for paying all or a part of the principal before the date on which the principal is due, including a refund of unearned interest computed by a method that is less favorable to the consumer than the actuarial method as defined by the house and community development act of 1992 (p.l. 102‑550; 106 stat. 3672; 15 United States Code section 1615d), unless both of the following apply:
1. The penalty is otherwise permitted by law.
2. Under the terms of the loan, all of the following apply:
(a) The penalty does not apply after the two year period following consummation.
(b) The penalty does not apply if the source of the prepayment monies is a refinancing by the creditor or an affiliate of the creditor.
(c) The amount of the periodic payment of principal or interest, or both, may not increase during the four year period after consummation.
Sec. 3. Section 33-1126, Arizona Revised Statutes, is amended to read:
33-1126. Money benefits or proceeds; exception
A. The following property of a debtor shall be exempt from execution, attachment or sale on any process issued from any court:
1. All money received by or payable to a surviving spouse or child upon the life of a deceased spouse, parent or legal guardian, not exceeding twenty thousand dollars.
2. The earnings of the minor child of a debtor or the proceeds thereof by reason of any liability of such debtor not contracted for the special benefit of such minor child.
3. All monies received by or payable to a person entitled to receive child support or spousal maintenance pursuant to a court order.
4. All money, proceeds or benefits of any kind to be paid in a lump sum or to be rendered on a periodic or installment basis to the insured or any beneficiary under any policy of health, accident or disability insurance or any similar plan or program of benefits in use by any employer, except for premiums payable on such policy or debt of the insured secured by a pledge, and except for collection of any debt or obligation for which the insured or beneficiary has been paid under the plan or policy and except for payment of amounts ordered for support of a person from proceeds and benefits furnished in lieu of earnings which would have been subject to such order and subject to any exemption applicable to earnings so replaced.
5. All money arising from any claim for the destruction of, or damage to, exempt property and all proceeds or benefits of any kind arising from fire or other insurance upon any property exempt under this article.
6. The cash surrender value of life insurance policies where for a continuous unexpired period of two years such policies have been owned by a debtor and have named as beneficiary the debtor's surviving spouse, child, parent, brother or sister, or any other dependent family member, in the proportion that the policy names any such beneficiary, except that, subject to the statute of limitations, the amount of any premium which is recoverable or avoidable by a creditor pursuant to title 44, chapter 8, article 1, with interest thereon, shall not be exempt. The exemption provided by this paragraph does not apply to a claim for the payment of a debt of the insured or beneficiary that is secured by a pledge or assignment of the cash value of the insurance policy or the proceeds of the policy. For the purposes of this paragraph, "dependent" means a family member who is dependent on the insured debtor for not less than half support.
7. An annuity contract where for a continuous unexpired period of two years such contract has been owned by a debtor and has named as beneficiary the debtor, the debtor's surviving spouse, child, parent, brother or sister, or any other dependent family member, except that, subject to the statute of limitations, the amount of any premium, payment or deposit with respect to such contract is recoverable or avoidable by a creditor pursuant to title 44, chapter 8, article 1 shall not be exempt. The exemption provided by this paragraph does not apply to a claim for a payment of a debt of the annuitant or beneficiary that is secured by a pledge or assignment of the contract or its proceeds. For the purposes of this paragraph, "dependent" means a family member who is dependent on the debtor for not less than half support.
8. Any claim for damages recoverable by any person by reason of any levy upon or sale under execution of his exempt personal property or by reason of the wrongful taking or detention of such property by any person, and the judgment recovered for such damages.
9. A total of one hundred fifty dollars held in a single account in any one financial institution as defined by section 6‑101. The property declared exempt by this paragraph is not exempt from normal service charges assessed against the account by the financial institution at which the account is carried.
B. Any money or other assets payable to a participant in or beneficiary of, or any interest of any participant or beneficiary in, a retirement plan under section 401(a), 401(k), 403(a), 403(b), 408, 408A or 409 or a deferred compensation plan under section 457 of the United States internal revenue code of 1986, as amended, shall be exempt from any and all claims of creditors of the beneficiary or participant. This subsection shall not apply to any of the following:
1. An alternate payee under a qualified domestic relations order, as defined in section 414(p) of the United States internal revenue code of 1986, as amended. The interest of any and all alternate payees is exempt from any and all claims of any creditor of the alternate payee.
2. Amounts contributed within one hundred twenty days before a debtor files for bankruptcy.
3. The assets of bankruptcy proceedings filed before July 1, 1987.
C. Any person the age of eighteen years or over, married or single, who resides within this state and who does not exercise the homestead exemption under article 1 of this chapter may claim as a personal property homestead exempt from all process prepaid rent, including security deposits as provided in section 33‑1321, subsection A, for the claimant's residence, not exceeding the lesser of one thousand dollars or one and one‑half months' rent.
D. Nothing in this section exempts property from orders which are the result of a judgment for arrearages of child support or for a child support debt.
Sec. 4. Exemption from rule making
For the purposes of section 1 of this act, the department of financial institutions is exempt from the rule making requirements of title 41, chapter 6, Arizona Revised Statutes, for one year after the effective date of this act.
Sec. 5. Retroactivity
Section 1 of this act is effective retroactively to September 30, 2009.
Sec. 6. Emergency
This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.
