§ 5.33.040. Prohibited terms and practices for home loans in general.

No lender may make a home loan in violation of any of the following prohibited terms or practices:

A.

No Excessive Prepayment Penalties. No lender may charge a prepayment penalty on a home loan, unless the home loan is not a high-cost home loan, and the prepayment penalty is only imposed on prepayments within the first three years of the date of the promissory note for the home loan, and then solely as set forth herein and otherwise allowed by state and federal law. Any such prepayment penalty is limited to three percent of the total loan amount during the first year after the date of the note, two percent of the total loan amount during the second year, and one percent of the total loan amount during the third year. Notwithstanding the above, when a borrower refinances a home loan, at no time may a lender charge a prepayment penalty on the home loan being refinanced if the same lender or an affiliate of that lender will be the holder of the note for the new home loan. For purposes of this paragraph, a "prepayment penalty" means any penalty, fee or charge imposed on a borrower by the lender or an affiliate of the lender for paying all or part of the principal of the home loan before the date when theprincipal payment is due.

B.

No Financing of Credit Insurance. No lender may finance any credit life, credit disability, credit property or credit unemployment insurance, or any other life or health insurance premiums when making a home loan. Insurance premiums not included in the home loan principal and calculated and payable on a monthly basis will not be considered financed by the lender for purposes of this paragraph.

C.

No Recommending Default. No lender may recommend or encourage a borrower to default or not to make payment on a home loan or any other debt, when such lender action is in connection with the closing or planned closing of a home loan that refinances all or part of the borrower's debt.

D.

No Loans Violating Federal Lending Laws. No lender may make a home loan that violates any applicable provision of the federal Truth in Lending Act, as amended by the Home Ownership and Equity Protection Act of 1994 (15 U.S.C. § 1601, et seq.), or any applicable provision of the federal Real Estate Settlement Procedures Act of 1974 (12 U.S.C. § 2601, et seq.), or any regulations implementing these statutes, as these statutes and regulations may be amended from time to time. The city intends that any violation of provisions in these laws pertaining to home loans shall give rise to a cause of action under this chapter independent of federal law, and shall entitle the aggrieved party or the City Attorney to pursue any of the rights and remedies set forth in this chapter.

(Ord. 12361 § 2 (part), 2001)