The Rhode Island Department of Business Regulation, Division of Banking, has updated each one of the model disclosures set forth in the final version of Regulation 3. Any enforcement action related to these disclosures will cover transactions initiated or pending after June 1, 2007. To read more about the final version of Regulation 3, please read our April, 2007 issue of The Compliance Wizard.

Following is a summary of the new disclosures:

Prohibited Acts and Practices Disclosure Regarding All Home Loans: This disclosure is designated as Form 1 in the Regulations and must be given to the loan applicant within three (3) days of application. This disclosure will appear in initial packages regardless of lien position, when the loan originator is a lender or broker and the secured property is owner-occupied.

Prohibited Acts and Practices Regarding High-Cost Home Loans: This disclosure is designated as Form 2 in the Regulations and must be given to the loan applicant within three (3) days of application. This disclosure will appear in initial packages regardless of lien position, when the loan originator is a lender or broker and the secured property is owner-occupied.

Tangible Net Benefit: This disclosure is designated as Form 3 in the Regulations and must be given to the loan applicant prior to or upon consummation of the home loan. Verification of the date of submission to the applicant and a fully executed copy of Form 3 must be maintained in each loan file. This disclosure will appear in initial and closing packages (regardless of lien position) of rate and term and cash-out refinance transactions, when the loan originator is a lender or broker and the secured property is owner-occupied.

High-Cost Home Loan Disclosure: This disclosure is designated as Form 4 in the Regulations and must be given to the loan applicant at such time that it is determined by the creditor that the new loan is a high cost home loan, but in sufficient time as to enable the applicant to receive, prior to closing the loan, face-to-face counseling on the advisability of the high cost home loan transaction, with a third-party non profit organization (see Form 5 below). Verification of the date of submission to applicant and a fully executed copy of Form 4 and Form 5 (see below) must be maintained in each loan file. This disclosure will appear in all initial and closing loan packages that are determined to be high cost home loans under Rhode Island Home Loan Protection Act (RIHLPA) by DocMagic's high cost loan analysis, when the loan originator is a lender or broker and the secured property is owner-occupied.

Consumer Caution and Home Ownership Counseling Notice and Certification: This disclosure is designated as Form 5 in the Regulations. Once a loan is determined to be a high cost home loan, the lender or broker must refer the applicant to a third-party non-profit organization approved by the United States Department of Housing and Urban Development ("HUD"). A HUD-approved counseling agency must provide this disclosure to the lender, certifying that the borrower was counseled face-to-face by the agency representative. This disclosure reflects the date and time of the counseling, the borrower's signature, and the agency representative's signature. This disclosure will appear in all initial and closing loan packages that are determined to be high cost home loans under RIHLPA by DocMagic's high cost loan analysis, when the loan originator is a lender or broker and the secured property is owner-occupied.

The regulations provide that all persons subject to RIHLPA must use the exact disclosure forms provided in said regulations and must not alter or change them in any manner. DocMagic's Compliance Department recently contacted the Department of Business Regulations to clarify whether this provision prohibits the addition of its standard headers and footers and was advised to lay them out exactly as provided in the regulations.

Please contact DocMagic's Compliance Department if you have any questions concerning these disclosures.