(a) A licensed mortgage lender or mortgage loan broker shall not make any payments to a contractor or home improvement contractor from proceeds of a mortgage loan for home improvement other than:

Terms Used In Tennessee Code 45-13-403

  • Commissioner: means the commissioner of financial institutions or the commissioner's designated representative. See Tennessee Code 45-13-105
  • Escrow: Money given to a third party to be held for payment until certain conditions are met.
  • Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. Source: OCC
  • Licensee: means a person to whom a license has been issued under this chapter, whether a mortgage lender, mortgage loan broker, mortgage loan servicer or mortgage loan originator, as applicable, but "licensee" also applies to any person holding a certificate of registration on July 31, 2009, for so long as the certificate is still valid. See Tennessee Code 45-13-105
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Mortgage lender: means any person who makes a residential mortgage loan or holds the person out as able to make a residential mortgage loan. See Tennessee Code 45-13-105
  • Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC
  • Mortgage loan broker: means any person who for compensation or other gain, paid directly or indirectly, or in expectation of compensation or other gain, solicits, places, negotiates or originates a residential mortgage loan for another person or offers to solicit, place, negotiate or originate a residential mortgage loan for another person or who closes a residential mortgage loan that may be in the mortgage loan broker's own name with funds provided by another person and which loan is thereafter assigned to the person providing the funding of the loan, regardless of whether the acts are done directly or indirectly, through contact by telephone, by electronic means, by mail or in person with the borrower or borrowers or potential borrower or borrowers. See Tennessee Code 45-13-105
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • signed: includes a mark, the name being written near the mark and witnessed, or any other symbol or methodology executed or adopted by a party with intention to authenticate a writing or record, regardless of being witnessed. See Tennessee Code 1-3-105
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(1) In the form of an instrument that is payable to the borrower or jointly to the borrower and the contractor or home improvement contractor; or
(2) At the election of the borrower by a third-party escrow agent in accordance with terms established in a written agreement signed by the borrower, the licensee and the contractor or home improvement contractor prior to the date of payment.
(b) A licensed mortgage lender or mortgage loan broker shall not permit a contractor or home improvement contractor to be a cosigner or to act as a guarantor for a mortgage loan for home improvement.
(c) As used in this section, “mortgage loan for home improvement” means a consumer credit mortgage loan transaction involving property located within this state regardless of the amount of the loan.
(d) The commissioner is authorized to impose a civil penalty in an amount not to exceed twenty-five thousand dollars ($25,000) for each violation of this section after notice and opportunity for a hearing.
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