Page 16 - John Hundley 2008

payment past due for 15 days or more; (3) cannot be imposed more than once for a single payment;
(4) must be reimbursed if the borrower presents proof of timely payment; and (5) must be posted on
the same business day as received by the lender, servicer or agent or at the address provided for
making payments.
The loan may not provide that more than two periodic payments are consolidated and paid in advance
from the loan proceeds.
A lender may not make such a loan unless it has given notice substantially similar to that contained in
12 C.F.R. 226.31(c).

Before making the loan, the lender must inform the borrower in writing of the right to participate in the
Mortgage Awareness Program, and no lender may offer a borrower less favorable loan terms
because of his participation in that program.

A lender may not divide a loan transaction into separate parts with the intent to avoid applica-
tion of the Act, nor perform any other subterfuge of its provisions.

A lender may not refinance a covered loan within one year if the refinancing charges additional points
and fees, unless it results in a tangible net benefit to the borrower.
If a loan is delinquent more than 30 days, the servicer must send a notice advising the borrower that
he may wish to seek credit counseling. If, within 15 days after mailing the notice, a lender or servicer
is notified in writing that the borrower is seeking approved credit counseling, no foreclosure may be
instituted for 30 days. (Only one such period of forbearance is required.) If, within the 30 days, the
parties agree to a debt management plan, foreclosure may not be commenced for as long as the plan
is complied with. If the borrower fails to comply with the plan, the lender may enforce the contract.
Before a foreclosure or collection action is filed, and before any action is taken to seize or
transfer ownership of property subject to the loan, the creditor must deliver to the borrower a
notice of the right to cure the default, stating: nature of the default, the right to cure by paying the
money required, the date by which cure is required (which may not be less than 30 days after the
notice is delivered); the name, address and phone number of a person to whom payment may be
made; that if the default is not cured by the date specified, the creditor may file an action; and the
name, address, and phone number of a person whom the borrower may contact if he disagrees that a
default has occurred or with the amount required to cure.
No part of the Act, other than Mortgage Awareness Program participation, may be waived.

Any provision of a loan which violates the Act is unenforceable against the borrower. However, a
lender or subsequent holder of the loan can avoid liability for a violation if it makes restitution to the
borrower and appropriate adjustments to the loan within 30 days of closing and prior to receiving
notice of the violation from the borrower, or within 60 days of its discovering an unintentional violation
that resulted from a bona fide error. Subsequent holders’ liability also may be limited under other
clauses of the Act, particularly if they can show policies and contract provisions prohibiting acquisition
of high-risk home loans, and the exercise of reasonable due diligence to prevent such acquisition.

John\Sharp Thinking\#10.doc
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