The Mortgage Disclosure Improvement Act (MDIA) (available here) became effective for mortgage loan applications received on or after July 30, 2009. Much has been written already about the impact the MDIA will have on the operations of mortgage brokers and lenders. See, for example, here. This article will review specifically the effect the MDIA has on loan documentation requirements and the changes DocMagic has made to accommodate those effects.

The Helping Families Save Their Homes Act of 2009 (the "Act") includes an amendment to the Truth in Lending Act that has generated a fair amount of conversation in mortgage compliance circles.  Section 404 of the Act amends the Truth in Lending Act to require new creditors that acquire a "mortgage loan" to notify borrowers within 30 days after the sale or other transfer or assignment of the mortgage loan.  A mortgage loan is defined as any consumer credit transaction secured by a borrower's principal dwelling.  The notification must include: the name, address and telephone number of the new creditor; the date of transfer; how to reach an "agent or party" with authority to act on behalf of the new creditor; the "location of the place where transfer of ownership of the debt is recorded" and any other relevant information about the new creditor.  Failure to comply could subject the new creditor or the servicer, or both, to civil liability under TILA.  To view a copy of the Act, click here.

Extensive revisions have been made to the New Mexico Home Loan Protection Act effective July 31, 2009.  Many prohibitions and restrictions that had previously been limited to so-called "high-cost home loans" only will, after the effective date of the amendments, be expanded to apply to "home loans" generally.  A home loan is defined generally as any loan secured by a 1- to 4-family, owner-occupied dwelling not exceeding the Fannie Mae conforming loan limit, regardless of lien position or loan purpose.  We have modified our memorandum posted online that describes DocMagic's interpretation of the New Mexico Home Loan Protection Act to reflect the effect of the new amendments.  To view a copy of the memorandum, click here.

In response to a number of customer inquiries, DocMagic's Compliance Department has prepared a matrix that lists the permissible fees for each of the 50 states, including the District of Columbia.  The Permissible Fees Matrix outlines the allowable fees that a lender and/or broker may charge and collect in a mortgage transaction and is broken down by license type in each jurisdiction.  Please note that if the Matrix does not address a specific fee in a particular state or the District of Columbia, it is because the statutes and regulations in that state do not contain any express provisions regarding that fee. 

Here is the matrix: State-Permissible Fees Matrix.

DocMagic, Inc. now offers loan modification programs that are supported by Fannie Mae's Home Affordable Modification Program (HAMP).  The following four (4) loan programs have been added under DSI's Generic Loan Programs:

Assembly Bill 151, which was signed by the Nevada Governor on May 29, 2009, and became effective on that date, added a new Section to Chapter 645B of the Nevada Revised Statutes, which reads:

DocMagic, Inc. has laid out and programmed model Advance Fee Agreements provided by the Washington State Department of Financial Institutions and the California Department of Real Estate.  These Advance Fee Agreements are practically identical, and Washington and California law each requires that a signed fee agreement for loan modification services be obtained from the borrower before charging a fee for such services in advance of the services being provided.

This month DSI posts updates to the loan program of California Housing Finance Authority and GMAC 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.

DocMagic's Compliance Department has updated its Mississippi security instruments and loan modification agreements to comply with document recording requirements that became effective on July 1, 2009, pursuant to HB 475.

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 June, 2009.

The U.S. Treasury security yield values for July 2009 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 August 2009.

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