16a-3-308a.   Loans secured by mortgages on consumer'sprincipal residence; negative amortization and balloon paymentsprohibited.(1) A loan subject to this section may not provide for thenegative amortization of principal or a balloon payment. A loan payment is nota balloon payment if the amount of the payment is less than twice the amount ofany other payment.

      (2)   Subsection (1) applies to a consumer loan which is secured by a firstmortgage or a second mortgage on the consumer's principal residence and withrespect to which (a) the loan-to-value ratio exceeds 100% at the time the loanismade or (b) the annual percentage rate exceeds the code mortgage rate.Notwithstanding the foregoing, subsection (1) does not apply to a loanpursuant to open end credit; a purchase-money loan incurred to acquire orconstruct the consumer's principal residence; or a reverse mortgagetransaction.

      (3)   The creditor must disburse the proceeds of a consumer loan secured by afirstmortgage or a second mortgage upon the satisfaction of all conditions to thedisbursement and the expiration of all applicable rescission, cooling-off orother waiting periods required by law, unless the parties otherwise agree inwriting.

      (4)   No person shall record a mortgage if moneys are not available fordisbursal to the mortgagor upon the expiration of all applicablerescission,cooling-off or other waiting periods required by law unless, before thatrecording, the person informs the mortgagor in writing of a definite date bywhich payment shall be made and obtains the mortgagor's written permission forthe delay.

      (5)   This section shall be supplemental to and a part of theuniform consumercredit code.

      History:   L. 1999, ch. 107, § 3;L. 2005, ch. 144, § 15;L. 2006, ch. 67, § 1; July 1.