The Minnesota legislature has enacted significant changes to the state's residential mortgage lending laws, effective August 1, 2007. Minnesota HF 1004 and SF 998 are the product, in part, of the Minnesota Attorney General's 11-member Predatory Lending Task Force announced in December, 2006. The Minnesota Department of Commerce has published both a brief summary of the bills available, as well as an FAQ. In this article, we will briefly highlight some of the more legal significant changes and describe some additional audits we will be implementing in our DocMagic software to better assist you in complying with these changes.

Based on further research provoked by comments from a number of DocMagic customers, we have modified all security instruments to add the name of the non-title spouse (NTS) under the definition of "Borrower." Previously, the NTS name appeared only in the signature block of the security instruments. (See prior articles on DocMagic's handling of a NTS here and here.)

DocMagic has added a 20-year repayment period to all of its Generic Home Equity Lines of Credit (HELOCs) plan codes. Now the following draw periods -- 5, 10, or 15 years may be used in conjunction with either a 0, 5, 10, 15 or 20 year repayment period. Use plan codes HELOC1 through HELOC8. For more detailed information, click here. Also, click here for an explanation of the DocMagic HELOC audits.

In response to a recent announcement by Mortgage Electronic Registration Systems, Inc. (MERS), Fannie Mae will soon be posting a mandatory change if a lender elects to name MERS as the mortgagee of record (as nominee for the beneficiary). That change is based on Indiana Senate Bill 232, which adds a new subsection (b) to Indiana Code § 32-21-2-3, as follows:

DocMagic's Compliance Department has revised the "Notice" provision in its second-lien security instruments (Paragraph 12 in most security instruments) to provide that any notice to either the lender or borrower required or to be given under the security instrument shall be provided by first-class mail. Previously, the security instruments provided that notice was to be given by certified mail. Although the prior "Notice" provision was adequate, the Compliance Department decided to revise the "Notice" provisions to render them consistent with the "Notice" provisions in the Fannie Mae security instruments.

For DocMagic customers' ease of reference, DocMagic's Compliance Department has prepared a matrix that reflects a list of various fees and charges (with DocMagic's charge codes) that are found in the dropdown menu of fees/charges for both DocMagic Online and DocMagic for Windows, DocMagic's defaults designating whether or not such fees/charges are finance charges, and the applicable citation to Section 226.4 of Regulation Z or the Official Commentary to Reg. Z upon which the defaults are based. Note that where a particular fee or charge, such as the flood certification fee, can be either a finance charge or not a finance charge, note that such fee/charge is listed twice with a different charge code assigned.

Here is the matrix: Finance Charges Matrix

Click below for our three-part series of articles on finance charges:

• Part 1
• Part 2
• Part 3

DocMagic's Compliance Department has revised its Montana Mortgage Loan Origination Disclosure to comply with Senate Bill 92, which becomes effective October 1, 2008. SB 92 revises the Montana Residential Mortgage Lender Licensing Act ("Act"). Among other statutes, SB 92 amends Montana Code Annotated § 32-9-124 by requiring a mortgage loan origination disclosure to provide:

This month DSI posts updates to the loan programs of ABN AMRO Mortgage, American Home Mortgage, Aurora Loan Services, Chevy Chase Bank F.S.B., 1st National Lending Services, Option One Mortgage, and Bear Stearns to its Compliance page. Find out the description of each investor's loan program, which promissory notes, prepayment riders and addenda are used, and what the rate caps and interest-only periods are for variable rate loans by visiting our Investor Updates page.

A new disclosure, the Colorado Mortgage Broker Disclosure (File name: COMBD.MSC), has been added to the Colorado disclosure matrix. Colorado House Bill 07-1322 was enacted as a measure to prevent mortgage fraud and became effective on June 1, 2007. Among the many new statutes that have become law through H.B. 07-1322, Colorado Revised Statutes § 12-61-914 requires a mortgage broker to provide a borrower with a written disclosure of numerous items concerning the borrower's loan within three (3) days after receipt of a loan application or any moneys from the borrower.

In order to keep DocMagic software users better apprised of document changes and additions as they occur, DSI posts listings of all newly created and revised documents. Here is the list of forms created or modified in June 2007.