Pursuant to new Section 3(1) in Substitute House Bill 2770, DocMagic, Inc.'s Compliance Department has laid out a residential mortgage loan disclosure summary that has been prescribed by the Washington Department of Financial Institutions (DFI) as a model form.  This model form, dated May 22, 2008, is entitled "Basic Facts About Your Mortgage Loan."  DocMagic's file name for this disclosure is WABFAYML.MSC. 

With the passage of Senate Bill 1167, enrolled as Public Act 095-0691, the Predatory Lending Database Program ("Program), which originally started as a pilot program and covered only certain areas of Cook County, Illinois, has been modified in certain respects.  In addition, SB 1167 adds restrictions and prohibitions with respect to how lenders and brokers may originate and broker loans in Illinois.  As SB 1167 makes sweeping changes, this article addresses only those portions of the Bill that affect new disclosure requirements which became effective June 1, 2008, and DocMagic, Inc.'s audit regarding the Program.

Some three years after initially adopted, the oft-delayed and subsequently amended Predatory Lending Database Program established within Cook County, Illinois becomes operational on July 1, 2008.  As the name suggests, within ten (10) days after taking a mortgage application brokers and originators must input certain required borrower and loan-related information into a database.  Within seven (7) days after receipt of that information, the Illinois Department of Financial and Professional Regulation (IDFPR) must determine whether to recommend housing counseling by a HUD-approved counselor.  Counseling is required if the borrowers are all first-time homebuyers.  In addition, counseling is required if the borrower is refinancing a primary residence and the loan includes one or more of the following features: (a) interest only payments; (b) negative amortization; (c) total points and fees paid by the borrower exceed 5%; (d) the loan includes a prepayment penalty; or (e) the loan is an ARM.  The borrower may not waive required counseling.  Additional procedures and timeframes are included to accommodate changes in loan or commitment terms.  The borrower then has ten (10) days within which to complete counseling, and the counselor has seven (7) days to input that information into the database.  Reasonable and customary costs of counseling up to $300 must be paid by the broker or originator.  Within ten (10) days after closing a loan, the title company or closing agent must submit required information to the database.  Finally, the title company or closing agent must attach either a certificate of compliance or a certificate of exemption to the mortgage in order to record the mortgage on or after July 1, 2008.

Mortgages and Assignments 

In our February, 2008 issue, we reported that DocMagic, Inc.'s Compliance Department had updated Fannie Mae's/Freddie Mac's Massachusetts mortgage as well as its other mortgages and assignments to comply with Section 3 of Chapter 206 of the Acts of 2007.  Although the mortgages and assignments were updated to reflect the required mortgage broker's name, post office address, and license number, the name, post office address and license number of the mortgage loan originator were not added to these documents, because the law governing mortgage loan originators does not become effective until July 1, 2008.

DocMagic, Inc.'s Compliance Department has caused the Illustrations of Consumer Information for Hybrid Adjustable Rate Mortgage Products (ICIHARM.MSC) ("Illustrations") to be laid out for customers' use upon their request.  The federal financial regulatory agencies -- Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the Federal Reserve System (Board); Federal Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, Treasury (OTS); and National Credit Union Administration (NCUA) (collectively, the Agencies) --issued the final drafts of the Illustrations on May 22, 2008.

The DocMagic System will be updated to reflect the July 1, 2008, increased late fee dollar amounts for loans made under the consumer credit codes in Indiana, Minnesota, Oklahoma and South Carolina.  The following changes were made: (i) Indiana late fee dollar amount was $17.00, changed to $17.50; (ii) Minnesota late fee dollar amount was $6.76, changed to $7.28; (iii) Oklahoma late fee dollar amount was $21.00, changed to $22.00; and (iv) South Carolina maximum late fee dollar amount was $15.50, changed to $16.50, and minimum late fee dollar amount was $6.20, changed to $6.60.

Depending on where you are licensed, many states require lenders and/or brokers to maintain a physical presence in the state in order for them to conduct business in that state.  The following matrix outlines on a per-state basis whether there is an in-state office requirement (also known as a "brick-and-mortar" requirement) or whether no such requirement exists.  If a physical presence is not required, but certain restriction(s) apply to lenders and/or brokers who wish to conduct business in that state, a description of the restriction(s) is noted in the matrix.

Here is the matrix: In-State Office Requirements Matrix.

This month DSI posts the loan programs of California Housing Finance Authority, Liberty Mortgage Corporation and PHH Mortgage Corporation and updates the loan programs of CitiMortgage, Inc. (Broker Division), CitiMortgage, Inc. (Correspondent Division), Countrywide Home Loans, Inc. (Correspondent), GMAC Bank, and U.S. Bank, N.A. 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.

Updated: August 8, 2008 (Revisions are highlighted in yellow) 

With enactment of Maryland HB 363, which became effective on June 1, 2008 (except for Section 7 of the Bill which becomes effective on January 1, 2009), Maryland law now prohibits prepayment penalties on closed - or open - end loans regardless of loan purpose or lien priority, secured by property in Maryland that is:

The U.S. Treasury security yield values for June 2008 may be viewed online here.  The yield is determined as of the 15th day of the month immediately preceding the month in which the creditor receives the application.  The yield value is used for Section 32 and most state high-cost tests.  These values will, therefore, be used for loan applications received by the creditor in July 2008.

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 May 2008.