Document Systems, Inc. ("DSI") has noticed in the last couple of months that FHA loan programs have been one of the most selected loan programs by its customers. FHA loans appear to be replacing the once popular subprime and Alt-A loans. The purpose of this article is to describe the two methods that the DocMagic software employs to calculate the declining mortgage insurance premium.

Under applicable North Carolina law (N.C. Gen. Stat. § 24-1.1A(c); N.C. Gen. Stat. § 24-8(a); N.C. Gen. Stat. § 24-1.2A(b)), only certain fees may be charged on home loans that are first lien residential loans (not equity lines) between $10,000 and $300,000 and made by a lender who is either:

RESPA, Section 8, prohibits "impermissible referrals", that is, the payment of a thing of value for the referral of settlement service business when little or no activity is performed in return for such payments.   HUD issued several Statements of Policy ("SOP") to explain the activities a mortgage broker may perform to be permissibly compensated for acting as a mortgage broker. Such policy statements covered lender payments to mortgage brokers, including those payments referred to as "yield spread premiums" (or "YSPs").

Document Systems, Inc. ("DSI") has updated its Florida Mortgage Brokerage Services Agreement (FLMBBSA.MSC) pursuant to Senate Bill 1824. In the "Mortgage Brokerage Fee" section, the Agreement now provides for the total amount of the mortgage brokerage fee, comprised of the amount(s) paid by the borrower and the lender.  In the "Lender Compensation" area under this section, we removed the range of fees to be paid by the lender and added the maximum amount that the broker could be receiving from the lender (i.e., YSP). These changes became effective October 1, 2007.  If you have any questions concerning this disclosure, please contact Customer Service, at (800) 649-1362.

The California DRE Mortgage Loan Disclosure Statement/Good Faith Estimate, Nontraditional Mortgage Product (One to Four Residential Units) (RE885.MSC) is now available to customers upon request only. This disclosure was prepared based on the model form (RE 885) provided by the Department of Real Estate (DRE) and in accordance with Section 2842 of Title 10 California Code of Regulations. If you wish to add this disclosure to your account, please contact Customer Service, at (800) 649-1362.

A new disclosure has been added to Nevada's State Build.  The Nevada "Commercially Reasonable Means or Mechanism" Worksheet (NVCRMMW.MSC) became effective on October 1, 2007, and a model disclosure is provided by the Nevada Mortgage Lending Division.  The Worksheet was prepared pursuant to AB 440, which amended NV Rev. Stat. 598D.100, and in accordance with Mortgage Lending Division Letter 2007-2, the Division's interpretive opinion of AB 440.   

A new disclosure has been added recently to Arkansas' State Build.  The Arkansas Disclosure Certification (ARDC.MSC) was created pursuant to Rule 5010-2 of the Rules of the Fair Mortgage Lending Act and its use was required beginning on October 1, 2007.  The Disclosure Certification will appear in all Arkansas closing packages where the origination type is either a lender or broker.  If you have any questions concerning this disclosure, please contact Customer Service, at (800) 649-1362.

A number of customers have recently inquired whether Document Systems, Inc. ("DSI") offers HUD's Disclosure Statement Notice to Mortgagor at Loan Closing Regarding Prepayment ("Disclosure"), as provided in Mortgagee Letter 92-19.  Please note that, as confirmed by a couple of underwriters at Santa Ana, California's HUD Office, this Disclosure is obsolete and has been replaced with HUD 92900-B (see "About Prepayment" section of form).  If you have any questions regarding the contents of this article, please contact DSI's Compliance Department.

This month DSI posts updates to the loan programs of Aurora Loan Services, LLC, Freedom Mortgage Corporation, GMAC Bank, and Homecomings Financial, LLC 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.

Under Civil Code Section 2954(a), a voluntary escrow account may be set up "if, prior to the execution of the loan or sale agreement, the seller or lender has furnished to the purchaser or borrower a statement in writing, which may be set forth in the loan application, to the effect that the establishment of such an account shall not be required as a condition to the execution of the loan or sale agreement, and further, stating whether or not interest will be paid on the funds in such an account."  The California Impound Account Statement (CAIAS.MSC) satisfies the requirements of Section 2954(a) and is available upon request.  To add this form to your California predisclosure and/or closing packages, please contact Customer Service, at (800) 649-1362.

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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 September 2007.