Back in September 2008, we wrote about New York's new subprime home loan law and the audit DocMagic, Inc. had developed to assist in identifying such loans.  That article is available here.  Based on feedback from our DocMagic customers, we have added some additional information to the audit results that are displayed when a loan meets the definitional requirements of a subprime home loan.  Specifically, the audit will now return back the following data points used in making the subprime home loan determination: the loan application date; a description of the commitment rate used (e.g., 30YRFIX); the actual commitment rate used; the commitment rate publication date; the subprime home loan threshold; and the loan fully-indexed APR .  For example, for a 30-year fixed rate, first lien loan with an application date of December 1, 2008 and an APR of 8.109%, if the loan was determined to be a subprime home loan, the audit would read as follows:

WARNING: THIS IS A NY SUBPRIME HOME LOAN (NY BANKING LAW SECTION 6-M(1)(C)): APPLICATION DATE: 12/01/08; COMMITMENT RATE DESC: 30YRFIX; COMMITMENT RATE: 5.990; RATE PUB DATE: 11/26/08; SUBPRIME THRESHOLD: 7.740; FULLY-INDEXED APR: 8.109

The above information tells us that for this particular loan, based on a December 1, 2008 application, the average conventional 30-year commitment rate for fixed rate loans in the Northeast region for the week of November 26, 2008 is used, and such rate is equal to 5.990%.  Because this is a first lien loan, 1.75% is then added to that commitment rate to arrive at a subprime home loan threshold rate of 7.740%.  Because the loan APR of 8.109% is greater than the subprime threshold of 7.740%, this is a New York subprime home loan.

Please feel free to contact DocMagic's Compliance Department if you have any questions or comments regarding this audit.