(a) As used in this section and sections 36a-760a to 36a-760j, inclusive:

(1) “APR” has the same meaning as provided in § 36a-746a;

(2) “CHFA loan” means a loan made, insured, purchased, subsidized or guaranteed by the Connecticut Housing Finance Authority;

(3) “FHA loan” means a loan made, insured, purchased, subsidized or guaranteed by the Federal Housing Administration;

(4) “First mortgage loan” has the same meaning as provided in § 36a-485;

(5) “Lender” means any person engaged in the business of the making of mortgage loans who is (A) required to be licensed by the commissioner under chapter 668, or such person’s successors or assigns, or (B) exempt from licensing pursuant to subdivisions (1) to (3), inclusive, of subsection (a) of § 36a-487, and their successors and assigns, but does not include any mortgage broker, as defined in this section, or any mortgage loan originator, as defined in § 36a-485;

(6) “Mortgage broker” means a mortgage broker, as defined in § 36a-485, who is required to be licensed by the commissioner under chapter 668, or such person’s successors or assigns;

(7) “Nonprime home loan” means any loan or extension of credit, excluding an open-end line of credit, any mortgage insured under Title II of the National Housing Act, 12 USC 1701 et seq., as amended from time to time, that satisfies the requirements for a qualified mortgage set forth in 24 C.F.R. § 203.19(b), as amended from time to time, and a reverse mortgage transaction, as defined in 12 C.F.R. § 1026.33, as amended from time to time:

(A) In which the borrower is a natural person;

(B) The proceeds of which are to be used primarily for personal, family or household purposes;

(C) In which the loan is secured by a mortgage upon any interest in one-to-four family residential real property located in this state which is, or when the loan is made, intended to be used or occupied by the borrower as a principal residence;

(D) In which the principal amount of the loan does not exceed four hundred seventeen thousand dollars;

(E) Where the loan is not a CHFA loan; and

(F) In which the conditions set forth in subparagraph (F)(i) of this subdivision apply, subject to any adjustments made pursuant to subparagraph (F)(ii) of this subdivision:

(i) The difference, at the time of consummation, between the APR for the loan or extension of credit and the average prime offer rate for a comparable transaction, as of the date the interest rate is set, is greater than one and one-half percentage points if the loan is a first mortgage loan or three and one-half percentage points if the loan is a secondary mortgage loan. For purposes of this subparagraph, “average prime offer rate” has the meaning as provided in 12 C.F.R. § 1026.35, as amended from time to time. For purposes of this clause, the date the interest rate is set is the last date the interest rate is set, provided the rate is adjusted on or before consummation.

(ii) The commissioner shall have the authority, after consideration of the relevant factors, to increase the percentages set forth in subparagraph (F)(i) of this subdivision. For purposes of this clause, the relevant factors to be considered by the commissioner shall include, but not be limited to, the existence and amount of increases in fees or charges in connection with purchases of mortgages by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and increases in fees or charges imposed by mortgage insurers and the impact, including the magnitude of the impact, that such increases have had, or will likely have, on APRs for mortgage loans in this state. When considering such factors, the commissioner shall focus on those increases that are related to the deterioration in the housing market and credit conditions. The commissioner may refrain from increasing such percentages if it appears that lenders are increasing interest rates or fees in bad faith or if increasing the percentages would be contrary to the purposes of sections 36a-760 to 36a-760f, inclusive. No increase authorized by the commissioner to a particular percentage shall exceed one-quarter of one percentage point, and the total of all increases to a particular percentage under this clause shall not exceed one-half of one percentage point. No increase shall be made unless: (I) The increase is noticed in the Banking Department Bulletin and the Connecticut Law Journal, and (II) a public comment period of twenty days is provided. Any increase made under this clause shall be reduced proportionately when the need for the increase has diminished or no longer exists. The commissioner, in the exercise of his discretion, may authorize an increase in the percentages with respect to all loans or just with respect to a certain class or classes of loans;

(8) “Open-end line of credit” means a mortgage extended by a lender under a plan in which: (A) The lender reasonably contemplates repeated transactions; (B) the lender may impose a finance charge from time to time on an outstanding unpaid balance; (C) the amount of credit that may be extended to the consumer during the term of the plan, up to any limit set by the lender, is generally made available to the extent that any outstanding balance is repaid; and (D) none of the proceeds of the open-end line of credit are used at closing to (i) purchase the borrower’s primary residence, or (ii) refinance a mortgage loan that had been used by the borrower to purchase the borrower’s primary residence;

(9) “Secondary mortgage loan” has the same meaning as provided in § 36a-485.

(b) The provisions of sections 36a-760a to 36a-760i, inclusive, shall be applicable to nonprime home loans and mortgages, as appropriate, for which applications have been received on or after August 1, 2008.