| In this Issue |
2011 Starts Off with a Bang of Regulatory Changes
Coming Soon...The New Look and Features of DX's 2011 software
Compliance Updates, Industry News & DX Compliance Memos |
| Upcoming Events | |
MBA's National Technology in Mortgage Banking Conference and Expo 2011
March 27-30, 2011
Ft. Lauderdale, FL |
| LOS Interfaces and Partners |
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2011 Starts Off with a Bang of Regulatory Changes
January 2011 brought a ton of regulatory changes to the mortgage industry. Document Express has been hard at work over the past few months in preparation for these new requirements. To recap, here is a brief explanation of what changes occurred and how DX accommodated them:
Risk Based Pricing Disclosures
In mid-December 2010, Document Express added the H-3 Risk Based Pricing Disclosure to all Initial Disclosure and Closing Document packages. This disclosure replaced the existing credit score notices. Beginning on January 1st, 2011, all Lenders who use credit reports to evaluate extensions of credit and base the terms of the credit on the consumer's credit history must use this form.
Three model forms were introduced to accommodate the new disclosure requirements under the FACT Act and the Fair Credit Reporting Act. The first disclosure, the H-1 Model, is used when the borrower's credit score resides in the bottom 60% of the Lender's consumer database. The H-5 Model is used when the consumer doesn't have any credit scores. The H-3 Model can be used to satisfy all requirements of the rule by providing a disclosure to all borrowers regardless of credit score or credit ranking. This is the disclosure that is provided in our packages.
Document Express updated its Credit Score Screens within CyberDocs to accommodate the H-3 Risk Based Pricing Disclosure.
Privacy Notice Disclosures
Six model privacy notices were added to our Initial Disclosure and Closing Document packages in mid-December 2010. While Lenders were not required to adapt to these forms, those that did not were no longer covered under the safe harbor provided by the Gramm-Leach-Bliley Act unless their custom privacy notices followed the guidelines outlined in the Act.
Under this Act, financial institutions are required to disclose their information sharing practices to their customers and also notify them of their right to opt out of certain practices.
Document Express enhanced CyberDocs with a new Privacy Notice screen which allows clients to choose which of the six notices applies to their institution and then fill out all applicable data fields per account to ensure the notice printed with the proper information.
Truth-in-Lending Disclosures
Beginning with all loan applications taken on or after January 30th, 2011, new Truth-in-Lending Disclosures will now print in all DX Closing Documents and Initial Disclosure packages. These new TIL disclosures are provided in accordance with the interim rule amending Regulation Z which implements the Truth-in-Lending Act. This rule requires the existing payment schedule on the TIL disclosure to be replaced with an Interest Rate and Payment Summary Table which will alert borrowers to the risks of payment increases.
Many different versions of the new TIL disclosure were created by our forms partner, Wolters Kluwer Financial Services, to accommodate different loan programs and scenarios. These disclosures were implemented into DX packages at the end of January, 2011.
Should our clients have any questions relating to any of these recent changes, please contact DX Customer Support at 800-476-3627 or [email protected]. |
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A New DX is Coming Soon...
 The Spring of 2011 is going to be an exciting time for Document Express and it's clients! We are working hard at building a new software that will encompass all of the bells and whistles that our clients have been waiting and asking for while maintaining the same great service and features that make DX what it is today! Here are some highlights of what our new software will include:
- New Look - Less scrolling and less congestion on the screens plus a ton of new functionality!
- Pick and choose which documents to print/send to a third party instead of having to print/send the whole package!
- Online Billing - Retrieve and pay bills online!
- Online Customer Support Chat - Chat with DX Customer Support with one click of the mouse!
- Barcoding
- eSignatures...and Much More!
We are looking for clients to be beta testers for our new software! If this is something you would be interested in, please contact Lori Johnson at [email protected]!
Keep your eyes peeled for more information about DX 2011!
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CyberDocs Changes and Updates
Maryland Notice of Housing Counseling and Services Disclosure Added to Initial Packages: November 2010: Maryland HB 1399, Subtitle 12 requires Lenders provide to Borrowers before closing a mortgage loan a written notice regarding Home Buyer Education and Housing Counseling Programs and Services.
Massachusetts Credit Insurance Disclosure Added to Initial Disclosure Packages: November 2010: A written disclosure of the cost and notification that the purchase of credit life insurance is voluntary (not a factor in the decision to extend credit) is required in order for the credit insurance premium to be excluded from the finance charge and the annual percentage rate of the Truth in Lending Disclosure. [TILA Section 226.4(d)] MA law requires every disclosure statement involving life insurance or accident and health insurance or involuntary unemployment insurance must contain the following language printed in ten point boldface type. [MA Gen Law Part III, Title IV, Ch. 255, Section 12G]
YOU CANNOT BE DENIED CREDIT SIMPLY BECAUSE YOU CHOOSE NOT TO BUY CREDIT INSURANCE. CREDIT LIFE INSURANCE AND CREDIT ACCIDENT AND HEALTH INSURANCE AND CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE ARE NOT REQUIRED TO OBTAIN CREDIT. INSURANCE WILL NOT BE PROVIDED UNLESS YOU SIGN AND AGREE TO PAY THE ADDITIONAL CHARGE.
