North Carolina has created a new category of predatory loan, the so-called "rate spread home loan."  The new law is contained in North Carolina G.S. Section 24-1.1F (a copy of the bill enacting this new section is available here).  Click here for a description of the new law along with a description of the audit DocMagic is implementing to identify such loans.

North Carolina has amended the definition of "points and fees" in its High-Cost Home Loan Law effective for loans entered into on or after January 1, 2008.  Under the current high-cost home loan law (North Carolina General Statutes Section 24-1.1E), only compensation paid directly by a borrower to a mortgage broker is included in the definition of "points and fees."  Lender-paid compensation to a mortgage broker (e.g., yield spread premiums) is not a point and fee.  However, for loans entered into on or after January 1, 2008, points and fees include "all compensation paid from any source to a mortgage broker," including compensation in a table-funded transaction.  As a result of this change, yield spread premiums and other forms of lender-paid compensation are treated as a point and fee.  To view a copy of our North Carolina predatory lending memorandum (which has been updated to reflect the above information and to make minor editorial changes), click here.  Please contact the DocMagic Compliance Department if you have any questions or comments.

DocMagic, Inc.'s Compliance Department recently posted its memo on Maine's Anti-Predatory Lending Law.  To view Maine's high cost memo, click here.

In response to customer inquiries, DocMagic, Inc.'s Compliance Department has prepared a Tangible Net Benefit Matrix that shows for each state, plus the District of Columbia: (1) whether a creditor is required to determine a tangible net benefit to the borrower; (2) whether the creditor must provide the borrower with a tangible net benefit worksheet; (3) whether any applicable tangible net benefit law applies to the occupancy status of the borrower; (4) the applicable citations to the governing law; and (5) notes regarding the specific tangible net benefit law. 

Here is the matrix: Tangible Net Benefit Matrix.

DocMagic recently received SAS 70 Type I certification.  For your reference, we're providing a summary of the auditor's report.  For current DocMagic customers who wish to receive a complete version of this report, you must complete and return the Non-Disclosure Agreement (NDA) to compliance@docmagic.com or fax: (800) 564-1362.  Additionally, we are currently undergoing the Type II report and will make this available to our customers.  We're anticipating having this report available in the 4^th quarter of 2008.

Currently, Fannie Mae accepts an inter vivos revocable trust as an eligible borrower for a conventional first mortgage as long as the secured property is a one-family principal residence, second home, or an investment property, and the trust complies with other eligibility requirements stated in Part IV, Section 501 and Part VII, Section 101.06 of its Selling Guide.  Pursuant to Announcement 07-25, dated December 21, 2007, the eligibility of secured property in which a revocable trust is the borrower has been expanded to include one - to four - family principal residences, investment properties, and one-family second homes.  Additionally, Fannie Mae clarifies in its Announcement that eligible properties include units in condominium projects, planned unit developments (PUDs), manufactured homes and cooperatives, provided that the lender has obtained approval to deliver cooperatives.

This month DSI posts loan programs of AmTrust Bank and Thornburg Mortgage Home Loans, LLC and 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.

DocMagic, Inc.'s Compliance Department has received customer inquiries about whether the Massachusetts Important Notice of Loan Terms (Broker - MAINLTB.MSC; Lender - MAINLTL.MSC) that were repealed in December, 2007 have been replaced by new disclosure forms.  According to the Massachusetts Office of the Attorney General's Guidance With Respect to 940 CMR 8.00 et seq. (as amended), these repealed disclosures are not replaced with new disclosures.  Brokers and lenders must simply comply with all other Federal and Massachusetts disclosure requirements. 

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 December 2007.