The New Mexico Regulation and Licensing Department, Financial Institutions Division ("Division"), has finalized NM ADC 12.19.8.12, which now states as follows:

(A) Mortgage loan companies shall provide rate lock disclosures to and enter into signed lock-in agreements with a borrower(s). The mortgage loan company shall use a rate lock disclosure form of their choosing. The rate lock disclosure shall include the following information: (1) a rate float option, (2) the lock-in loan interest rate, (3) loan pricing for the lock-in interest rate, (4) loan terms, (5) loan lock-in period and (6) any fees required for an extension of the lock-in period. For the purposes of act, the term "pricing" means the credit or charge to the borrower(s) for the loan interest rate.

(B) At least two (2) days prior to closing, a mortgage loan company shall provide to the borrower(s) the following federal disclosures specific to the mortgage loan the borrower(s) is receiving: (1) a good faith estimate and (2) a truth in lending statement. These documents shall be used to comply with Chapter 122 Session Law 2009 Section 52 (D) and (E). For the purposes of the act, the yield spread premium or discount points received by the mortgage loan company shall be disclosed as a dollar amount on all Good Faith Estimates.

The prior version of the regulation, in proposed draft, required a mortgage loan company1 to provide a borrower with a Mortgage Loan Compensation Disclosure and Mortgage Loan Summary Disclosure.  (As the final version of the regulation no longer requires these two disclosures, they will be removed from DocMagic's inventory.)  Instead, the federal good faith estimate and truth-in-lending statement must be provided to the borrower at least two (2) days before closing.  (See NM ADC 12.19.8.12(B).)

The prior draft of Section 12.19.8.12 also required that mortgage loan companies use the Rate Lock Disclosure and Rate Lock Agreement model forms that were published previously on the Division‘s website, but that requirement has been removed from the final version of the regulation.  (See NM ADC 12.19.8.12(A).)  Now, mortgage loan companies may use a rate lock disclosure and rate lock-in agreement of their choosing.  However, as a mortgage examiner at the Division has advised DocMagic's Compliance Department that the model Rate Lock Disclosure and Rate Lock Agreement forms that were posted previously on their website may still be used (although they are no longer required to be used), these two forms have been added to DocMagic's inventory. 

Both the New Mexico Rate Lock Disclosure (NMRLD.MSC) and the New Mexico Rate Lock Agreement (NMRLA.MSC) will select for all loan transactions where the property state is New Mexico, the DocMagic package type is Forms List, and loan origination type is either lender or broker.  The New Mexico disclosure matrix showing these two new disclosures may be viewed here.

FOLLOWING IS DOCMAGIC'S EARLIER ARTICLE ON THIS SUBJECT.

___

Four new disclosures required by NM Senate Bill 342 (2009), §52 -- the New Mexico Mortgage Loan Summary Disclosure (NMMLSD.MSC), New Mexico Mortgage Loan Compensation Disclosure (NMMLCD.MSC), New Mexico Rate Lock Disclosure (NMRLD.MSC), and New Mexico Rate Lock Agreement (NMRLA.MSC)  -- will be added to DocMagic's New Mexico disclosure matrix on or before August 31, 2009.  Although the statute requiring these disclosures became effective on July 31, 2009, according to the New Mexico Regulation and Licensing Department, Financial Institutions Division ("Division"), the obligation to provide these Disclosures will not become effective until August 31, 2009.

According to SB 342, §52, in relevant part:

A mortgage loan company1 shall, in addition to other disclosures required pursuant to other statutes or common law: . . .

(D) Disclose at least two days prior to closing of the loan, in a manner that can be understood by a reasonable borrower, the total amount of any compensation the mortgage loan company expects to receive specific to the loan being offered, including origination fees, broker fees, yield spread premiums and other fees payable to the mortgage loan company by the lender or other third party at the time the loan is funded to the borrower;

(E) Clearly and conspicuously disclose in writing a mortgage loan summary, as specified by the director by rule; and

(F) Enter into a signed contract with the borrower, as specified by the director by rule, that provides for mortgage loan rate float or rate lock-in.

The proposed rule adopted by the Director of the Division, (NM ADC 12.19.8.12), states:

(A) Mortgage loan companies shall provide rate lock disclosures to and enter into lock-in agreements with borrowers using the forms required by the Financial Institutions Division; and

(B) At least two (2) days prior to closing, a Mortgage Loan Company shall provide the borrower with a mortgage loan compensation disclosure form and a mortgage loan summary specific to the mortgage loan. Mortgage loan companies shall use forms required by the Financial Institutions Division.

The Division has posted to its site, under the section entitled, "Drafts of Proposed Rules," a model Mortgage Loan Summary Disclosure, Mortgage Loan Compensation Disclosure, Rate Lock Agreement and Rate Lock Disclosure, which are each dated August 31, 2009.  A mortgage examiner at the Division advised DocMagic's Compliance Department to wait until August 31 to begin using these model forms even though the statute requiring these disclosures became effective on July 31, 2009.  The mortgage examiner explained that as the Director of the Division has the power and duty to make reasonable rules for the implementation of the NM Mortgage Loan Company and Loan Broker Act pursuant to N.M. Stat. Ann. § 58-21-9, the Director may mandate when the model disclosures must begin to be used.  The mortgage examiner further advised that as revisions to these model disclosures are likely, he recommended that the Compliance Department check the Division's site for any revisions on August 27 or 28. 

Meanwhile, DocMagic has laid out and programmed the proposed model disclosures, but will monitor the Division's website for any revisions and update the disclosures accordingly should any content change.  The model disclosures may be accessed from the Division's website here, under the section entitled, "Drafts of Proposed Rules."

Once the model forms become final, DocMagic will add the: (1) New Mexico Mortgage Loan Summary Disclosure (NMMLSD.MSC) and New Mexico Mortgage Loan Compensation Disclosure (NMMLCD.MSC), which will both select for all loan transactions where the property state is New Mexico, the DocMagic package type is pre-closing and Forms List, and the loan origination type is either lender or broker; (2) New Mexico Rate Lock Disclosure (NMRLD.MSC), which will select for all loan transactions where the property state is New Mexico, the DocMagic package type is Forms List, and loan origination type is either lender or broker; and (3) New Mexico Rate Lock Agreement (NMRLA.MSC), which will select for all loan transactions where the property state is New Mexico, the DocMagic package type is Forms List, and the loan origination type is either lender or broker.

Please feel free to contact DocMagic's Compliance Department if you have any questions or comments regarding these new disclosures.

1 A "mortgage loan company" means any person who, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly: (1) accepts an application for a mortgage loan; negotiates terms for a mortgage loan; or solicits, processes, originates, brokers or makes mortgage loans for others; (2) offers to: (a) accept an application for a mortgage loan; (b) negotiate terms for a mortgage loan; or (c) solicit, process, originate, broker or make mortgage loans for others; or (3) closes mortgage loans that may be in the mortgage loan company's own name with funds provided by others and that are assigned to the mortgage lenders providing the funding of such loans. (N.M. Stat. Ann. §58-21-2(I))  A "mortgage loan" means any loan primarily for personal, family or household use that is secured by a mortgage, deed of trust or other equivalent consensual security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling as so defined. (N.M. Stat. Ann. §58-21-2(J))