Ohio Administrative Code › Title 1301:9 - Division of Financial Institutions: Credit Unions › Chapter 1301:9-2 - General Provisions › Section 1301:9-2-23 - Home equity and second mortgage loans

Current through all regulations passed and filed through July 1, 2024
(A) A "home equity loan or a second mortgage
			 loan" is a loan secured by the equity in a dwelling, and is made for a purpose
			 other than the purchase or refinancing of the dwelling, regardless of the lien
			 priority. A home equity loan may be one with lines of equity credit which are
			 either variable or fixed-rate. Home equity loans qualify as consumer credit.
			 Home equity and second mortgage loans shall be made in accordance with
			 disclosures  under the "Truth in
			 Lending Act," 82 Stat. 149 (1980),
			 15 U.S.C.
			 1606, as in effect on
			 
								July
			 18, 2023.
(B) Adequate
			 insurance on properties securing home equity and second mortgage loans shall be
			 in place and the borrower shall furnish a copy of a fire and casualty policy in
			 at least the amount of any outstanding mortgage with a mortgage loss payable
			 clause in favor of the credit union.
(C) Credit unions engaging in equity lending
			 shall obtain a title search of the property securing home equity and second
			 mortgage loans for outstanding liens and  retain a copy in the member's file. The title
			 to the property securing a home equity or second mortgage loan shall be in
			 fee-simple absolute.
(D) The
			 combined aggregate amount of first mortgage and home equity or second mortgage
			 loans 
								are limited to one hundred per cent of the
			 appraised value of the property securing the loan. An appraisal made by a
			 certified or licensed independent appraiser who has satisfied the requirements
			 of Chapter 4763. of the Revised Code and applicable rules or other comparable
			 statute, shall be obtained for home equity or second mortgage loans of four
			 hundred thousand dollars or more, or for ninety- five per cent of appraised
			 value. Appraisals or a determination of the property value for home equity or
			 second mortgage loans which are less than four hundred thousand dollars or less
			 than ninety-five per cent of appraised value shall, as a minimum, be made by
			 qualified staff personnel and include a written report documenting the
			 comparable sales or based on other acceptable information and documentation
			 that accurately reflects the appraised value.
(E) A credit union may make home equity or
			 second mortgage loans secured by liens exceeding ninety-five per cent of the
			 appraised value, provided that the credit union files with the superintendent a
			 copy of the loan policy and information regarding the placement of proper
			 private mortgage insurance on the excess amount.If
								
								the superintendent fails
			 to
								 notify the credit union
			 
								within ten business days after the filing of the
			 request or policy 
								that it is denied,  needs modification, or that additional documentation or information is being
			 requested, then the request or policy shall be deemed approved. If additional documentation or
			 information is 
								requested, the credit union
			 
								has thirty days to file the additional documentation
			 or information with the superintendent. If the
			 superintendent does not respond within ten business days of receiving the
			 additional documentation the request shall be deemed approved. However, nothing
			 shall preclude a credit union from requesting a waiver in writing for the
			 requirement of private mortgage insurance when modifying an existing loan above
			 ninety five per cent loan to value. The superintendent shall approve or deny
			 the waiver within ten business days of receiving the request. If the
			 superintendent does not respond within ten business days of receiving the
			 waiver request it shall be deemed approved.
(F) The payment schedules for home equity and
			 second mortgage loans made on or after April 1,
			 2023 shall provide for monthly installments  that include
			 amortization of the principal and interest within terms of the loan agreement,
			 and in no case shall the term exceed forty years. Home
			 equity and second mortgage loans made prior to April 1, 2023 may provide for no
			 less than quarterly installments.
(G) If requested by a credit union, the
			 superintendent may approve a less restrictive real estate loan policy than
			 provided by this rule. The request shall be made in writing and include a copy
			 of the proposed real estate loan policy and a certified copy of the resolution
			 of the board of directors adopting the policy. The credit union shall
			 substantiate that it has the expertise, capital, management, and experience to
			 implement the proposed policy. The credit union shall file with the
			 superintendent a copy of the loan policy and information regarding the
			 placement of proper private mortgage insurance the excess amount. The
			 superintendent shall notify the credit union not more than ten business days
			 after the filing of the request or policy whether it is denied, approved, or
			 needs modification. If the superintendent does not respond within ten business
			 days after the filing of the request or policy, it shall be deemed approved;
			 unless, the superintendent notifies the credit union in writing within ten
			 business days of the credit union's request being filed that additional
			 documentation or information is
			 being requested
								. If additional documentation
			 or information is 
								requested,
			 the credit union 
								has thirty days to file the additional
			 documentation with the superintendent. If the superintendent does not respond
			 within ten business days of receipt of the additional documentation, the
			 request or policy shall be deemed approved.
(H)
								
								The superintendent may adopt a more
			 restrictive real estate loan policy than provided by this rule, if it is
			 justified as a matter of safety and soundness.