PURPOSE: This rule sets standards for mortgage brokers’ commitments and closings.

1. (1) Approval Notice. Immediately upon approval of a loan application, the licensee shall deliver to the applicant a written loan approval notice stating the terms and conditions of the loan, namely—

   1. (A) The day the loan commitment expires;
   2. (B) All economic terms of the loan and their duration; and
   3. (C) Whether the economic terms are fixed or, if subject to change, an explanation of the time when, circumstances under which, and extent to which they may be changed.
2. (2) Inconsistent Conditions Prohibited. No residential mortgage loan commitment shall contain conditions inconsistent with those required by the state and federal laws in effect at the time of application, unless such conditions are less onerous to the applicant. 20 CSR 1140-30
3. (3) Avoidance of Commitment. If an applicant and the real estate meet normal standards, the licensee shall not refuse to make the loan to avoid complying with agreed to terms.
4. (4) Delay. Any licensee which delays processing an application with the result that a borrower incurs higher costs shall be liable to the borrower for such increase in costs, including points and rates, and for a reasonable attorney’s fee.

5. (5) Fees and Charges Prior to Closing.

   1. (A) Any fee paid by the borrower prior to closing shall be placed with a licensed and bonded disbursing agent or licensed real estate broker. A licensee shall not require a borrower to pay any fees or charges prior to the loan closing, except—

      1. 1. Charges to be actually and necessari-

ly incurred for services from third parties needed to process the application; and

1. 2. A rate-lock fee (fee), all of which

must be a bona fide fee paid in full to a third party, and further provided—

1. A. The Rate-Lock Fee Agreement is

in writing and signed by both the licensee and the applicant and states—

1. (I) The expiration date of the fee

agreement;

1. (II) The amount of the loan;
2. (III) The maximum interest rate

and maximum discount (points); and

1. (IV) The term of the loan; and
2. B. The licensee is able to demonstrate

to the commissioner that—

1. (I) The licensee is able to perform

under the terms of the fee agreement; and

1. (II) Subject to verification, the

information submitted by the borrower indicates that the loan will be approved in accordance with the fee agreement; and

1. C. The fee is deposited in escrow in

accordance with the requirements of 4 CSR 140-30.040, for the following distribution:

1. (I) The fee is paid to the lender and

credited to the borrower at closing; and

1. (II) The fee must be refunded if the

loan does not close in accordance with the fee agreement, except that the fee may be retained upon the licensee’s ability to demonstrate to the commissioner any of the following reasons: the applicant withdrew the loan application; the applicant has made a material misrepresentation on the loan application; the applicant has failed to provide documentation necessary to the processing or closing of the loan, such documents having been timely requested; and FINANCIAL INSTITUTIONS AND PROFESSIONAL REGISTRATION

1. (III) When the fee is to be retained,

the licensee shall send a written notice to the borrower stating the reason for retaining the fee.

1. (6) Refunds on Failure to Close. If a residential mortgage loan is not closed through no fault of the applicant, all the charges described in section (5) shall be refunded to the applicant, except to the extent such charges were incurred in good faith by the licensee on behalf of the applicant for third party services.
2. (7) Licensee’s Failure to Close—Disclosure. If a loan fails, through no fault of the applicant, to close within the specified commitment period, the licensee shall provide detailed written notification to such applicant of why the loan failed to close and specify any resulting conditions which will affect the availability of such loan.
3. (8) Escrow Account Agreements at Closing. If the mortgage requires an escrow account for taxes and/or insurance premiums, a written Escrow Account Disclosure Agreement shall be executed at closing. Compliance with applicable federal law shall constitute compliance with this rule.

AUTHORITY: sections 443.847, 443.869(7) and 443.887, RSMo Supp. 1996.*This rule originally filed as 4 CSR 140-30.110. Emergency rule filed Nov. 25, 1996, effective Dec. 5, 1996, expired June 2, 1997. Original rule filed Nov. 25, 1996, effective May 30, 1997. Moved to 20 CSR 1140-30.110, effective Aug. 28, 2006.

*Original authority: 443.847, RSMo 1994, amended 1995; 443.869(7), RSMo 1994, amended 1995; and 443.887, RSMo, 1994, amended 1995.