DocMagic, Inc.'s Compliance Department has added the following FHA LIBOR Loan Programs under "Generic Plans" as the "Investor" pursuant to Mortgagee Letter 2007-13:

As of the middle of August, 2008, the DocMagic software returns a deed of trust in a closing loan package for all non-FHA loans when New Mexico is the state in which the secured property is located.  Both Fannie Mae and Freddie Mac will mandate on September 1, 2008, that a New Mexico deed of trust be used instead of a mortgage.  DocMagic, Inc.'s Compliance Department changed the New Mexico Uniform Instrument from a mortgage to a deed of trust, as Fannie Mae and Freddie Mac documents are considered Uniform Instruments under DocMagic's License and User Agreement.

The California Department of Real Estate (DRE) has amended its regulations, effective August 15, 2008, pertaining to DRE Forms 882, 883 and 885.  The most obvious change to each one of these DRE Forms is the addition of an Informational Sheet.  Please click here to access the text of the DRE's adopted changes and the updated versions of DRE Forms 882, 883, and 885.

DocMagic, Inc.'s Compliance Department has updated the Impound Requirements matrix to incorporate escrow cushion requirements, if any, for each state. To view the updated matrix, click here.  

On July 30, 2008, the Board of Governors of the Federal Reserve Board (the "Board") published a final rule amending Regulation Z.  The final rule, the main provisions of which do not become mandatory until October 1, 2009, is available here.  The stated goals of the final rule are: (1) to protect consumers from unfair, deceptive and abusive lending and servicing practices; (2) to improve mortgage advertising; and (3) to provide consumers with disclosures early.

Periodically, DocMagic, Inc.'s Compliance Department reviews its form selection, print, signature and header default rules for its core loan documents (i.e., documents returning in all closing loan packages) to determine whether the rules need updating based on new legal requirements, customary practice, or for other reasons. After a recent periodic review, the Compliance Department modified the print and/or header (the top of page 1 of the form identifying the borrowers, lender, loan number, etc.) default rules for certain core loan documents, because it was determined that lenders seldom request the forms identified below for those borrower types that were excluded from the rules. Changes to these default rules will be implemented in the coming weeks.

Effective September 1, 2008, FIS Flood Services is changing its name to LPS National Flood.  The name change is being made in connection with the spin-off of Lender Processing Services, Inc. from Fidelity National Information Services, Inc. that was completed on July 2, 2008.  We have been assured that there will be no service interruptions, key personnel changes, customer service center location changes or database location changes as a result of either the spin-off or the name change.  In other words, with the exception of the name change and some changes in marketing materials, we expect that customers will continue to receive the same level of excellent service from LPS National Flood to which they have grown accustomed.  For additional information about Lender Processing Services, Inc., click here.  For additional information about LPS National Flood, click here.

The article regarding Maryland's prohibition of prepayment penalties, originally published in the June, 2008 issue of The Compliance Wizard and updated in the July, 2008 issue, has once again been updated.  To view the updated article, please click here.  We thank Maryland attorney Marjorie A. Corwin, Esq., of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC, for her valuable input on this topic. 

The views expressed in this article do not necessarily reflect the views of Document Systems, Inc., and are those solely of the author.

Even the substitute Texas Plain Language Amendment sticks to the mistaken notion that there is an "average" borrower for whose easy understanding parties can write loan contracts.1 The plain truth is that the "average" borrower is a fiction and in Texas there is no "average" borrower but there are average borrowers; those who speak English and those who speak Spanish. Obviously, there are others. But, to the proposed law, they do not matter.

This troubling notion of the "average" borrower- at the heart of the proposed law - makes the Texas Amendment virtually impossible to implement. Indeed, if implemented, the undefined and fictional "average" borrower, including the "average" borrower who speaks only Spanish may be even more confused about his or her rights and obligations under the loan contract, loan summaries, and the required disclosures in a form that complies with the Federal Truth-In-Lending Act, 12 C.F.R. § 226.18; and, more than ever, undue influence could factor in his or her decision to enter into a loan contract, invalidating the loan contract altogether.

The Amendment is Not About Translation, Unfortunately

The proposed law is about a contract for a loan, a retail installment transaction, or a regulated home equity loan, (which) must be written in plain language2 designed to be easily understood by the average borrower and [which must be] printed in an easily readable fonts and type size. If the terms of the loan were negotiated in Spanish, a copy of a summary of loan terms and disclosure of "pertinent" information must be provided in Spanish and in "a form identical to disclosures required for a closed-end transaction under Regulation Z, 12 C.F.R. § 226.18."

It is unfortunate that the Amendment is not about requiring a Spanish translation of the summary of loan terms and disclosures of "other pertinent" information. If only if it were so, lenders and brokers could easily obtain an accurate, complete and certified Spanish translation of the relevant summary and disclosures. While it may not be impossible to write loan contracts in plain language, lenders and brokers will experience a nightmare as they struggle to provide, in Spanish - not in Spanish translation - "pertinent" information "in a form identical to disclosures required for a closed-end transaction under 12 C.F.R. § 226.18."3 Impliedly, the proposed law requires the use of only one version of language for loan contracts, summary, and disclosures; impliedly, because the Amendment conceives of two distinct versions within the same language, legalese and plain language. Interestingly enough, while the proposed law does not expressly bar parties from negotiating even in legalese, it mandates that the parties write loan contracts only in the plain language that the average consumer can easily understand.

Impossible to Implement

Because the "average" consumer is a fiction and no one can design a loan contract for easy understanding by a fiction, the Amendment is virtually impossible to implement. It will also prove extremely hard to write disclosures of pertinent information in Spanish in compliance with all of Regulation Z, 12 C.F.R. § 226.18's exhaustive technicalities, details, analyses, intricacies, and official staff interpretation.

Other challenges to successful implementation of the proposed law include limitations and the motivations of parties who speak only Spanish or other foreign language; the nature of language, the nature of the language of law and contracts, and the defect in plain language requirements and mandates; and, the impact of unfair or deceptive practices laws that prohibit the kind of writing a loan contract, summary, or disclosure that could result in a borrower who does not understand the loan contract or a borrower who is confused about his or her rights and obligations, and a borrower who is unduly influenced.

Borrower Motivations and Limitations

1. Borrowers who become psychologically committed to getting the loan want just money and not necessarily a loan contract, summary, or disclosures - regardless of the language, whether legalese, plain, or Spanish.
2. Borrowers, who experience anomie - powerlessness - and desperation at the same time - conclude even if the loan contract is unfair, what can they do? And, if they cannot do anything, why read? Why insist on plain language loan contract and summary of loan terms and disclosures in Spanish? Such borrowers, regardless of the terms of the loan, are grateful to the lender for simply making them the loan.
3. Borrowers who have developed general distrust of lenders and the lending process cannot objectively listen or read loan contracts even if such contracts are in plain language and requires summaries and disclosures in Spanish. Negative reports from organizations such as ACORN and the continuing litany of predatory lending are not helpful.

Lender and or Broker Motivations and Limitations

1. Lenders and brokers who may choose to comply with the requirements of the Amendment are helpless when borrowers cannot read loan contracts, summaries, and disclosures, even when provided in Spanish; when they can read but do not want to be overloaded with information at that point in time.
2. The compensation structure of the lender and the broker - commissions - does not encourage educating, informing, translating, and interpreting the subtleties and intricacies of the terms of the loan for the benefit of the vulnerable borrower who speaks only Spanish. The linguistically isolated, under the circumstances, are literally lost and they have no choice but to trust the lender and or the broker, or both, or some community or opinion leader.
3. Lenders and brokers, always under time pressure to quickly close loans even when the sun does not shine, view the responsibility to inform, educate, translate, and interpret for the borrower who speaks only Spanish as a drain on their resources. Consequently their approach to communicating with the borrower, under the circumstances is far from sincere and enthusiastic and, at best, minimalist.

The Nature of Language

1. Parties to a loan transaction, generally, speak and write language at different levels and no one can telescope all these levels into one level, the plain language level of the fictional "average" consumer.
2. Languages are audience-specific and the audience for plain language contracts, summaries, and disclosures is diverse with different agenda and motivation. Such audience includes the regulatory agencies that enforce compliance and conduct audits and the court who, in case of a dispute, dispense justice relying on the legal concept to determine the meaning of the plain language of the loan contract, disclosure, or summaries, or their decisions will be arbitrary. Plain language will work only when parties write the loan contract and the required summaries and disclosures for only each other.4

3. The language of contract is a separate foreign language because the language of law is in fact a privileged communication of the initiate5 and therefore not intended to be understood by those not in that particular profession; those who have not learnt to think conceptually cannot grasp many of the text that govern their legal obligations.6 Legalese is not under any list of foreign languages, but it should be. It takes as long to learn as any foreign language, and to most people legalese is a foreign language.

   Although, one can communicate the general function, importance, or effect of a legal concept in a particular loan transaction in plain language, such efforts, at best, can only be in a summary fashion, not word for word [including punctuations] and there is always a danger that an important term of obligation may be lost in the plain language or Spanish translation.

