With the advent of the amendments to RESPA Regulation X and the resulting new Good Faith Estimate (GFE) and HUD-1 Statement, all becoming effective January 1, 2010, DocMagic's Compliance Department has prepared a mandatory disclosure required by Reg. X Section 3500.7 for certain new home purchases and other RESPA-related disclosures that are not required by Reg. X, but intended to document the borrower's receipt of the GFE and the borrower's intent to proceed on the loan application covered by the GFE.  In addition, the Compliance Department has prepared a "Total Estimated Funds Needed to Close" disclosure and a new Itemization of Amount Financed that will accompany the Truth-in-Lending Statement and return in the same loan package when a new GFE and HUD-1 Statement will be used in the loan transaction.  A more detailed description of each one of these disclosures follows.

Mandatory Disclosure - Acknowledgment of Right to Issue Revised GFE

Under Reg. X Section 3500.7(f)(6), in transactions involving new home purchases, where settlement is anticipated to occur more than 60 calendar days from the time a GFE is provided, the loan originator may provide the GFE to the borrower with a clear and conspicuous disclosure stating that at any time up until 60 calendar days prior to closing, the loan originator may issue a revised GFE. If no such separate disclosure is provided, the loan originator cannot issue a revised GFE, except as otherwise provided in Section 3500.7(f).

Accordingly, DocMagic's Compliance Department has prepared an Acknowledgment of Right to Issue Revised GFE  (ARIRGFE.GFE) that advises the borrower that the loan originator has the right to issue a revised GFE if the transaction is a new home purchase and settlement is scheduled to occur more than 60 calendar days from the date that the GFE is provided to the borrower.  The originator must provide this disclosure with the GFE.  This disclosure will appear in predisclosure and pre-closing loan packages as well as on the "Forms" list of DocMagic as an interim/processing disclosure when the loan package is broker - or lender - originated; when the loan is a purchase-money transaction regardless of lien priority; and the occupancy status is owner-occupied or a second home. 

Acknowledgment of Receipt of Good Faith Estimate

The Compliance Department has prepared an Acknowledgment of Receipt of Good Faith Estimate (AR.GFE) that will return in the loan package when the new GFE is selected to be used in the loan transaction.  Although not required under Reg. X, this Acknowledgment is intended to evidence the borrower's receipt of the GFE.  This Acknowledgment will immediately follow the GFE in the loan package and has the same selection logic as the new GFE, returning in predisclosure and pre-closing loan packages as well as appearing on the "Forms" list of DocMagic as an interim/processing disclosure when the loan package is broker - or lender - originated.

Notice of Intent to Proceed With Loan Application

If a borrower expresses his/her intent to continue with the loan application covered by the GFE provided previously to the borrower, the Compliance Department has prepared a Notice of Intent to Proceed With Loan Application (NIPLA.GFE) to document this fact.  This Notice is not required by Reg. X, but merely provided in the DocMagic application as an optional disclosure.  A DocMagic user may select this Notice from DocMagic's "Forms" list when the loan package is broker - or lender - originated.

HUD-1 Certification Addendum

Although not a new disclosure, the HUD-1 Certification Addendum (CA.LSR), which currently appears in certain loan programs, will now appear in all loan programs when the new HUD-1 Statement is used in a loan transaction.  In fact, it will immediately follow the HUD-1 Statement in the loan package.  The Addendum acknowledges the borrower's receipt of the HUD-1 statement and indicates that the borrower has carefully reviewed the HUD-1 Statement and believes it to be a true and accurate statement of all receipts and disbursements made by the borrower or on the borrower's account.  This Addendum will appear in pre-closing and closing loan packages when the loan package is broker - or lender - originated.

Total Estimated Funds Needed to Close

DocMagic's Compliance Department has prepared a Total Estimated Funds Needed to Close (TEFNC.MSC) as a supplemental, optional disclosure that can be provided to the borrower.  This disclosure mirrors the "VII. Details of Transaction" section found at the bottom of page 3 of the Uniform Residential Loan Application (1003) and is intended to disclose to the borrower the total cost of the loan transaction, some of which costs would not appear in the GFE.  This disclosure will appear in predisclosure and pre-closing loan packages as well as on the "Forms" list of DocMagic as an interim/processing disclosure when the loan package is broker - or lender - originated.

Itemization of Amount Financed

Although the Itemization of Amount Financed is not a disclosure required under Regulation X, but, rather, under the Truth In Lending's Regulation Z, DocMagic's Compliance Department has prepared a new Itemization of Amount Financed (IAF.TIL) that will appear with the Truth In Lending Statement when the "Include New GFE/HUD" box in the "Document Processing Options" screen of DocMagic is checked, and, at some later date, when only the new GFE and HUD-1 forms will be available in DocMagic.  If the "Include New GFE/HUD" box in the "Document Processing Options" screen is not checked, the existing or "old" version of the Itemization of Amount Financed will return in the loan package.  The new Itemization of Amount Financed omits any reference to the GFE and HUD-1 line references.  In addition, any fee descriptions in the "old" Itemization of Amount Financed that no longer matched the fee descriptions in the new HUD-1 Statement were updated, such as a change from "Title Ins. Premium" to "Owner's Title Ins. Premium."

If you have any questions relating to the contents of this article, please contact DocMagic's Compliance Department.