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286.8-120 Fees and charges in addition to interest -- Letters of commitment -Failure to fulfill terms constitutes default.
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(2)
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(4)
(5)
(6)
(7)
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Every mortgage loan company may require borrowers to pay all necessary and
reasonable expenses incurred in connection with the making, closing,
disbursing, extending, readjusting, or renewing of loans. Without limiting the
generality of the foregoing, such expenses may include appraisal, attorneys'
fees, abstract, recording and registration fees, title examination, title insurance,
mortgage insurance, credit report, survey, drawing of papers, origination fees,
loan closing costs, and taxes or charges imposed upon or in connection with
the making and reporting of any mortgage.
Every mortgage loan company also may require the borrowers to pay the cost
of all other necessary and incidental services rendered by the mortgage loan
company or by others in connection with loans in reasonable amounts. Without
limiting the generality of the foregoing, such costs may include the cost of
services of inspectors, engineers, and architects.
Such initial charges as described in subsections (1) and (2) of this section may
be collected by the mortgage loan company from the borrower and paid to any
person rendering such services, or paid directly by the borrower.
In lieu of such initial charges to cover such expenses and costs as described in
subsections (1) and (2) of this section, a mortgage loan company may make a
reasonable charge, part or all of which may be retained by the mortgage loan
company which renders such service, or part or all of which may be paid to
others who render such services.
The fees and charges authorized by this section shall be in addition to interest
authorized by law, and shall not be deemed to be a part of the interest
collected or agreed to be paid on such loans within the meaning of any law of
this Commonwealth which limits the rate of interest which may be exacted in
any transaction.
No person shall receive any fee or other compensation of any kind in
connection with procuring any loan, except for services actually rendered as
above provided, and in no event shall a mortgage loan company or mortgage
loan broker require the payment of a fee greater than one hundred dollars
($100) as a condition to submitting a loan application unless the commissioner
shall otherwise prescribe by rule.
All "letters of commitment," or any other contracts or agreements between
prospective borrowers and a mortgage loan company or a loan broker, where
the borrowers employ services, for a fee or commission, to obtain a loan
commitment or funding from a lending institution shall indicate the terms and
conditions thereof, including a full and detailed description of the services the
broker or company undertakes to perform, a specific statement of the
circumstances in which the broker or company will be entitled to obtain or
retain consideration and the period that such agreement shall remain in effect.
Failure on the part of any party, with the exception of the borrower, to fulfill the
terms of any loan commitment, letter of commitment, agreement, or contract for
the loan of money within the time and on such terms specified therein, or the
failure to make a bona fide effort to secure a loan after receiving a fee for such
service, shall constitute default by the mortgage loan company and any other
person so in default; and any person damaged by such default may sue at law
or equity for damages, reasonable attorneys' fees and interest at the legal rate
of interest under KRS 360.010. Every cause of action for damages under this
subsection survives the death of any person who might have been a plaintiff or
defendant. No person may sue under this subsection more than five (5) years
after any act constituting default.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 777, effective July 15, 2010. -Amended 1998 Ky. Acts ch. 197, sec. 12, effective July 15, 1998. -- Amended
1986 Ky. Acts ch. 461, sec. 15, effective July 15, 1986. -- Created 1980 Ky. Acts
ch. 365, sec. 13, effective July 15, 1980.
Formerly codified as KRS 294.120.
Legislative Research Commission Note (7/12/2006). In accordance with 2006
Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a
section of the Kentucky Financial Services Code, KRS Chapter 286.
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