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H.B. 291
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6 This act modifies the Financial Institutions Act to exempt loans made after May 6, 2002 from
7 certain obligations related to reserve accounts and to make technical changes.
8 This act affects sections of Utah Code Annotated 1953 as follows:
9 AMENDS:
10 7-17-4, as enacted by Chapter 124, Laws of Utah 1979
11 Be it enacted by the Legislature of the state of Utah:
12 Section 1. Section 7-17-4 is amended to read:
13 7-17-4. Options in lieu of reserve account -- Notice by lender -- Selection by
14 borrower -- Noninterest-bearing reserve account.
15 (1) A lender not requiring the establishment and maintenance of a reserve account shall
16 offer the borrower the following options:
17 (a) the borrower may elect to maintain a noninterest-bearing reserve account to be serviced
18 by the lender at no charge to the borrower; or
19 (b) the borrower may manage the payment of insurance premiums, taxes and other charges
20 for [
21 (2) (a) The lender shall give written notice of the options to the borrower:
22 (i) with respect to real estate loans existing on [
23 mailed not more than 30 days after [
24 (ii) with respect to real estate loans made on or after [
25 notice given at or prior to the closing of the loan.
26 (b) The notice required by this Subsection (2) shall:
27 (i) clearly describe the options; and
28 (ii) state that:
29 (A) a reserve account is not required by the lender[
30 (B) the borrower is legally responsible for the payment of taxes, insurance premiums, and
31 other charges; and [
32 (C) the notice is being given pursuant to this [
33 (c) For real estate loans in existence on [
34 select one of the options prior to 60 days after [
35 (d) If no option is selected prior to 60 days after [
36 borrower will be [
37 provided, however, that the borrower at a later time may select the option described in Subsection
38 (1)(b).
39 (e) For loans made on or after [
40 one of the options at the closing.
41 (f) If the borrower selects the option described in Subsection (1)(a), the lender [
42 not be required to account for earnings, if any, on the account.
43 (3) (a) [
44 in Subsection (1)(b), or [
45 premiums, or other charges pertaining to the property securing the loan prior to the delinquency
46 date for such payments, the lender may require a reserve account without interest or other
47 compensation for the use of the funds[
48 (b) Notwithstanding Subsection (3)(a), the lender may not require a reserve account
49 without interest or other compensation if:
50 [
51 [
52 premiums, or other charges.
53 (4) This section does not apply to a loan made, renewed, or modified on or after May 6,
54 2002.
Legislative Review Note
as of 1-23-02 4:53 PM
A limited legal review of this legislation raises no obvious constitutional or statutory concerns.