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. 

Although use of this disclosure became mandatory on June 12, 2008, the DFI posted an updated version of the model form on June 16, 2008.  The sentence, "Your fully indexed monthly payment is $                        ." was added to the May 22nd version of the model form.  DocMagic's Compliance Department is in the process of updating the disclosure to match the June 16^th version of the form currently posted to the DFI's website.  The DFI's rule WAC 208-600-200 enacting the model form can be accessed here.

Section 3 requires a separate residential mortgage loan disclosure summary of all material terms to be provided to the borrower within three (3) business days following receipt of a loan application, and, if any material terms have changed, a new disclosure summary must be provided to the borrower within three (3) three days of any such change or at least three (3) days before closing, whichever is earlier.

The model form, "Basic Facts About Your Mortgage Loan," includes a disclosure of the following:  fees and discount points on the loan; interest rates of the loan; broker fees; the broker's yield spread premium as a dollar amount; whether the loan contains prepayment penalties; whether the loan contains a balloon payment; whether the property taxes and property insurance are escrowed; whether the loan payments will adjust at the fully indexed rates; and whether there is a price added or premium charged because the loan is based on reduced documentation.

The disclosure will select for both predisclosure and closing loan packages when the origination type is a lender or broker; the property type is not commercial property, vacant land and lots, or multifamily; and the occupancy status of the property is owner-occupied or a second home.  Additionally, as the DFI's rule requires that this disclosure be the first document to be provided to the borrower, it is placed first in the stacking order or document tree of the loan packages. 

Please contact the DocMagic Compliance Department if you have any questions or comments regarding the information in this article.