7-17-4 - Options in lieu of reserve account -- Notice by lender -- Selection by borrower -- Noninterest-bearing reserve account -- Exemption. - Utah Statutes

7-17-4. Options in lieu of reserve account -- Notice by lender -- Selection byborrower -- Noninterest-bearing reserve account -- Exemption.
(1) A lender not requiring the establishment and maintenance of a reserve account shalloffer the borrower the following options:
(a) the borrower may elect to maintain a noninterest-bearing reserve account to beserviced by the lender at no charge to the borrower; or
(b) the borrower may manage the payment of insurance premiums, taxes and othercharges for the borrower's own account.
(2) (a) The lender shall give written notice of the options to the borrower:
(i) with respect to real estate loans existing on July 1, 1979, by notice mailed not morethan 30 days after July 1, 1979; or
(ii) with respect to real estate loans made on or after July 1, 1979, by notice given at orprior to the closing of the loan.
(b) The notice required by this Subsection (2) shall:
(i) clearly describe the options; and
(ii) state that:
(A) a reserve account is not required by the lender;
(B) the borrower is legally responsible for the payment of taxes, insurance premiums,and other charges; and
(C) the notice is being given pursuant to this chapter.
(c) For real estate loans in existence on July 1, 1979, the borrower shall select one of theoptions prior to 60 days after July 1, 1979.
(d) If no option is selected prior to 60 days after July 1, 1979, the borrower will beconsidered to have selected the option described in Subsection (1)(a), provided, however, that theborrower at a later time may select the option described in Subsection (1)(b).
(e) For loans made on or after July 1, 1979, the borrower shall select one of the options atthe closing.
(f) If the borrower selects the option described in Subsection (1)(a), the lender may notbe required to account for earnings, if any, on the account.
(3) (a) Subject to Subsection (3)(b), if the borrower who selects the option described inSubsection (1)(b), or the borrower's successors or assigns, fails to pay the taxes, insurancepremiums, or other charges pertaining to the property securing the loan prior to the delinquencydate for such payments, the lender may require a reserve account without interest or othercompensation for the use of the funds.
(b) Notwithstanding Subsection (3)(a), the lender may not require a reserve accountwithout interest or other compensation if:
(i) the borrower pays any delinquency within 30 days; and
(ii) the borrower has not previously been delinquent in payment of taxes, insurancepremiums, or other charges.
(4) This section does not apply to a loan made, renewed, or modified on or after May 6,2002.

Amended by Chapter 378, 2010 General Session