4. Under the proposed law, the "average" Spanish-speaking borrower would need a loan contract in plain language and the related disclosures and summaries in Spanish that he or she can understand. Such plain language is possible only if the original writing is also clear concept, well organized, and the one that an average consumer can understand.7 While one can certainly teach and learn plain writing, legislating such writing will provide no cure.8
5. A writer who cannot understand the legal structure of a regulated Texas loan cannot write the Texas loan contract in plain language "designed to be understood by the average borrower." Similarly, a Spanish writer, who cannot understand the legal structure of a regulated Texas loan, cannot write summary of loan terms and disclosures as required by the proposed law.
6. Unlike plain language, the language of law and the language of contract isolate relevant facts and subsume them under a rule of law. It is certainly a myth that Hemingway's writing style can be universally adapted for use in writing Texas plain language loan contracts, or Spanish language disclosures and summaries required by the proposed law.
7. To overcome borrower illiteracy, oral translation, in addition to written loan contracts, disclosures, and summaries, may also be required. Oral translation, especially when inconsistent with written contracts can be confusing, create misunderstanding, exert undue influence, and even degenerate into a dialogue on a particular borrower concern, question, or issue. All this could amount to an unauthorized practice of law.
8. Deception, confusion, or misunderstanding is inevitable when lenders and brokers negotiate a loan in one language and document the negotiations in another; or, using the same language, negotiate the terms of the loan in legalese and reduce their negotiations into writing in the plain language, or vice versa.9

Beyond Good Motives

The itch to accommodate, include, protect, and even pander to those who speak only Spanish is understandable in the context of that minority's growing purchasing power, credit needs, and political clout. Such efforts can also promote governmental policies towards such minorities, fulfill the promise of protection for such minorities,10 promote the rights of such minorities as borrowers, and respect the rights of such minorities to equal protection under the law. It is also good business to include in consumer lending in Texas, as elsewhere in the nation, those who speak only Spanish or another foreign language.

After the passage of the proposed law, what next may we expect? Out of Texas or from another state? After Texas accommodates, includes, protects and even panders to its Spanish-speaking linguistic minority whose turn will it be next and in what order? Could that, like in other countries, fan divisive impulses and flame communal passions? Could the passage of such legislation lead to a more ambitious legislation, whether in Texas or elsewhere, that could mandate entire loan contracts, including all the notices and disclosures to be written in any number of the world's languages in which parties negotiate the loan?11 The Amendment as originally introduced in the Texas legislature proposed exactly that creating a frightening vision of never ending compliance nightmare. And because we live in an age of some copy-and-paste legislation the itch to pander to linguistic minorities could develop into a nation-wide epidemic when all we really need is a translation: accurate and authentic.

Speaking "plainly," it is naïve, delusional, or demagogic to assume that the "average" borrower, whether in Texas or anywhere in the world, with no legal training and no education in conceptual thinking or doctrinal analysis, might understand a loan contract, summaries of loan terms, and required disclosures merely because his or her vocabulary includes all of the words in which the document is written.

Perhaps the best ways to accommodate, include, engage, and protect linguistic minorities, - whether Spanish or any other foreign language speaking - is not to require plain language written contracts in any language but to impose on the lender and the broker an absolute, unqualified, and affirmative duty to protect the borrower. It is tempting to impose similar duty on the linguistically challenged borrower and admonish him or her to learn the English language well enough to completely and fully understand his or her rights and obligations under a loan contract. However, a borrower, like any one, can take a lifetime learning a foreign language and loans must close quickly because time is, always, of the essence; including for the lender who needs his fees, the broker who needs his compensation, and the borrower who needs his money.

Dhiren Sharma is a Paralegal at Document Systems, Inc. and a member of its Legal/Compliance Department.

---

1 C.S.H.B. 1747; C.S.H.B. 1547 79 (R).
2 The proposed law defines plain language as "one designed to be easily understood by the average consumer," Tex. Fin. Code § 341.502.
3 12 C.F.R. § 226.18 deals with contents of disclosure and, together with Supplement I to Part 226-Official Staff Interpretation, constitutes about 22 closely typed pages of regulation and official analysis of the regulation to aid compliance.
4 The Polish Government after World War II attempted to draft all laws so plainly that workers and peasants could understand them, but it soon became clear that without legal concepts, the application of law was capricious and unpredictable, L. Fuller, The Morality of Law 45 (rev.ed.1969) quoted by Hyland, supra, 618.
5 Richard Hyland, "Essay: A Defense of Legal Writing, 134 U Pa. L. Rev, pp. 625-626 at 604.
6 Ibid, 618.
7 Can Regulation Z, 12 C.F.R. § 226.18, or any definition of Finance Charge or High Cost Loan be written [or re-written] in plain language "designed to be understood by the average consumer?"
8 This explains why plain language legislation, such as Conn. Gen. Stat § 42-152 (c) (1)-(2) which specifies the average number of words in length in a sentence, are wholly arbitrary - or meaningless platitudes, like the reminder that a sentence should be no longer than necessary, N.J. Stat § 56:12-10 (a) (2), quoted in Hyland, supra 620.
9 According to a regulator at Maine's Department of Consumer Credit Regulation, the department once required a lender to refund some of the points charged on a sub prime loan that was solicited in Spanish. The loan process was conducted in both Spanish and English, and the lender communicated with the borrower through an English-speaking relative. With the facts, the agency concluded that the lender knew that the borrower did not speak English well enough to conduct a loan transaction, and thus the transaction was unfair, Negroni, Adrea Lee; Neill, Lorna M., Marketing Mortgages en Espanol, Mortgage Banking, August 1, 2002, p.39. In Brooklyn Union Gas Co. v. Jiminez (1975) cited with approval in Sitarz v. Drexel Burnam Lambert, Inc et al (1991).
10 "The New Colossus" the following text appears at the base of the Statue of Liberty: "America will not allow any language -including English - to erect a language barrier which effectively excludes the "huddled masses yearning to be free."
11 As of May 11, 2004 there were 6,800 languages spoken in the 200 countries of which 2,261 languages are written with printed and on line dictionaries in 304 languages, www.yourdictionary.com/languages.html.

You've entered all of your loan-specific information onto DocMagic for Windows ("DMW"), and you are now ready to process the Worksheet. When processing the Worksheet, DMW offers a number of options to suit the user's needs.  The DMW Processing window has five separate sections - (1) Worksheet Selection; (2) Processing Options; (3) Delivery Options; (4) Security; and (5) Additional Services. 

 
Click here for larger image

Worksheet Selection

The "Worksheet Selection" area allows you to select the Worksheet(s) that you wish to process and to verify the primary borrower's last name and package type.   The most recent worksheet that you entered will automatically be selected for you, but you may select a different worksheet to process in the drop down menu found in the "Worksheet Number" column. If you choose to process multiple worksheets, you may do so simply by selecting additional worksheets from the drop down menu. Note: each worksheet may also have its very own processing options.  To view each worksheet's processing options, highlight a worksheet that has been selected for processing, and then select each option that you would like to take place.

Processing Options

The "Process and Return documents" option will always be automatically selected for you when processing the worksheet.  You may also select the additional option of automatically printing the documents when processing is complete.  Note, however, that this option will only print the full set of documents the first time a worksheet is processed.  After that, selecting this option will only automatically print the documents that have changed since the last time the worksheet was processed. 

Delivery Options

Use of the "Delivery Options" section is optional.  You will want to use this area only if you wish to have the documents picked up at another location, such as at a title company or signing service.

If you prefer to email the documents to someone for them to retrieve, check the "E-mail to another location" box, and type in the email address of that person.  The email will be sent from the DocMagic Servers and a confirmation email will be sent.  Make sure that the person you are emailing has configured their SPAM filtering service so that emails coming from docs@docmagic.com are not blocked.  The confirmation emails sent to you will also come from this email address.

If you wish to have the documents picked up by another DocMagic user with a different account number, choose the "Leave for Pickup by another DocMagic" option.  When selected, you will need to specify that DocMagic user's client number.  The next time this DocMagic customer connects to the DocMagic servers, this person will receive your loan package.

If you wish to leave the documents for pick up at http://www.docmagic.com/, check the "Leave for Web Pickup" box.  When processing is complete, the "Processing Messages" window will provide you with a code that you would give to the person to whom you want to deliver the documents.  You may also double-click on the code in this window to copy it to the Windows clipboard. Note that this person will need to have the DocMaster software (available free at http://www.docmagic.com/) installed before they can pick up the documents.

And, finally, in the "Delivery Options" section is the "DSI to Print and Deliver" box.  If you select this option, the "Edit Delivery Information" section will become available where you can type in the address to which you would like us to send the documents after we have printed them.

The "eDisclosure" box will be available if you have typed in an email address for the borrower in the "Borrower Details" screen and are preparing a predisclosure package.  If you select this option, an eDisclosure will be sent to the borrower when you process a predisclosure package.  Click here for information regarding DocMagic's eDisclosure service.

Security

This section only becomes available if you have chosen either the "Leave for Web (Internet) Pickup" or "E-mail to another location" box.  If you have selected either one of these, then you may, as an additional security measure, require that the user provide a password when retrieving the documents.  You may select one of the password choices from the drop down menu or choose "other" and type in your own password.

In this section, you may also request that you be notified via email when another person retrieves the documents by checking the "E-mail Read Receipt Check" box.  DocMagic will send you an email letting you know when the documents are retrieved if you choose this option.  Notice that when selecting this option the email address to which the "Read Receipt" will be sent is displayed.

