Mortgage industry

​Statement of need 

The purpose of this policy statement is to clarify the division's policy against permitting or requiring consumers to sign promissory notes and trust deeds before the loan's final approval.

Oregon consumers have been harmed by lenders who permit or require consumers to sign promissory notes and trust deeds before a loan's final approval. In some cases, trust deeds have been recorded before final loan approval, and consumers' loans were not approved or funded. In a few instances, it has taken up to six months to get the recorded trust deed released and the consumers were unable to refinance until the existing lien was removed. This is a misleading or deceptive practice prohibited by ORS 59.865(2) and 59.930 and may result in the suspension, revocation, or denial of a license, in addition to administrative sanction.

Policy 

Requiring or permitting consumers to sign promissory notes and trust deeds before final approval of a loan is an unfair and unethical practice constituting grounds for denial, suspension, or revocation of a mortgage lender license. Loans should have received a written loan approval with the repayment terms of the loan fully disclosed before the time the loan documents are signed.

Lenders may not record trust deeds until they are prepared to fund the fully approved loan. Loan funds should be released to the borrower or the borrower’s approved representative, such as a closing attorney or escrow agent, on the day of recording, but no later than 24 hours following the recording.

For purposes of this policy, “lender” includes both mortgage brokers and mortgage bankers.

Starting Oct. 3, 2015, the consumer must be provided the following documents translated into the language used in the transaction:

Documents that need to be translated and provided to consumers to comply with ORS 86A.198

For loans subject to the TILA/RESPA Integrated Loan Disclosures: 

  • The Loan Estimate 
  • The Closing Disclosure 
  • The general disclosure 

For loans not subject to the TILA/RESPA Integrated Loan Disclosures:

  • GFE 
  • TIL 
  • The general disclosure 

The department further recommends that mortgage bankers, mortgage brokers, and mortgage loan originators that are required by ORS 86A.198 to provide translated documents for loans subject to the integrated loan disclosures also provide a translation of Form H-27(A), as developed and publicized by the CFPB. This will ensure the consumers have all their key disclosures in the language used in the transaction. To aid in this, the department has translated Form H-27 (A) Mortgage Loan transaction - Written List of Providers Model Form, which we recommend using when the above disclosures have been provided to borrowers as required by RESPA and TILA. 

Information, guidance and tutorials

(Table with translation pdf links here)

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