Washington Disclosures Revised: November 2010: The Washington State Department of Financial Institutions revised several of its disclosures. Additional versions of the DFI's 1-Page Disclosure Summary Forms were added to be more consistent with the new Good Faith Estimate. The Residential Loan Disclosure Summary for Fixed Rate and Adjustable Rate loans was revised to meet these new guidelines. Also, the Mortgage Broker Disclosures, the Broker Application Disclosure and the Rate Lock Disclosure were revised to more closely resemble the model forms. These revised documents are now included in DX Initial Disclosure packages.
Waiver of Escrow Revised: November 2010: Section B2-1.4-01 of the Fannie Mae Selling Guide, requires lenders to advise borrowers that they may be able to establish an escrow account after their loan has closed. The sentence "You may have the option to set up an escrow account after your loan closes by contacting your loan servicer" has been added to the VMP634 Waiver of Escrow to assist lenders in meeting this requirement.
Kentucky Mortgage Loan Commitment Added to DX Library: November 2010: The Kentucky Mortgage Loan Commitment was created to meet the requirements of Kentucky Revised Statutes 286.8-120(7). All commitment letters issued by mortgage loan companies (see Kentucky Revised Statutes 286.8-20 for exempted entities) require a detailed description of the terms and conditions, the services the company undertakes to perform, a specific statement of the circumstances in which the broker or company will be entitled to obtain or retain consideration and the period that such agreement will be in effect. This document was added to our DX Library should a client require it after Initial Disclosures have been sent and prior to closing.
Kentucky Advance Fee Disclosure Replaces Mortgage Broker Disclosure: November 2010: An Advanced Fee Disclosure (VMP1048KY) was created to better meet the requirements of Kentucky Revised Statutes 286.8-270. This new form replaces the existing Mortgage Broker Disclosure (VMP1061KY) in the Initial Disclosure packages.
Discontinued Missouri Broker Documents: November 2010: The Missouri Division of Finance Mortgage Broker Rules, Title 20 Sections 1140-30.110 and 1140-30.28 were rescinded effective November 30, 2010. As a result, the Borrower Information Document and the Failure to Close Disclosure were removed from our Initial Disclosure packages. There are no replacement forms for these documents.
Fannie Mae Revises Kentucky Mortgage: January 2011: On January 5, 2011, Fannie Mae announced a revision to Fannie Mae/Freddie Mac Uniform Instrument Form 3018. The revision addresses a change in Kentucky law that requires the lender's principal place of business address to be stated within security instruments. The revised form now requires both the lender's mailing and principal place of business addresses. The revised Mortgages will be available at the end of February in our Closing packages.
Florida Refinance Rider Fields Added to CyberDocs: January 2011: Lenders may add the following language at the end of the security instrument or in an attached rider when the document is used for a refinance transaction and the amount of the refinance mortgage is less than or equal to the sum of the unpaid principal balance of the original mortgage obligation and accrued (but unpaid) interest:
Pursuant to Section 199.145(4)(b), Florida Statutes, additional nonrecurring intangible tax is due. This Mortgage is given in connection with the refinancing of an obligation secured by an existing mortgage, recorded in Official Records Book __________, Page ______, Public Records of ______________________ County, Florida, from the Mortgagor hereunder to the Mortgagee hereunder, or to the assignor of the Mortgagee hereunder. As of the date of the refinancing, the unpaid principal balance of the original obligation, plus accrued but unpaid interest, secured by the existing mortgage, is equal to $___________________. The principal balance of the new obligation secured by this Mortgage is $____________________, which amount represents, as of the refinancing, the excess of the unpaid principal balance of the original obligation, plus accrued but unpaid interest. Notwithstanding anything to the contrary contained in the foregoing, if the obligor under the new obligation is not liable to the obligee under the new obligation secured by this Mortgage, then the additional nonrecurring intangible tax shall be computed on the entire principal balance of the new obligation.
Lenders may add the following language at the end of the security instrument or in an attached rider when the document is used for a refinance transaction and the amount of the refinance mortgage is greater than the sum of the unpaid principal balance of the original mortgage obligation and accrued (but unpaid) interest:
Pursuant to Section 199.145(4)(a), Florida Statutes, no additional nonrecurring intangible tax is due. This Mortgage is given in connection with the refinancing of an obligation secured by an existing mortgage, recorded in Official Records Book __________, Page ______, Public Records of ______________________ County, Florida, from the Mortgagor hereunder to the Mortgagee hereunder, or to the assignor of the Mortgagee hereunder. As of the date of the refinancing, the unpaid principal balance of the original obligation, plus accrued but unpaid interest, secured by the existing mortgage, is equal to $___________________. The principal balance of the new obligation secured by this Mortgage is $____________________, which amount, as of the refinancing, is less than or equal to the unpaid principal balance of the original obligation, plus accrued but unpaid interest.