You may read more about your security options in this Tech Tip article of The Compliance Wizard.>

Additional Services

In this section, you may request a Flood Certification when processing a Closing Package.  When requesting the Flood Certification, you can then specify if you would like it for the Life of the Loan.

This section also allows you to request that we register the Loan with MERS for you.  To successfully register your loan with MERS via DocMagic Online, it is important that you first complete three (3) steps.  First, you must register with MERS and receive a MERS Organization ID number.  Second, a MERS integration representative must activate the ID number.  Finally, you must add DocMagic as an authorized MERS vendor on MERS' website.  This last step, which is critical for the service to work, is detailed here.

If you have any questions concerning your document processing options, please contact Customer Service at (800) 649-1362.

To view all Tech Tips of the Month, click here.

You've entered all of your loan-specific information onto DocMagic Online ("DMO"), and you are now ready to process the Websheet. When processing the Websheet, DMO offers a number of options to suit the user's needs. The DMO Processing window has five separate sections - (1) General Options; (2) Loan Application; (3) Delivery Options; (4) Security; and (5) Additional Services.

Here is a screen shot of what you should see:

Click for larger image

General Options

In the "General Options" area, you select the package type and document file format you wish to receive. For the document file format, you may choose either DocMagic BLK format, which requires the DocMaster program, or Adobe PDF format, which requires that you have the Adobe software installed.

For the package type you have 5 choices:

1. Application: Provides the Uniform Loan Application

2. Closing: Provides all the documents included in the closing package

3. Predisclosure: Provides all the documents included in the predisclosure package

4. Servicing Transfer: Provides the document included in the loan servicing transfer package

5. Flood Certification: Provides the Flood Certification document

Note that all Loan Program codes automatically include documents for the Application, Closing and Predisclosure package types. However, you may need to contact Customer Service to set up documents for Servicing Transfer or Flood Certification package types for some loan programs.

For the document format you can choose either DocMagic BLK format, which requires the DocMaster program, or Adobe PDF format, which requires that you have the Adobe software installed.

Loan Application

If you would like to include a Uniform Loan Application in your Closing package you may use "Loan Application" section to attach a Fannie Mae file. You may use either v3.0 or v3.2 of the Fannie Mae file format. We recommend you use the v3.2 format, if possible, to obtain more complete information from the borrower on the loan application.

Delivery Options

Use of the "Delivery Options" section is optional. You will want to use this area only if you wish to have the documents picked up at another location, such as at a title company or signing service.

If you wish to leave the documents for pick up at http://www.docmagic.com/, check the "Leave for Web (Internet) Pickup" box. When processing is complete, the "Congratulations" window will provide you with a code that you would give to the person to whom you want to deliver the documents. Note that this person will need to have the DocMaster software (available free at http://www.docmagic.com/) installed before they can pick up the documents.

If you prefer to email the documents to someone for them to retrieve, check the "E-mail to another location" box, and type in the email address of that person. The email will be sent from the DocMagic Servers and a confirmation email will be sent. Make sure that the person you are emailing has configured their SPAM filtering service so that emails coming from docs@docmagic.com are not blocked. The confirmation emails sent to you will also come from this email address.

The "Send Borrow eDisclosure" box will be available if you have typed in an email address for the borrower in the "Borrower Details" screen and are preparing a predisclosure package. If you select this option, an eDisclosure will be sent to the borrower when you process a predisclosure package. Click here for information regarding DocMagic's eDisclosure service.

And, finally, in the "Delivery Options" section is the "DSI to Print and Deliver" box. If you select this option, the "Edit Delivery Information" section will become available where you can type in the address to which you would like us to send the documents after we have printed them.

Security

This section only becomes available if you have chosen either the "Leave for Web (Internet) Pickup" or "E-mail to another location" box. If you have selected either one of these, then you may, as an additional security measure, require that the user provide a password when retrieving the documents. You may select one of the password choices from the drop down menu or choose "other" and type in your own password.

In this section, you may also request that you be notified via email when another person retrieves the documents by checking the "E-mail Read Receipt Check" box. DocMagic will send you an email letting you know when the documents are retrieved if you choose this option. Notice that when selecting this option the email address to which the "Read Receipt" will be sent is displayed.

You may read more about your security options in The Compliance Wizard.

Additional Services

In this section, you may request a Flood Certification when processing a Closing Package. When requesting the Flood Certification, you can then specify if you would like it for the Life of the Loan.

This section also allows you to request that we register the Loan with MERS for you. To successfully register your loan with MERS via DocMagic Online, it is important that you first complete three (3) steps. First, you must register with MERS and receive a MERS Organization ID number. Second, a MERS integration representative must activate the ID number. Finally, you must add DocMagic as an authorized MERS vendor on MERS' website. This last step, which is critical for the service to work, is detailed here.

If you have any questions concerning your document processing options, please contact Customer Service at (800) 649-1362.

To view all Tech Tips of the Month, click here.

Written by Howard A. Lax of LIPSON, NEILSON, COLE, SELTZER & GARIN, P.C.

The following article is reprinted with permission from the January/February 2007 edition of The Mortgage News.

HUD increased civil money penalties for a number of its regulations, including the penalty for a loan servicer's failure to provide an escrow analysis under Section 17 of Regulation X. Why couldn't HUD fix Section 21 of Regulation X while it was tinkering with its regulation? We keep reminding HUD that Section 6 of RESPA was amended in 1996:

Sec. 2103. REDUCTIONS IN REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 REGULATORY BURDENS.

(a) Unnecessary Disclosure.--Section 6(a) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(a)) is amended to read as follows:

``(a) Disclosure to Applicant Relating to Assignment, Sale, or Transfer of Loan Servicing.--Each person who makes a federally related mortgage loan shall disclose to each person who applies for the loan, at the time of application for the loan, whether the servicing of the loan may be assigned, sold, or transferred to any other person at any time while the loan is outstanding.''.

The Servicing Disclosure Statement disclosure is no longer required by RESPA, and HUD should amend Section 21 of Regulation X to conform to the law. Even Grant Mitchell, who wrote the 1992 version of Regulation X, concurs that changing Section 21 of Regulation X is long overdue. In an email message we received on January 10, 2007, Grant Mitchell stated:

...I left the regulatory revision to Section 6 Mortgage servicing in the bin before I left HUD in April 1999. Maybe someone just felt a midnight amendment on a September 30th in an Omnibus Reconciliation Act for the entire federal government didn't deserve recognition and they are not going to do it. It's called administrative abnegation. There are a couple of Japanese soldiers in a cave on Okinawa, also, who don't know the war is over.

Grant

Grant E. Mitchell, Esq.
Lotstein Buckman, LLP
5185 MacArthur Boulevard, NW
Washington, D.C. 20016
202-237-6000 x118 or 202-351-6118 (Direct) 202-237-8900 FAX mitchell@lotsteinbuckman.com
website: www.lotsteinbuckman.com

The revised law is on HUD's web site - it is not as if nobody at HUD realizes that RESPA has changed. As far as we can tell, changing Section 21 of Regulation X is not even on someone's "to do" list. In case HUD needs to look up the term "abnegation," it means "self denial" (according to dictionary.com). Congress amended RESPA more than a decade ago. HUD can no longer rationally claim self denial. We think that, in this case, HUD's inaction would be better described as "self delusion."

The following legal public holidays1 will be observed on the dates listed below. Whenever a legal holiday occurs on a Saturday, it is observed on the Friday immediately preceding the holiday. If the holiday occurs on a Sunday, it is observed on the following Monday.

2010 Public Holidays	Day	Date
New Year's Day	Friday	January 1
Martin Luther King Jr's Birthday	Monday	January 18
Washington's Birthday	Monday	February 15
Memorial Day	Monday	May 31
Independence Day	Monday	July 5
Labor Day	Monday	September 6
Columbus Day	Monday	October 11
Veterans Day	Thursday	November 11
Thanksgiving Day	Thursday	November 25
Christmas Day	Friday	December 24

For DocMagic's office hours and holiday schedule, click here.

---

1 5 U.S.C. 6103(a)

The following is a list of the Fannie Mae / Freddie Mac conforming loan limits for both first and second lien mortgage loans.  Please note that the conforming loan limits for Alaska, Hawaii, Guam and the Virgin Islands are 50% higher than the limits set forth below.

Year	First Mortgages				Second Mortgages
	1-Unit	2-Units	3-Units	4-Units
2010	$417,000	$533,850	$645,300	$801,950	$208,500
2009	$417,000	$533,850	$645,300	$801,950	$208,500
2008	$417,000	$533,850	$645,300	$801,950	$208,500
2007	$417,000	$533,850	$645,300	$801,950	$208,500
2006	$417,000	$533,850	$645,300	$801,950	$208,500
2005	$359,650	$460,400	$556,500	$691,600	$179,825
2004	$333,700	$427,150	$516,300	$641,650	$166,850
2003	$322,700	$413,100	$499,300	$620,500	$161,350
2002	$300,700	$384,900	$465,200	$578,150	$150,350
2001	$275,000	$351,950	$425,400	$528,700	$137,500
2000	$252,700	$323,400	$390,900	$485,800	$126,350

* To view a list of counties for which the conforming loan limits have been increased as a result of the Economic Stimulus Act of 2008, click here.

