Tenn. Comp. R. & Regs. 0770-01-02-.13 - LOAN CLOSING

(1) Manner, Time and Place. The loan closing shall be conducted in accordance with these regulations and such subsequent procedures established by the Agency and shall be scheduled at a time and settlement office acceptable to the applicant and the Agency. When a loan is made through a qualified servicing agent, closing will normally occur at the office of the servicing agent originating the mortgage loan.

(2) Closing Officer. All loans shall be closed by loan closing officers approved by the Agency.

(3) Charges and Fees. The Agency or servicing agent may collect from the mortgagor, reasonable and customary amounts not in excess of those set from time to time by the Agency for the following terms:

(a) Recording fees, transfer taxes or other charges incident to recordation of title or deed of trust:

(b) Credit report;

(c) Real Property Survey if required by the Agency or applicable qualified insurer;

(d) Title examination and title insurance if required by the Executive Director or applicable qualified insurer;

(e) Such other reasonable and customary charges or fees as may be established by the Executive Director; provided, however, that no originating service fee or so called ''points'' may be charged to either the buyer or seller of any loan under this program unless specifically authorized by the Agency. For the purpose of these regulations, ''points'' shall mean any charge or discount for originating and closing a loan other than the application fee under Rule 0770-1-2-.10(2) and those fees established under Rule 0770-1-2-.13(3).

(4) Escrows. Upon closing the mortgage loan, the mortgagor shall pay to the Agency or its agent to be held in escrow, as provided in Rule 0770-1-2-.07(2) (c) a sum sufficient to pay the estimated real property taxes, special assessments, and insurance premiums for the period beginning on the date such taxes, assessments and insurance premiums were each last due and payable through the date of the first monthly payment under the mortgage.

(5) Taxes and Assessments. The Agency, or its agent, shall determine that all prior taxes and assessments against the property which are due and payable are paid at or before the time of loan closing.

(6) Promissory Note. The Agency, or its agent, will determine that the promissory note is properly completed and executed. The note and mortgage deed of trust shall be signed by all persons required to perfect a valid mortgage lien. The note will be dated no later than the date the mortgage is filed of record; provided it may be executed and dated earlier, if execution of that date is impossible and the mortgagor is advised that interest will accrue on the loan from the date of executing the promissory note.

(7) Mortgage. The Agency, or its agent, will determine that the mortgage deed of trust is properly completed, executed, sealed and witnessed, acknowledged and filed of record. The mortgage will be executed and dated the same date as the note, except that if it is impossible for one or more of the required signatories of the mortgage, it may be executed on a different date, but not prior to the date of the note.

(8) Mortgage Title Policy. Prior to loan closing evidence of title satisfactory to the Executive Director shall have been received by the Agency. A Mortgage Title Insurance policy shall be on the ALTA Standard Form Policy and paid-up in an amount at least equal to the outstanding principal balance of the mortgage loan. On single family mortgages on existing homes or on one of not more than fifty (50) loans from a subdivision, if title insurance coverage is not commonly required by private institutional mortgage investors in the area in which the mortgage premises is located, the Agency will accept an Attorney's opinion letter, or such other evidence of title commonly required by such private institutional mortgage investors; provided, the Attorney carries malpractice insurance in an amount and with coverage satisfactory to the Agency; and further provided that said evidence of title, or opinion is not subject to exceptions other than those exceptions acceptable to the Agency.

(9) Mortgage Insurance. Mortgage insurance policies or guaranties on mortgage deeds of trust securing loans made by the Agency, shall comply with the following requirements:

(a) All policies or guaranties shall be issued by qualified insurers as defined in Rule 0770-1-2 - .03 (g).

(b) A firm commitment to issue said policy shall be in effect at the time of loan closing.

(c) The Agency shall be named as the mortgagee insured or guaranteed in the policy or guaranty.

(d) The insurance or guaranty shall be in an amount at least equal to the top twenty percent (20%) of the existing principal balance of the mortgage loan.

(e) The terms and extent of coverage of the mortgage insurance policies or guaranties shall be satisfactory to the Executive Director.

(10) Property Insurance. Hazard Insurance against fire, extended coverage, etc., on homes subject to mortgages securing loans by the Agency shall, as a minimum, comply with the following requirements:

(a) All policies shall be written by companies authorized to transact business within the State of Tennessee.

(b) The company shall be reputable and financially sound as determined by the Executive Director.

(c) All policies shall be in force at the time of loan closing and a binder presented to the Agency or its agent.

(d) The Agency shall be named as the mortgagee in a standard mortgage clause attached to or printed in the policy.

(e) The insurance shall be in an amount at least equal to ninety percent (90%) of the insurable value of the improvements of the mortgaged real property.

(f) The terms and extent of coverage of all insurance policies must be satisfactory to the Executive Director.

(11) Mortgage Lien. A mortgagor must represent and determine that after the mortgage deed of trust has been recorded, the mortgaged property will be free and clear of all prior liens (other than such mortgage) and that there will not be outstanding any other unpaid obligation contracted in connection with the mortgage transaction or the purchase of the mortgage property.

Notes

Tenn. Comp. R. & Regs. 0770-01-02-.13

Original rule filed July 24, 1974; effective August 23, 1974. Amendment filed November 12, 1974; effective December 12, 1974.

Authority: T.C.A. § 13-23-115(18).