Sec 6-946. Required accounting practices and records; refundable deposits; periodic impoundment payments; disclosure

A. Every mortgage banker shall keep and maintain at all times correct and complete records clearly reflecting the financial condition of the business as prescribed by the superintendent that will enable him to determine whether the licensee is conducting his business in accordance with this article. If the mortgage banker operates two or more licensed places of business in this state, after notifying the superintendent, he may maintain the records at his principal place of business in this state, except that a mortgage banker, with the approval of the superintendent, may maintain the records outside of this state. A mortgage banker shall, for records kept outside of this state, make the records available to the superintendent in this state not more than three business days after demand and provide for the acceptance of collect calls or provide a toll free telephone number to borrowers to obtain information from the records if the licensed places of business in this state cannot readily provide the information requested by the borrowers. Every mortgage banker shall maintain original documents, or clearly legible copies, of all mortgage banking loan transactions and mortgage loan transactions, unless the mortgage banking loan or mortgage loan is paid in full or the mortgage banking loan or mortgage loan and its servicing are sold, for not fewer than two years after the date of the mortgage banking loan closing or the date of the last disbursement of monies by the licensee, whichever occurs last. With the approval of the superintendent, a licensee that uses a computer or mechanical record keeping system is not required to keep a written copy of the records if the licensee is able to generate all information required by this section in a timely manner for examination or for other purposes.

B. Every mortgage banker shall observe generally accepted accounting principles and practices.

C. If a mortgage banker requires an advance or fee to be paid in connection with an application for a mortgage banking loan or mortgage loan, there shall be a written agreement. The parties shall sign the written agreement, and the agreement shall contain terms pertaining to the payment of the fee or disposition of the advance or fee, whether the loan is finally consummated or not, and the term for which the agreement is to remain in force before return of the advance or fee for nonperformance can be required. Advances or fees shall be immediately deposited in a trust account in a bank, savings bank or savings and loan association that is fully insured by the federal deposit insurance corporation or any successor agency and shall not be commingled with other monies. The trust account shall designate the licensee as trustee and shall provide for withdrawal of the monies without previous notice. Withdrawals shall only be disbursed according to the terms of the agreement. A licensee who receives advances or fees shall preserve and on request make available to the superintendent all deposits, withdrawal receipts and statements of account rendered by the bank or savings and loan association. The licensee shall further preserve all agreements between the parties involved in the transaction and all contracts, agreements and instructions to or with the depository and shall keep an accurate accounting of each separate bank account in which the trust funds have been deposited. If the loan is declined by or on behalf of the lender or cancelled by the applicant, all documents provided by or at the expense of the applicant, including any appraisal, are the property of the applicant. At the applicant's discretion, said documents shall be returned or transferred to any financial institution or enterprise so designated without additional consideration except for fees for which the applicant has previously contracted, provided that any such document is not prohibited by law from being transferred or returned.

D. If periodic payments are to be collected from the mortgagor to provide for payments by the mortgagee of taxes, assessments, insurance premiums, ground rents or other current charges against the real estate security, the estimated payment amount stated to the mortgagor by the mortgage banker shall be such that the total of these payments collected for each category during the tax or other period will approximate the actual tax or other payment when due. All such periodic payments of taxes, assessments, insurance premiums, ground rents and other current charges shall be accounted for annually to the borrower and, to the extent monies have been collected for payment, shall be paid promptly by the mortgage banker.

E. Before a mortgage banking loan closing on residential real property designed principally for the occupancy of from one to four families, a licensee shall fully comply, to the extent they apply, with the real estate lending disclosure requirements of title I of the consumer credit protection act (15 United States Code sections 1601 through 1666j), the real estate settlement procedures act (12 United States Code sections 2601 through 2617) and the regulations promulgated under those acts.