The Property Screen in CyberDocs has been updated for Florida refinance loans to accommodate the new Florida Refinance Riders we have created and added to our Closing packages.
Co-Op Fields Added to CyberDocs: January 2011: We have added fields to our Property Screen within CyberDocs to better accommodate Co-Op property loans. The following fields were added: Corporation Name, Number of Shares, Certificate Number, Authorized Officer of Co-Op, Apartment Number, Lease Date and Apartment Building Name.
Program and Investor Updates November 2010 - January 2011
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Compliance Updates and Industry News
North Carolina Emergency Program to Reduce Home Foreclosures: November 2010: North Carolina SB 1216 amends various provisions of the Emergency Program to Reduce Home Foreclosures, the definitions of "points and fees" and "threshold" for high-cost home loans, and increases the renewal fee for branch licensing and mortgage loan originators. The amendments to the Emergency Program to Reduce Home Foreclosures became effective November 1, 2010 and extend the program expiration date until May 31, 2013. The remainder of North Carolina SB 1216 became effective September 1, 2010.
Virginia Code Renumbered: November 2010: Effective October 1, 2010, Virginia SB 295 renumbered various acts of the Virginia Code, including the Banking and Finance General Provisions, Usury Statutes, Wet Settlement Act, Mortgage Loan Originator Act, and the Mortgage Lender and Broker Act without substantive revisions.
Vermont Third Party Loan Servicers: November 2010: Effective January 1, 2011, Vermont SB 287 enacts new Chapter 83 Loan Servicers. Chapter 83 requires any person acting as a third party loan servicers, directly or indirectly, for a loan to a Vermont borrower to obtain a license.
Missouri Disclosures: November 2010: Effective November 30, 2010, the Department of Insurance, Financial Institutions and Professional Registration published the official adoption of new Rules 20 CSR 1140-30-200 through 20 CSR 1140-30-320, and the rescission of Rules 20 CSR 1140-30-010 through 20 CSR 1140-30-120 in the Missouri Register. As a result, we are discontinuing the Missouri Borrower Information Document and Missouri Failure to Close Disclosure.
California SB 1137: December 2010: Effective January 1st, 2011, California SB 1137 amends the Business and Professions Code and the Financial Code. The amendments add violations, penalties, surety bond requirements, and change renewal dates applicable for finance lenders or brokers employing, directly or indirectly, mortgage loan originators.
California Regulations Added: January 2011: Effective December 23, 2010, the Department of Corporations adopted Emergency Amendments to the Finance Lenders Law Regulations, Title 10 CCR Sections 1404 et seq. and the Residential Mortgage Lenders Act Regulations, Title 10 CCR Sections 1950.003 et seq. The amendments add mortgage loan originator fees relating to license application, reinstatement, and renewal. In addition, the advertising regulations were amended to extend the time period that a licensee must keep advertising copies.
Georgia Regulations Amended: January 2011: The Department of Banking and Finance amended the Residential Mortgage Lenders and Brokers Regulations, Ga. Comp. R. & Regs. R. Sections 80-11-1-.01 et seq. relating to licensee fees and record retention requirements. The amendments became effective on November 22, 2010.
Illinois Rate Lock Agreement: January 2011: The Department of Financial and Professional Regulation published in the November 12, 2010 Register amendments to the Residential Mortgage License Act of 1987 regulations. The amendments became effetive October 29, 2010 and conform the licensee fees with the Act, clarify record retention requirements, and adds that lenders must provide a rate lock agreement regardless of whether a fee is collected or the interest rate is locked or floating. Document Express currently includes a Rate Lock Agreement in all Illinois Initial Disclosure packages.
Michigan State Licensing: January 2011: Effective December 22, 2010, Michigan SB 1525 amends the Mortgage Loan Originator Licensing Act by adding the definition of "originate" and surety bond requirements for persons providing coverage for mortgage loan originator employees or exclusive agents.
Washington Mortgage Broker Licensing Act and Consumer Loan Act Amendments: January 2011: Effective November 5, 2010, the Department of Financial Institutions adopted various amendments to the Mortgage Broker Licensing Act (Chapter 208-660) regulations and the Consumer Loan Act (Chapter 208-620) regulations. The regulations add new definitions, licensee requirements, permitted advertising uses, and prohibitions for the licensees under both acts. In addition, the disclosure of tax and benefit statement prior to or simultaneously with receiving an initial application for reverse mortgage loans is required.
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We sincerely hope you enjoyed this issue of our quarterly newsletter. As always, we welcome any suggestions, comments and criticisms to help better serve you. Feel free to contact us anytime at [email protected] or at 800-476-3627. |
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