To find information about each field in the DocMagic software, please click on the tab then the fields are organized by each field name within that tab.

For example, if you have a question about the "Disbursement Date" click on the "General" tab, then the names are organized from top to bottom - left column first. Disbursement Date is the last field in the second column, so the information will be at the bottom of the "General" page. Or click Ctrl+F to search for a term on a page.

DocMagic Online Definitions

DocMagic for Windows Definitions

Back to DM Help

General Information

Critical Dates

 

General Information

Loan Program

The loan program is the key to preparing the document package.  The loan program defines: 1) the data fields that need to be completed; 2) The forms that will appear in the loan package, i.e. notes, riders, disclosures; 3) Late charge information; 4) Computations, i.e. ARM adjusting, rounding, etc.; 5) Goof-Proof auditing and much, much more.

If you know the code for the program you wish to utilize, select it from the list of available loan programs.  If you don't see the plan code in your current list, simply add a new plan.  You will instantly be provided with DocMagic's current investor listing.  Select the investor for which you wish to add a program or choose Generic if no investor is applicable.  After making your selection, you will be provided with a list of available loan programs.  Make your selection(s).  Within seconds DocMagic will provide you with your new program code(s).  Required: Yes; Default: No

DocMagic Compliance Articles:

• Investor Updates
• Tech Tip of the Month: DocMagic's Plan Selection Filter
• Conventional and FHA CEMA Plans Available
• DocMagic Adds FHA LIBOR ARM Loan Programs
• CitiMortgage Programs Now Use DocMagic's Prepayment Penalty Forms
• Revived Loan Programs: Correspondent Division of Chevy Chase Bank
• Newly Added FHA Plans to Use Average Outstanding Balance Method
• Master and Short Form Deeds of Trust/Mortgages Coming Soon!
• Impac Suspends Alt-A Loans; New Plans in Effect
• SunTrust Mortgage Converts Agency Treasury ARM Index to LIBOR ARM Index
• New Loan Programs: UBS Investment Bank
• At Your Service: Generic Texas Loan Programs
• At Your Service: AmTrust Bank's Revocable Trust Signature Requirements
• New Loan Programs: Deutsche Bank, Freedom Mortgage & SunTrust Mortgage
• MERS Loan Registration Now Available on DocMagic for Windows
• DocMagic Generic HELOC Plan Codes
• Updated Countrywide HELOC Agreements
• Wells Fargo HELOC Documents

Alternate Lender:

The Alternate Lender Code field should be utilized only when documents are to be drawn in a lender's name other than your own.  In addition, the indicated plan must have alternate lender capabilities.  To draw in the name of an alternate lender, simply enter the code corresponding to an entry in the alternate lender pop-up list.  If the alternate lender you desire is not present, simply enter the alternate lender in the data entry window.  To have alternate lender capabilities enabled for a plan, contact DSI.  Required: No; Default: No

Transfer To

Select an entity to transfer/assign this loan to. Contact DSI customer service to modify this list.  Required:  No; Default:  No

Origination Type

What is your role in this transaction? Options to choose from: Broker, Lender, Correspondent, other.

Broker Name

Enter the Broker Name or a Broker Code, if applicable, that corresponds to an entry in the Broker Company database.  Note that if a Broker Code is used, when you hit <enter> the Broker Name will be entered for you. If you do not want to add the Broker to the Broker database, simply enter the Broker Name in this field.  Required: No; Default: No

Loan Rep

Enter the name of the loan representative responsible for originating this transaction, or type a code (usually initials) from your representative list to retrieve the name quickly. Required: No; Default: No

Branch

Enter the branch name or number if the originating branch differs from the branch currently drawing documents. Enter the Branch Code to retrieve the name quickly if you know it. This field, like the Representative field, generally pertains only to the Lender's Instructions form.  Required: No; Default: No

Loan Type

Is this a conventional, FHA, or VA loan?  Entry in this field is required to insure that applicable Goof-Proof auditing is enabled.  Select one of the following:  1) CONV  - Conventional; 2) FHA - Federal Housing Administration; 3) VA  - Department of Veterans Affairs; 4) FHAT1 - Title One; 5) E - Equity Line of Credit; 6) CON   - Construction.  Required: Yes; Default: Plan 

Loan Purpose

Is the purpose of this loan to purchase new property?  Refinance real estate already owned?  Subordinate financing?  Enter the appropriate code corresponding to the purpose of this loan.  Depending on the type of loan indicated above, your available selections may differ.  Generally possible choices will include: 1) P -Purchase; 2) R - Refinance; 3) I - Refinance - *Credit Increase; 4) S - Streamline Refinance (FHA); 5) JR - Second Trust Deed; 6) HI - Home Improvement; 7) 3RD - 3rd Trust Deed  * Credit increases with the same lender necessitate a slightly different Notice of Right to Cancel model form.  Use code "I" to indicate a same-lender refinance or increase in credit.  Required: Yes; Default: No

DocMagic Compliance Article:

• Refinance or Refinance/Increase: What's the Difference?

Loan Number

Enter your loan number in this field or, if required by an investor, the investor loan number.  The loan number prints on most forms.  Required: No; Default: No

MERS #

Your MERS identification number is a unique number assigned to a particular transaction, it is very similar to your loan number.  The number is created by utilizing your company's organization number assigned by MERS, the transaction loan number and a special digit computed by a mathematical algorithm supplied by MERS.  The resulting identification number will appear on your MERS-specific documentation (ex. security instrument, assignment).  In order for DocMagic to compute this identification number, it is necessary for DSI to know your unique MERS organization code.  Contact DSI's customer service department with this code.  Required: No; Default: None

FHA/VA Case #

For an FHA loan, type your 11-digit FHA case number, including dashes.  For a VA loan, type in your VA case number preceded by "LHG".  For example: 041-8325133-703 (FHA) or LHG 2146773 (VA).  Required: No; Default: None

Section #

For FHA loans, enter the section of the ADP code. For example: 1) 203b - Standard FHA program; 2) 234c - Condominium program; 3) 245a - GPM program. Required: No; Default: No

Critical Dates 

Application Date

Enter the date that you received the borrower's application for credit. An application is received when it reaches the creditor (the person whom the note is initially payable) in any of the ways applications are normally transmitted - by mail, hand delivery, or through an intermediary agent or broker. If an application reaches the creditor through an intermediary agent or broker, the application is received when it reaches the creditor, rather than when it reaches the intermediary agent or broker.  This date is specifically utilized in the computation of the Regulation Z section 32 analysis.  This analysis requires the use of a comparable index value published as of the 15th of the month immediately proceeding the month in which the original loan application was received. You may also wish to use this date to confirm that required federal and state disclosures, if any, are given within the prescribed timeframe.  Note: Entry of "+ # days" or "- # days" will result in the automatic date computation.  For example: "+5" would add 5 days to today's date while "-30" would subtract 30 days from today's date.  All date fields automatically add the '/' wherever necessary.  Required: No; Default: Predisclosure Document Date

DocMagic Compliance Articles:

• Yield on Treasury Securities: Which Value Do I Use?
• Newly Implemented Audits - Fannie Mae and Application Date

Rate Lock Date

The date the loan's interest rate is set for the final time before closing, whether pursuant to lock-in agreement or otherwise.  Note: Entry of "+ # days" or "- # days" will result in the automatic date computation.  For example: "+5" would add 5 days to today's date while "-30" would subtract 30 days from today's date.  All date fields automatically add the '/' wherever necessary.  Required: No; Default: No

Document Date

Use this field to indicate the date of transaction execution that will appear on all documents.  Note: Entry of "+ # days" or "- # days" will result in an automatic date computation.  For example: "+5" would add 5 days to today's date while "-30" would subtract 30 days from today's date.  All date fields insert the '/' symbols automatically.  Simply type in any date as one 6-digit number.  Example: August 21, 1994 would be keyed as '082194'.  Required: No; Default: Today

Closing Date

Type in the 6-digit date that is the best estimation of when this loan transaction will be closed.  Note: Entry of "+ # days" or "- # days" will result in an automatic date computation.  For example: "+5" would add 5 days to today's date while "-30" would subtract 30 days from today's date.  All date fields insert the '/' symbols automatically.  Simply type in any date as one 6-digit number.  Example: August 21, 1994 would be keyed as '082194'.  Required: No; Default: No

Signature Date

The signing date is the date of the transaction appearing in the rescission notice.  Remember that '/'s are not necessary as DocMagic will insert these where necessary.  An example entry for June 30, 1996 would be "063096".  Required: No; Default: No

Cancel Date

The cancel date is the date of the end of the right to cancel period.  This is usually 3 days into the future.  Simply entering "+3" will result in the automatic computation of the date 3 days in the future.  Be careful, however, as the computation will not automatically exclude Sundays or holidays!  Remember that '/'s are not necessary as DocMagic will insert these where necessary.  An example entry for June 30, 1996 would be "063096".  Required: No; Default: No

DocMagic Compliance Articles:

