We are certainly in the midst of trying and challenging times.  The financial crisis that has affected the mortgage industry has permeated many other markets domestically and globally.  A handful of document preparation companies have been acquired by others or have gone out of business.  Most recently, Ellie Mae, Inc. purchased the assets of Online Documents, Inc. and Document Processing Systems, Inc. ("DPS") closed its doors. 

On July 30, 2008, President Bush signed the Housing and Economic Recovery Act of 2008 (the "Act") into law.  The Act amends the National Housing Act to create a new temporary FHA mortgage insurance program called HOPE for Homeowners (H4H).  This new Program, as described in Mortgagee Letter 2008-29, is designed to assist borrowers at risk of default or foreclosure with refinancing into an affordable 30-year, fixed rate mortgage that is insured by FHA.  The Program is effective for endorsements on or after October 1, 2008 and ends September 30, 2011.  Below is a description of the new Program along with a description of DocMagic, Inc.'s plans for implementing the requisite documents under the H4H Program.

We have received numerous questions regarding changes to the North Carolina High-Cost Home Loan law ("NCHCHL"), effective October 1, 2008.  As a result of these recent amendments to the NCHCHL law, there is uncertainly whether certain fees that had previously been excluded from the definition of "points and fees" under the NCHCHL law must now be treated as "points and fees" under the NCHCHL law.  For the reasons stated below, we believe that with very limited exceptions, these recent amendments have not greatly expanded the definition of "points and fees" under the NCHCHL law.

DocMagic, Inc.'s Compliance Department has created a Lock-In Agreement (MTLIA.MSC), Prepayment Penalty Disclosure (MTPPD.MSC) and Loan Commitment (MTLC.MSC) pursuant to HB 69, which enacted the new Montana Residential Mortgage Lender Licensing Act, Mont. Code Ann. §§ 32-10-101 et seq. The law became effective October 1, 2008, but, due to a grammatical oversight, the law applies to mortgage loans made on or after October 2, 2008.  These new disclosures will select if the secured property is located in Montana, the property type is not multifamily, commercial, or land & lots and occupancy status is owner-occupied, regardless of lien status.

The Maryland Commissioner of Financial Regulations has published proposed regulations to implement recently adopted emergency legislation requiring the inclusion of the names and license numbers of mortgage lenders and mortgage originators (or an affidavit of exemption) on recorded security instruments encumbering residential property. We previously wrote about the emergency legislation in our April 2008 issue of the Compliance Wizard here. The proposed regulations can be viewed here. Comments on the proposed regulations are due by November 10, 2008. We will keep you posted on the status of the proposed regulations.

We've received a number of questions recently regarding Nevada's electronic transmission encryption law that became effective October 1, 2008.  As explained below, DocMagic's various processing and document delivery systems provide ample tools to ensure compliance with Nevada's email encryption law.

Updated: November 5, 2008 (Revisions are highlighted in yellow)

Beginning November 3, 2008, DocMagic users will begin to see the standard 1-4 Family Rider (US3170.RID) in FHA closing packages whenever the property securing the FHA loan is owner-occupied, not a second home, and the property type is a 1-4 unit property or in rare instances permitted by HUD, such as for the purchase of HUD real-estate owned (REO) property, the property type is investment property (i.e., non-owner-occupied and not a second home).  Note that the FHA-required non-occupancy rider (NOOR.LSR) and the Borrower's Contract with Respect to Hotel and Transient Use of Property, Form HUD-92561 (92561.HUD), already appear in these packages.  Although HUD does not require the 1-4 Family Rider in FHA loan packages, some investors do require it.  Therefore, DocMagic, Inc.'s Compliance Department has decided to add the 1-4 Family Rider to enhance the salability of customers' loans.  Customers wanting the 1-4 Family Rider deleted from their FHA closing loan packages must contact DocMagic, Inc.'s Customer Service Department, at (800) 649-1362.

This month DSI posts the loan programs of CitiMortgage, Inc. (Correspondent Division), Countrywide Home Loans, Inc. (Correspondent), Freedom Mortgage Corporation, U.S. Bank N.A., and Wells Fargo Bank 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.

Fannie Mae and Freddie Mac have updated their New Mexico deed of trust by revising Section 22 to describe the borrower notice requirements and Section 25 to include non-judicial sales in the redemption period.   The tagline date for this instrument is 1/01 Rev 9/08. 

If you are a DocMagic customer and wish to receive HMDA-LAR data for your 2008 loan originations, just follow these easy steps:

Many of our customers believe that they must re-process worksheets that were previously processed in order to obtain the necessary information to prepare IRS Form 1098. Save yourself the additional processing fee and instead use the reporting capabilities offered by DocMagic Online (DMO) or DocMagic for Windows (DMW).  Obtaining a 1098 report via DMO and DMW is free.

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 2008.

The U.S. Treasury security yield values for October 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 November 2008.

To view this month's list of announcements or newsletters related to our mortgage industry, please click here.