PURPOSE: This rule draws attention to the provisions of section 408.052, RSMo as they relate to fees taken by insiders in connection with real estate secured loans.

PUBLISHER’S NOTE: The secretary of state has determined that the publication of the entire text of the material which is incorporated by reference as a portion of this rule would be unduly cumbersome or expensive. Therefore, the material which is so incorporated is on file with the agency who filed this rule, and with the Office of the Secretary of State. Any interested person may view this material at either agency’s headquarters or the same will be made available at the Office of the Secretary of State at a cost not to exceed actual cost of copy reproduction. The entire text of the rule is printed here. This note refers only to the incorporated by reference material.

1. (1) Section 408.052, RSMo, which concerns loans secured by first mortgages on residential real estate, prohibits a lender from charging, requiring or receiving fees of any nature with certain exceptions. Those exceptions include actual expenses paid to any person or entity other than an officer, employee or director of the lender or a business in which an officer, employee or director owns any substantial interest. Accordingly, a bank may not make a separate identifiable charge to a customer for any services performed by it or any of its officers, directors or employees or any business in which any officer, director or employee has a substantial interest.
2. (2) It should be noted that P.L. 96-221, 12 U.S.C. 1735f-7 eliminated the limitation on the number of points as well as interest rates which may be assessed on first mortgage residential real estate loans which are federally related mortgages. As all Missouri banks are insured by the Federal Deposit Insurance Corporation (FDIC), all first mortgage residential real estate loans made by Missouri banks, by definition, are federally related. Accordingly, it would be acceptable for a bank to permit services, such as abstract and appraisal services, to be performed by an officer, director or employee or business in which these persons hold a substantial interest and then add the cost to the points so that the finance charge and annual percentage rate reflect these costs. In this way, no separate identifiable charge is assessed and section 408.052, RSMo will not be violated, in our opinion.

AUTHORITY: sections 361.105, RSMo 1986 and 408.052, RSMo Supp. 1989.* This rule originally filed as 4 CSR 140-2.053. Original rule filed June 12, 1990, effective Nov. 30, 1990. Moved to 20 CSR 1140-2.053, effective Aug. 28, 2006.

*Original authority: 361.105, RSMo 1967 and 408.052, RSMo 1974, amended 1979, 1989.