• A Borrower's Right to Rescind
• Notice of Right to Cancel - Closed-End Loan Forms & Form Selection Logic
• Notice of Right to Cancel - Open-End Loan Forms & Form Selection Logic
• Notice of Right to Cancel - Instructions for Completing a Notice of Right to Cancel

Disbursement Date

Enter the 6-digit date that corresponds to the date of funds disbursement.  This date is used to compute the default for the Days Prepaid Interest field.  Note: Entry of "+ # days" or "- # days" will result in an automatic date computation.  For example: "+5" would add 5 days to today's date while "-30" would subtract 30 days from today's date.  All date fields insert the '/' symbols automatically.  Simply type in any date as one 6-digit number.  Example: August 21, 1994 would be keyed as '082194'.  Required: No; Default: Prev

DocMagic Compliance Article:

• A Borrower's Right to Rescind

Mortgage Disclosure Date Information

DocMagic Compliance Article:

• Mortgage Disclosure Improvement (MDIA) Act Effective July 30, 2009

Back to DM Help

Borrowers

Sellers

 

Borrowers

Corp/Trust Name

If the borrower is a business, corporation or trust, enter the complete name of the entity in this field.  This name will appear as the borrower and above all signature lines on required documentation.  If a name is entered in this field, the vesting field below is utilized for the title of each officer or trustee.  Required: No; Default: No

DocMagic Compliance Articles:

• Fannie Mae Expands Eligibility for Inter Vivos Revocable Trusts
• Trustee Requirements Matrix
• At Your Service: AmTrust Bank's Revocable Trust Signature Requirements
• New Borrower Type: Non-Title Spouse, Part I
• New Borrower Type: Non-Title Spouse, Part II
• At Your Service: Entering the Name of Inter Vivos Revocable Trusts

Name

Enter the first name, middle name or initial and the last name of a borrower on each entry line.  If the borrower is a business entity or trust, your entry is assumed to be an officer or trustee of the business entity or trust.  Use one line for each borrower, officer or trustee (nine borrower maximum).  To enter borrower AKA (name variations) press <F3> to pop-up a zoom window. Enter all applicable name variations on the lines below the borrower to which they apply.

Borrower Type

Enter the borrower type: I - Individual; O - Officer; T - Title Only; C - Co-signer.

DocMagic Compliance Articles:

• Security Instruments Modified to Add Non-Title Spouse As Borrower
• New Borrower Type: Non-Title Spouse, Part I
• New Borrower Type: Non-Title Spouse, Part II
• At Your Service: "Signature Selection" Column Added to Disclosure...

Social Sec. #

Enter the borrower's social security number on the line that corresponds to the borrower's name. DocMagic will automatically insert the "-"for you.  Required: No.  Default: No

Details

Credit Scores: Enter the Credit Rating Agency, Score, Date and Factors.
AKA/POA: Enter the Also Known As and Power of Attorney Signer information.
Contact Info: Enter phone numbers and email addresses for each borrower.

DocMagic Compliance Article:

• Tech Tip of the Month: Enhanced Key Factors Lists for Consumer Credit Score Disclosure

Vesting

Select the proper vesting for each borrower.  Choose from a list of 40 default options or Add/Edit the options. 

Final Relation

If a final relationship was not entered in the Vesting field, select an option from the options list, enter the code corresponding to an entry in the final relationship database or simply enter the final relation- ship.  Entry in this field applies to all borrowers listed.  Required: No; Default: No

Vesting to Read

This field reflects the complete vesting block as it will appear.  This field will default and should be allowed to default whenever possible.  In some cases, however, it may become necessary to override this computed vesting and re-enter it in a manner which is not consistent with our default.  Note: Changes in the Vesting or Final Relationship fields above will result in the automatic clearing of this field.  If this field is left blank, the vesting will be automatically computed based on the borrower information entered. Required: No; Default: Yes

Mailing Address (Street, State, Zip)

Enter the borrower's primary mailing street address in this field.  DocMagic recommends avoiding abbreviations for words such as: street, boulevard, north, etc.  Type in the number, street name, and apartment number (if applicable).  Required: No; Default: No

Sellers

Corp/Trust Name

If the seller is a business entity or trust, enter the name of the entity in this field.  Required: No; Default: No

Seller Names

Type an individual seller name on each entry line.  First name, middle name or initial and last name.  (Eight seller maximum).  Required: No; Default: No

Address (Street, State, Zip)

Type in the city of the seller's address in this field.  Required: No; Default: No

Back to DM Help

Terms

HELOC

ARM

Miscellaneous

 

Terms

Rate Type

Utilize this field to indicate whether the interest rate will adjust or remain constant during the life of the loan.  Select 'F' for fixed rate, 'ARM' for an adjustable rate, GPARM for GPM/Adjustable or just press [Enter] to accept the DocMagic plan-specific rate type default.  Required: Yes; Default: Plan

GPM Type

If your loan requires a graduated payment schedule, select the appropriate GPM code from the option list.  The proper code choice is mandatory for the calculation of the graduated payment schedule and the computation of the initial P & I payment.  Required: No; Default: No

Buydown Type

If your loan requires a buydown payment schedule, select the appropriate buydown code from the option list.  Selection of the proper buydown code triggers the calculation of the buydown payment schedule.  Note: A buydown which is paid by a seller or other third party will not result in a buydown payment schedule for purposes of the Truth-in-Lending disclosure.  The only time the payment schedule will reflect a buydown is when the borrower pays the buydown fee.  If a buydown type is indicated in this field, the buydown charge amount will be automatically calculated and defaulted in the Charge Amount field.  Required: No; Default: No

Appraised Value

Type the appraised value of the property in this field.  DocMagic will automatically insert '$', ',' and '.' signs in all numeric fields for you. All you need to do is enter the actual number.  Example:  If you enter 125000, the resulting entry will be $125,000.00  Required: No; Default: No

Approved JR Lien

Type the total amount of subordinate financing in this field.  If there is more than one lien, enter the total outstanding amount of all other liens.  DocMagic will automatically insert '$', ',' and '.' signs in all numeric fields for you.  Example:  If you enter 125000, the resulting entry will be $125,000.00.  Required: No; Default: No

Sales Price

If this loan is for the purchase of property, type the sales price in this field.  DocMagic will automatically insert '$', ',' and '.' signs in all numeric fields for you.  All you need to enter is the actual number.  Example: If you enter 125000, the resulting entry will be $125,000.00. Required: No; Default: No

Loan Amount

If this loan is for the purchase of property, type the sales price in this field.  DocMagic will automatically insert '$', ',' and '.' signs in all numeric fields for you.  All you need to enter is the actual number.  Example:  If you enter 125000, the resulting entry will be $125,000.00. Required: No; Default: No

DocMagic Compliance Articles:

• FHA Loans ONLY: Moratorium on FHA's Risk-Based Premiums, Leads to DocMagic Simplifying MIP Calculator
• FHA Loans ONLY: FHA Risk-Based Premiums Policy Implemented into DocMagic

Initial Interest Rate

Type the initial interest rate or note rate in this field.  Required: Yes; Default: No

DocMagic Compliance Articles:

• Maximum Interest Rate Matrix

Term/Amortization

Enter the length of this loan (in MONTHS) in this field.  Example: a 30-year amortized loan due in 5 years would have a term of 60 months.  Your entry would be '60'.  For bi-weekly loans, '999' will default in the term field. The actual term will be calculated automatically when the worksheet is processed.  Required: Yes; Default: Plan

Monthly Payment

How many months should be utilized for computing the monthly P & I payment and resulting payback stream?  Example: a 30-year amortized loan due in 5 years would have an amortization period equal to 30 years or 360 months.  Your entry would be '360'.  For bi-weekly loans, enter the original amortization period. For example, for a 30 year bi-weekly loan, your entry would be '360'.  Required: Yes; Default: Plan

First Payment Date

Enter the date that the first payment will be due.  This is generally the first day of the month and should always be after the document and disbursement dates.  This date has an effect on the impound account analysis as the forecast is based on a twelve month estimate from this date.  Note: Entry of "+ # days" or "- # days" will result in an automatic date computation.  For example: "+5" would add 5 days to today's date while "-30" would subtract 30 days from today's date.  DocMagic will add "/" for you.  An example entry for June 30, 1998 would be "063098".  Required: Yes; Default: Last 1st Pay Date

Days Prepaid Interest

Enter the number of days of prepaid interest to be collected at closing and included as part of the prepaid finance charge.  The default for this field is the difference between the disbursement date and the date one month prior to the first payment date (per diem interest date.)  Required: Yes; Default: Plan/WS

DocMagic Compliance Articles:

• Negative Prepaid Interest

Paid By

Interest is paid by the Broker, Borrower, Seller, etc.

HELOC

DocMagic Compliance Articles:

• Updated HELOC Important Terms Disclosure
• Texas Constitutional Amendments Governing Home Equity Loans Become Effective December 4, 2007
• Texas HELOC Document Packages
• 20-Year Repayment Option for Generic HELOCs
• APR Calculation for Open End Lines of Credit (HELOCs)
• Updated Countrywide HELOC Agreements

Initial Advance

Enter the amount of the initial advance that the borrower will receive at closing.  All you need to enter is the actual number.  Example:  If you enter 125000, the resulting entry will be $125,000.00. Required: No; Default: No

Draw / Repay Period

Enter the number of months for the draw and repay periods. 

