Vermont Adopts Provisions Related to Residential Real Estate Mortgage Loan Commitment Letters

• September 11, 2018
• Robert Harrison

Vermont enacted provisions related to form, content, and timing of residential real estate mortgage loan commitment letters; Regulation B-2018-02 supersedes and replaces Regulation B-98-1.  Regulation B-2018-02 constructs the framework within which commitment letters are to be issued in Vermont and encourages complete and timely disclosure of information to ensure consumer protection.  The regulation establishes the form of the commitment letter and the content it should contain.  All lenders must issue a commitment letter in connection with every mortgage loan; the regulation goes on to outline general requirements for the content contained in the commitment letter, some of those required items are:

1. Name of borrower
2. Date of issuance
3. Property address
4. Loan type
5. Commitment expiration date
6. Principal loan amount or maximum credit limit
7. Loan term
8. Loan disbursement and repayment periods
9. Amount of monthly payment
10. Rate program (locked or floating)
11. Interest rate
12. Prepayment terms
13. Name and phone number of the licensed or registered mortgage loan originator whom the borrower may contact with questions
14. The NMLS identification number for both the lender and the mortgage loan originator. (Regulation B-2018-02 Section 4 Subdivision A)

If the lender is required to issue a closing disclosure under Federal Regulation Z, the lender has the option to issue a short form commitment letter. (Regulation B-2018-02 Section 4 Subdivision B).  In the case of a reverse mortgage loan the content of the commitment letter is also outlined (Regulation B-2018-02 Section 4 Subdivision C).  All commitment letters must be delivered to the borrower no less than three business days prior to the closing unless an exception applies. (Regulation B-2018-02 Section 5).  This regulation is effective October 1, 2018

The full text of the regulation can be found here: http://www.dfr.vermont.gov/sites/default/files/dfr-regulation-banking-b-2018-02-commitment-letter.pdf

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