SECTION 1. Section 34-23-6 of the General Laws in Chapter 34-23 entitled "Mortgages of Real Property" is hereby amended to read as follows:

34-23-6. Disclosure requirements. -- In the event any brokerage fees, loan fees, points, finders' fees, origination fees, or any similar charges shall be imposed on any secured mortgage loan on real estate containing thereon dwelling houses of not more than four (4) dwelling units, those charges must be disclosed within the mortgage documents and the disclosure shall contain specific reference to the fact that in the event the underlying loan contract is prepaid in full, the loan fees or other similar charges shall not be subject to any refund. Nothing herein shall require said fees or charges to be displayed directly on the mortgage document so long as they are disclosed to the prospective borrower in both the "Good Faith Estimate" and the "Truth In Lending" disclosures. shall not be subject to any refund in the event the underlying loan contract is prepaid in full and shall be disclosed in writing to the applicant either by delivering such disclosure or by placing it in the mail to the loan applicant, not later than three (3) business days after the application is received. The disclosure, which may be a form of good faith estimate under the federal real estate settlement procedures act, shall contain an itemization of such fees and charges. The applicant also concurrently shall be given the following notice: "Notice regarding nonrefundability of loan fees: You have received a good faith estimate or other itemization of fees and charges showing the loan fees and similar charges you are likely to pay to obtain this loan. As provided in Rhode Island general laws section 34-23-6, none of these or other fees and charges will be refunded in the event the loan is prepaid in whole or in part." The applicant shall sign an acknowledgement of receipt of such disclosure and notice.

SECTION 2. This act shall take effect on November 1, 2002.