Annual Fee

If the loan program has an annual fee, please select the "Yes" option.  Required: Yes; Default: No

ARM

Interest Change Date

Enter the date of the first interest rate change, utilize the plan-generated default date.  The audit system will detect any change date entry that does not match the plan-generated default date and warn you of the discrepancy.  Normally, the first interest rate change date will be one month prior to the first payment change date.  All date fields insert the '/' symbols automatically.  Simply type in any date as one 6-digit number.  In addition, entering "+30" or "-30" will result in the automatic date computation based on the addition/subtraction of days indicated.  Example: August 21, 2009 would be entered as '082194'.  If today's date was October 15, 2009 and "-15" was entered, October 1, 2009 would be the resulting date entered.  Required: No; Default: Plan

Payment Change Date

Enter the date of the first scheduled payment change in this field or utilize the plan-generated payment change default date.  The audit system will detect any change date entry that does not match the plan-generated default date and warn you of the discrepancy.  Normally, the first payment change date is one month after the first interest change date (assuming non-negative amortization).  Example: On a 6-month ARM, if the first payment date is 11/1/2009, add 6 months for the first payment change (5/1/2009) and subtract one month for the date of the first interest change (4/1/2009).  All date fields insert the '/' symbols automatically.  Simply type in any date as one 6-digit number.  In addition, entry of "+ # days" will result in the automatic computation of the date reflecting the addition/subtraction of days indicated. Example: August 21, 2009 would be keyed as '082109'.  Required: No; Default: Plan

Margin

Type the margin (spread/differential) in this field.  Example: '2.500'  For disclosure purposes... adding the margin to the index rate and rounding, will result in the Target Rate.  The initial rate will be adjusted (subject to adjustment caps/parameters) to the target rate.  Required: Yes (ARM); Default: No

Current Index

Enter the current ARM index value for the specific index being utilized as of the date of interest rate-lock.  Required:  Yes (ARM); Default: Last Value

Ceiling (Max) Rate

In this field... enter the highest possible interest rate that can be reached over the life of the loan or utilize the plan-generated default ceiling rate.  This rate can be calculated by adding the initial interest rate to the lifetime rate cap.  Example: Start Rate: 4.5%, Lifetime Rate Cap: 6.0%, then Ceiling Rate: 10.5%.  Or review our state-specific maximum interest rate matrix (see link below).  Required: No; Default: Plan

DocMagic Compliance Article:

• Maximum Interest Rate Matrix

Floor (Min) Rate

Enter the lowest possible interest rate that can be reached over the life of the loan.  This can normally be computed by subtracting the lifetime rate cap from the initial rate.  If this is not the case, it is important that you make the correct determination.  Note: Entering the start rate in this field will disable downward adjustments in subsequent adjustment periods.  Required: No; Default: No

First Interest Cap

Enter the maximum percentage point movement in the interest rate that can occur at the time of the first rate adjustment.  Example: A Libor 228 program will generally have a 1st adjustment rate cap ranging from 1.000% to 3.000%.  Required: No; Default: No

Subsequent rate Cap

Enter the maximum percentage point movement in the interest rate than can occur in any single interest rate adjustment period.  Example: A six-month cost of funds ARM program would generally have an individual adjustment cap of 1.000% in any 6-month period.  Required: No; Default: Plan

Life-of-loan Cap

Enter the maximum percentage point movement in the interest rate that can occur over the life of the loan.  A default figure will be computed by subtracting the interest rate entry from the ceiling rate entry.  All figures are cross-checked to assure accuracy.  Example: A typical one-year treasury ARM  program might have a life cap of 5.000%.  Required: No; Default: Plan

Miscellaneous

Assumable

If this loan is assumable (subject to conditions) click 'Y' in this field. If this loan is not assumable, click 'N', or, if you are unsure, simply press [Enter] to accept the plan-specific default entry.  Required: No; Default: Plan

Prepayment Penalty

Does this loan have a prepayment penalty?  If so, click 'Y'.  If not, click 'N'. If you are unsure, simply accept the plan-specific default entry.  IMPORTANT: This field should coincide with the note/rider being utilized.  Most conventional documentation does not contain verbiage allowing for a prepayment penalty.  If you are unsure of this information, or require the use of a custom prepayment rider, consult DSI.  Required: No; Default: Plan

DocMagic Compliance Articles:

• Prepayment Penalty Matrix
• Connecticut Prohibits Prepayment Penalties on High Cost Home Loans
• Maryland Prohibits Prepayment Penalties
• Kentucky HB 552 Affects Prepayment Penalties, High Cost Test; Limits Compensation
• Colorado Adopts Emergency Rule Regarding Prepayment Penalties
• CitiMortgage Programs Now Use DocMagic's Prepayment Penalty Forms
• FHA Prepayment Disclosure Statement
• Georgia Prepayment Penalty Defaults to 2-Year, Tiered 2%/1%
• Ohio Prepayment Penalty Provisions Revised, Effective January 1, 2007
• At Your Service: California's Prepayment Penalty Addendum and Rider

Prepayment

If there is a prepayment penalty, what is the period of time, IN MONTHS, during which it is applicable?  Required: No; Default: Plan

Soft Prepayment

Enter the Soft Prepayment period that will apply.  Required: No; Default: No

DocMagic Compliance Article:

• At Your Service: When a Prepay Penalty Includes a Soft Prepay Provision

Prior Prepay Amount

Enter the prepayment fee charged on the loan being refinanced if made/held/serviced by creditor or affiliate.

DocMagic Compliance Articles:

• Massachusetts High Cost Analysis

Prepay Penalty Options

[Blank]

APR/Payment Schedule

Select this option to view the APR and Payment Schedule.

Back to DM Help

Service Providers

Prior Liens

 

Service Providers

Service Description

Enter the type of service that this particular service provider provides. Required: No; Default: N

Company Name

Type the name of the company in this field.

Ref #

Enter a Reference Number if applicable.  This might be a report number, parcel number, or other reference number the Service Provider is using to find this transaction. 

Contact

Enter the applicable Contact Name in this field.

Phone

Enter the contact's phone number in this field.

Details

Enter the email and other information that corresponds to the Service Provider entered.

Prior Liens

Lien Priority

Enter the priority for this lien.

Lender Name

Enter the name of the original lender.

Principal Amount

Enter the unpaid amount of the note as of the date of the modification agreement (FDIC). 

Principal Amount Interest Rate

Enter the interest rate for this lien.

Payment Amt

Amount of the currently payment being modified.  (Fannie Mae HAMP).

Details

Enter the applicable prior lien details and recording information.

Back to DM Help

Charges

Fees

DocMagic Compliance Articles:

• APR / Finance Charges Matrix
• New Compliance Tool: State-Specific Permissible Fees
• At Your Service: Is an Application Fee a Finance Charge?
• Pennsylvania Increases Permissible Fees for Returned Checks
• Fees Allowed for Texas Secondary Mortgage Loans
• Document Preparation Fee Matrix
• What Is a Finance Charge? Part I
• What is a Finance Charge? Part II
• What is a Finance Charge? Part III
• State Regulation: Fees Not Expressly Authorized by IA Consumer Credit Code

Charges

Charge Code/Description

Enter the code that corresponds to the charge.  The charge code enables defaulting of the charge description and indicates whether or not the charge should be included in the prepaid finance charge based on the default list that has applicable citations here: APR / Finance Charges Matrix

The Prepaid Finance Charge and Section 32 default Y/N flags can easily be changed if you desire.  If you require modification of these or any other default or automatic entries, simply contact DSI.  In many cases DSI has assumed that charges that may be considered part of the Section 32 analysis should be considered.  Sometimes this is not the case. Our assumptions result in a conservative computation in that 100% of the time a transaction is subject to Section 32, we will detect and properly indicate by the use of the required disclosures. 

However, this conservative approach may also trigger the use of the required disclosures in certain cases where the transaction is not subject to Section 32.  It is a wise idea to closely scrutinize all charges in an attempt to more precisely compute the Section 32 analysis.  As indicated above, all assumptions can be changed to meet your requirements.

To

Enter the appropriate party that a fee is being paid to.  The proper selection of the field will trigger necessary disclosures.  If  you're unsure who a fee is being paid to, please check with your investor to confirm the appropriate classification. 

Charge Amt

Indicate the amount of the charge in this field.  Even when a charge has been paid or will be paid at closing, enter the amount in this field.  DocMagic will automatically insert '$', ',' and '.' signs in all numeric fields for you. 

When a buydown has been indicated in the Buydown Code field above, a default entry of the required buydown funds will automatically be computed.  Note: The aggregate adjustment charge has been eliminated, as an Aggregate Adjustment field has been added to the Impound section below.  Required: No      

Paid By

Indicate the party responsible for paying this charge. 

Amount Paid

Enter the amount of the charge that has been paid.  The difference between the charge amount and the paid amount is the amount to the charge currently outstanding. 

POC?

Has this charge been paid outside of closing?

APR?

This field is determined based on the charge code selected.  To view our default APR matrix for the DocMagic Charges, please click here: APR / Finance Charges Matrix.

Fees

Fee Description

Enter the code that corresponds to an entry in the loan fee pop-up list.  The fee code distinguishes the loan fee description and whether the fee point percentage amount will apply to the loan amount as entered or the base loan amount (loan amount less MIP premium financed-FHA loans only).  Loan fee types consist of borrower/seller points and borrower/seller discount points. Generally discount points are utilized in FHA/VA transactions only.  Most conventional loan fees will consist of point (origination) fees only, while FHA/VA loans will often have origination and discount point fees. 

In the case of a FHA/VA transaction, point fee computations will be computed based upon the base loan amount.  The base loan amount is computed by subtracting any mortgage insurance premiums financed from the loan amount as entered.  All discount point fee computations will be computed based on the loan amount as entered.  An FHA sample loan fee entry, assuming a loan amount of $101,500.00 (base loan amount of $100,000.00 + mortgage insurance premium of $1,500.00), might look like this:

Fee Code	Fee Description	Fee to	Points	Fee fixed	Paid By
O	ORIGINATION FEE	L	1.000	-	B
D	DISCOUNT FEE	B	1.000	-	B

The origination fee would be computed by multiplying the point figure (1.000) by the base loan amount ($100,000.00) which would result in a $1,000 origination fee.  The borrower discount fee, however, would be computed by multiplying the point figure (1.000) by the loan amount as entered ($101,500.00) which would result in a $1,015 discount fee.  Remember that loan fees that are paid by the borrower are included in the prepaid finance charge and subsequently effect the APR while loan fees that are not paid by the borrower do not affect the prepaid finance charge. 

To

Indicate who the discount fee is being paid to. 

Fee Points

Show the percentage of the loan amount to be charged as a loan fee.  In the case of an FHA loan with the mortgage insurance premium financed, the point entry percentages will apply only to the base loan amount (the loan amount less the mortgage insurance premium financed fee).  Discount point entry percentages, however, will apply to the loan amount as entered. 

+Fee Fixed

Show any fixed dollar amount to be charged in ADDITION to any points indicated.  Note: This Fee amount is ADDED to the point(s) computation.  Very often users will erroneously place the full origination fee in this field in addition to indicating the number of points this effectively results in loan fee that is twice as much as it should be.

Paid By

Enter the party that the loan fee will be paid by.

APR?

Fees that are included in the APR have the box checked.

DocMagic Compliance Articles:

• APR Calculation for Open End Lines of Credit (HELOCs)

Bona Fide?

DocMagic Compliance Articles:

• Are Your Discount Points Bona Fide? Now the Choice is Yours
• Bona Fide Discount Points Update

GSE Bona Fide?

DocMagic Compliance Article:

• GSE Bona Fide Discount Point Flag Added

Back to DM Help

Payoffs

Premiums

DocMagic customers frequently ask about the difference between Payoffs and Premiums.  Payoffs consist of two options: "Pay Off" or "Pay Off Lien".  A "Pay Off" may be of a credit card, auto loan, judgment or other debt other than a lien of the real property securing the subject mortgage loan whose data is being entered into DocMagic.  A "Pay off Lien" is for an existing first-lien or junior-lien loan or a HELOC against the real property securing the new mortgage loan.

Premiums, however, are for Broker Compensation, Service Release Premium, or a Yield Adjustment Credit and are paid to the Lender, Broker or Investor.

Payoffs

DocMagic Compliance Article:

• Culpepper IV - 11th Circuit Rules Again on Legality of YSP

Payoff Type

Enter the payoff type: Payoff or Payoff Lien.

Description

Enter the Payoff Description.

Amount

Enter the Payoff Amount.

Premiums

DocMagic Compliance Article:

• California DOC Says YSPs NOT Included In Points and Fees Test

Premium Description

Broker Compensation, Service Release Premium, Yield Adjustment Credit, Yield Maintenance Premium, Yield Premium, Yield Spread Premium

Back to DM Help

Impounds

Accounts

PMI/MMI

Miscellaneous Impound Information

Impounds

Indicate any required impound accounts by selecting the appropriate impound code corresponding to an entry in the impound pop-up list. After entering an impound code, complete all related field entries and repeat the process until all required impound accounts have been indicated.  As impound account information is added/modified, the impound account cushion and impound account low balance information is instantly updated for your convenience.

You may view a complete one-year impound account analysis.  We recommend that all impound information be closely scrutinized prior to allowing DocMagic to compute an aggregate adjustment if such an adjustment is necessary.  Remember that an impound account low balance is acceptable as long as it is greater than zero and less than the impound account cushion.  The aggregate method of impound accounting can be confusing at times. 

Note: PMI/MMI impound information is not entered in this area.  

DocMagic Compliance Articles:

• Updated Compliance Tool: Impound Requirements Matrix
• New Compliance Tool: Impound Requirements Matrix

Accounts

Impound Description

Once you have entered the appropriate impound code in the Impound Code field, an impound description will automatically be entered and you will be whisked to the next field. If you need a different description, move the cursor back into this field, type in the desire description and press [enter]. Required: No;  Default: Yes

Pmts/Year

Enter the number of disbursements in a year. For example, property taxes being paid twice a year would require entry of "2" in this field. Disbursement dates are automatically computed by dividing the number of disbursements indicated in this field into 12 months. For example, in the property tax example above 12 months / 2 months=6 months. Therefore DocMagic would compute a second disbursement 6 months after the first date entered in the due date field. If multiple disbursement dates are not easily computer as described above, simply press <F3> in the Impound Due Date field and enter the disbursement dates as they should be. Required: No; Default: No

Payment Amt

Enter the amount of each disbursement. For example: in our property tax example, 2 disbursements will be made each in the amount of $600. $600 would be the entry in this field NOT $1,200 (total amount for the year). DocMagic will automatically insert ‘$' ‘,' and ‘.' Signs in all numeric fields for you. Required: No

Monthly Inflow

Enter the amount to be paid monthly into the escrow account. If multiple disbursements were indicated in the Payments/Year field, this number will equal the Payments/ Year times the disbursement amount divided by "12".

For example: Property taxes due twice a year in the amount of $600.00 each disbursements [$1,200.00/year] would be indicated as follows:

Code	Description	Pmts/Yr	Payment Amt	Monthly Amt
TX	Property Taxes	2	$600.00	$100.00

DocMagic will compute this field's entry for you, just press <Enter>. DocMagic will automatically insert ‘$' ‘,' and ‘.' Signs in all numeric fields for you. All you need to enter is the actual number! Required: No; Default: Yes

Due Date

Enter the first anticipated due date for the disbursement amount indicated. This information is critical for proper computation of aggregate information such as the account low balance and resulting aggregate adjustment figures.

If you have indicated more than 1 payment in a year DocMagic will compute subsequent due dates automatically. If you do not wish to utilize these computed due dates, simply press <F3> and enter the due dates exactly as you wish them to appear.

For example: If you entered 2 payments/year and an Impound Due Date of 11/01/96, disbursement would show 11/01/96 and 05/01/97. The second date was computed by adding 6 months [12 months divided by 2] to the first date indicated. For a due date other than 05/01/97, simply press <F3> and a pop-up window will appear. Your entry might read: 11/01/96 [first line]; 03/01/97 [second line]

Press <F9>to save, <Esc> to exit and <Enter>. The entry of 03/01/97 will override the computed default due date described above. Required: No. Default: No

Months

Enter the number of months to be collected at closing for this impound account. A default number of months figure will be computed based on the line-item method of impound accounting. This will almost always result in the required use of an aggregate adjustment figure. This figure will be computed by DocMagic in the Aggregate Adjustment field.

Notes: Changing the number of months to impound will have a direct effect on the impound account stating balance and subsequently low balance computation. As you change this number you can view the resulting change in the account low balance in the lower right-hand corner of your screen.

Press <Shift + F6> to view the impound account 12 month analysis.

Note: A two month reserve does not necessitate that "2" be entered in this field. The two month reserve is automatically included in the Impound Account Cushion computed and displayed at the lower left corner of your screen. We recommend the use of DSI default value. Required: No; Default: Yes

PMI/MMI

DocMagic Compliance Articles:

• Entering Monthly PMI in DocMagic
• Entering Upfront PMI in DocMagic
• Entering FHA (MMI) in DocMagic
• Canceling PMI
• Effect of MIP on Various State High Cost Tests
• Private Mortgage Insurance
• At Your Service: WI Prepayment Penalty Provisions Applicable to Variable Rate Loans

1^st Year Premium Rate

Enter the PMI 1^st year premium factor in this field. This value will be used for computing the PMI 1^st year premium amount default and is ignored in all other cases. Required: No. Default: No

Renewal Rate #1

If this transaction requires constant or two-tiered PMI, enter the 1^st renewal rate in this field. Required: No; Default: No

Renewal Rate #2

Enter the 2^nd renewal rate for two-tiered PMI in this field. Entry in this field should be limited to two-tiered PMI transactions only. Required: No; Default: No

1^st Year Premium

Enter the PMI 1^st year premium amount in this field. If a PMI premium factor was previously entered in the PMI Premium Factor field, pressing <Enter> will result in a computed default figure being entered. Required: No; Default: WS

1^st Renewal # Mos

This term in months (corresponding to the first renewal rate), should only be entered for two-tiered PMI. Assuming two-tiered PMI, an entry for this field would be ‘108' (with a first year premium) or ‘120' (no first year premium). Enter the term in months and press <Enter>. Required: No; Default: No

2^nd Renewal # Mos

This term in months (corresponding to the 2nd renewal rate), should only be entered for two-tiered PMI. Normally, an entry for this field would be the loan term months minus the 1^st PMI term months. For example: assuming two tiered PMI and a loan term of 360 months, entry in this field would be ‘240' Enter the term and press <Enter>. Required: No; Default: No

PMI/MMI Monthly

Enter the amount of PMI/MMI that will be collected monthly. If a PMI 1^st renewal rate was previously entered, pressing <Enter> will cause a computed default figure to be entered.

If this loan is an FHA or Title One transaction, a default monthly MMI figure will be computed for you. Press <Enter> to accept this default. Required: No; Default: Yes

PMI/MMI Due Date

Enter the anticipated date in which the next PMI/MMI payment will be due. If monthly PMI is applicable enter the first payment date in this field. Required: No; Default: No

PMI/MMI # Mos

Enter the number of PMI/MMI months to be collected at closing.

Note: The computation of the impound account cushion below allows for non-pmi/ mmi cushion months to be different than pmi/mmi cushion months. For example, if you desire a "0" month PMI/MMI cushion and a "2" month non-PMI cushion for all other impounds, this can be easily accomplished. If this computation does not agree with your assumptions, simply contact DSI for instant modification. Required: No. Default: "0"

Miscellaneous Impound Information

Impounds Paid By

Who will the impounds be paid by? Required: No; Default: No

PMI Paid By

Who will be paying the PMI? Required: No; Default: No

Aggregate Adjustment

If an aggregate adjustment is necessary, accept the default figure shown below. To view the result of the aggregate adjustment or simply see a monthly accounting of the impound account, simply enter <Shift + F6>.

Note: The aggregate adjustment is simply a direct adjustment to the starting balance of the impound account. Notice that when a figure is defaulted into this field, the Impound Account Cushion and Impound Low Balance figures below match. The same result can occur by manipulating the number of months to impound for any one or all of the impound items indicated above.

Although the use of the aggregate adjustment is convenient, it is NOT required. As long as the Impound Account Low Balance is greater than zero and less than the Impound Account Cushion, the impound account is fine.

DocMagic Compliance Article:

• Tech Tip of the Month: Aggregate Adjustment

Starting Balance

[Blank]

Low Balance

[Blank]

Cushion

[Blank]

Back to DM Help

DocMagic Compliance Article:

• Part V - RESPA Reform: Revised HUD-1 Settlement Statement

100. Gross Acount Due from Borrower

Code

Description

Amount

200. Amounts Paid by or in Behalf of Borrower

Code

Description

Amount

300. Cash at Settlement From/To Borrower

Code

Description

Amount

400. Gross Amount Due to Seller

Code

Description

Amount

500. Reductions in Amount Due to Seller

Code

Description

Amount

600. Cash to Settlement To/From Seller

Code

Description

Amount

700. Total Sales/Broker's Commission

Code

Description

Amount

Back to DM Help

Original Loan Data

Modification Data

Miscellaneous

DocMagic Compliance Articles:

• Advance Fee Agreements for Loan Modifications
• At Your Service: Mississippi Security Instruments, Loan Modification Agreements Updated
• DocMagic Now Offering Loan Modification Programs
• Steps for Lenders to Consider in Connection with Mortgage Modification Programs

Original Loan Data

Mortgage Date

The date of the original Mortgage being modified (Fannie Mae HAMP)

Payment Amount

The amount of the current Payment being modified (Fannie Mae HAMP)

Volume/Book/Page

The volume/book/page that the original Mortgage was recorded in (Fannie Mae)

Assumable?

Does the original loan document contain a provision that allows the Note and Mortgage to be assumed by a transferee of an interest in the property? (Fannie Mae HAMP)

Fannie Mae Owned?

Is the loan being modified currently owned by Fannie Mae or Securitized? (Fannie Mae HAMP)

In Default?

Is the loan being modified currently in Default? (Fannie Mae HAMP)

Prepayment Penalty?

Does the existing Note have a Prepayment Penalty? (Fannie Mae HAMP)

Modification Data

Effective Date

The date the Loan Modification takes effect. (Fannie Mae HAMP)

Investor Loan Number

The loan number that was assigned by the current Investor holding the loan being modified.

Unpaid Principal Balance

The unpaid principal balance of the Note as of the date of the modification agreement. (FDIC)

Deferral of Principal

The amount of Principal that is being deferred for repayment at a later date (Fannie Mae HAMP and FIDC)

Principal Forgiveness

The amount of Principal that is being permanently forgiven (Fannie Mae HAMP and FIDC)

Delinquent Interest

The sum of interest that is delinquent.  (FDIC)

Delinquent Escrow

The sum of all escrow monies that are delinquent.  (FDIC)

Escrow Shortage

The amount of money needed to bring an escrow account current. (Fannie Mae HAMP)

Amount in Arrears

Amount that is in arrears including principal, interest and escrow monies.  (FDIC)

Servicing Costs

Cost associated with completing the modification. (FDIC)

Miscellaneous

Bankruptcy Mortgage Reaffirmed?

Did the borrower previously receive a Chapter 7 bankruptcy discharge but did not reaffirm the mortgage debt under applicable law?  (Fannie Mae HAMP)

Subordination/Title Endorsement?

Is lender required to obtain one or more subordination agreements and/or a title policy endorsement to ensure that the modified loan retains its first lien position and is fully enforceable?  (Fannie Mae HAMP)

Hardship Explanation

The borrowers explanation of the hardship that is being experienced.

Back to DM Help

 

Closing County

Insert the County that the Loan will be closed in. This is usually the County where the Documents will be signed. Required: No; Default: No

Loan Proceeds To

Use this field to indicate the entity to which all loan proceeds will be directed. Select ‘T' for the title company, ‘E' for the escrow company, ‘B' for Borrower or simply leave the field blank. Required: No; Default: Last

Closing Instructions/Conditions

You may enter customer closing instructions and save each one to be used in the future.

Back to DM Help

 

Process

[Blank]

APR

View the APR/Payment Schedule and Amortization Schedule

Section 32/State High Cost

View the Section 32, State High Cost Analysis and Fannie Mae Test.

Audit

DocMagic Compliance Articles:

• Required Escrow Accounts for Higher-Priced Mortgage Loans
• DocMagic's RESPA 2010 Audits
• Virginia High-Risk Mortgage Loan Law and Audit
• FHA Prepayment Penalty Audit removed from HPML Audit
• Federal Higher-Priced Mortgage Loan (HPML) Audit
• Mortgage Disclosure Improvement (MDIA) Act Audits
• Maryland Higher-Priced Mortgage Loan Audit
• New York Subprime Home Loan Audit Enhancements
• Maine Rate Spread Home Loan Audit Added
• New York Subprime Home Loan Audit
• Vermont High Rate/High Cost Loan Audits
• Connecticut Nonprime Home Loan Audit
• Connecticut Prohibits Prepayment Penalties on High Cost Home Loans
• Connecticut Home Loan Audits
• Illinois Predatory Lending Database Pilot Program Audits
• Maryland Prepayment Penalty Audit
• Nevada Home Loan Audit
• DocMagic Adds North Carolina Rate Spread Home Loan Audit
• North Carolina Fee Limitation Audit
• Minnesota Residential Mortgage Lending Law Audits
• Tennessee Usury Audits Implemented
• New Massachusetts Borrower Interest Audit
• Section 32, Fannie Mae and Application Date Audits
• New Century Audit
• At Your Service: Texas Cash-Out Audit
• At Your Service: Wisconsin Calculation Audits
• DocMagic Audits

Details

IF YOU HAVEN'T ALREADY, PLEASE CHECK OUT THIS SECTION: Transaction Details and Compliance Audit.

Back to DM Help

General Options

Loan Application

Electronic Delivery

Additional Services

General Options

Document Package Type

DocMagic Compliance Articles:

• Pre-Closing Package Available Now
• Interim/Processing Disclosures and Forms Available Now
• Tech Tip of the Month: Document Processing Options for DocMagic

Document File Format

[Blank]

Loan Application

FNMA 3.x File

[Blank]

Electronic Delivery

E-mail Secure Link to

Edisclosure

DocMagic Compliance Article:

• Electronic Signatures Not Yet Permitted on FHA Loans, But Electronic Delivery Okay
• eDisclosure Results in Cost Savings

Additional Services

DSI to Print and Deliver

[Blank]

Flood Certification

DocMagic Compliance Articles:

• At Your Service: FEMA Updates Standard Flood Hazard Determination Form
• FIS Flood Services Changes Name to LPS National Flood
• FIS Flood Services Spring 2008 Newsletter
• FIS Flood Services Responds to OCC
• FIS Flood Services and DocMagic Partner to Offer Flood Zone Determinations
• Nationwide TotalFlood To Provide Flood Determinations Through DocMagic

MERS Registration

DocMagic Compliance Articles:

• MERS Loan Registration Now Available on DocMagic for Windows
• MERS Loan Registration Now Available on DMO
• At Your Service: MERS and the Missouri Recorder's Cover Page