With the passage of Senate Bill 1216, which becomes effective September 1, 2010, the North Carolina High-Cost Home Loan Law (the "NCHCL") will change as follows:
If the total loan amount is $20,000 or more, the threshold for the "points and fees" test will be reduced from five percent (5%) to four percent (4%), and
The following can be excluded as a point and fee:
(i) the portion of the up-front mortgage insurance premium collected and paid to the Federal Housing Administration (total of MIP (Cash) and MIP (Financed)), the portion of the funding fee collected and paid to the Veterans' Administration (total of VA Funding Fee, VA Funding Fee (Cash) and VA Funding Fee (Financed)), or the portion of the rural development guarantee fee collected and paid to the U.S. Department of Agriculture (Rural Development Guarantee Fee) that exceeds one and one-quarter percent (1.25%) of the total loan amount; or
(ii) the portion of any up-front private mortgage insurance premium, charge, or fee (PMI Premium) that exceeds one and one-quarter percent (1.25%) of the total loan amount, provided that the private mortgage insurance premium, charge or fee is required to be refundable on a prorated basis, the refund is automatically issued upon notification of the satisfaction of the underlying mortgage loan, and the borrower has the right to request or receive a prorated refund in accordance with state or federal law.
For purposes of the NCHCL determination, we will assume with respect to up-front private mortgage insurance, that the up-front private mortgage insurance premium, charge or fee is required to be refundable on a prorated basis, the refund is automatically issued upon notification of the satisfaction of the underlying mortgage loan, and the borrower has the right to request or receive a prorated refund in accordance with state or federal law.
Relevant updates to the North Carolina High-Cost Test in DocMagic will be implemented on or before the effective date of September 1, 2010. To view the updated memorandum describing DocMagic's NCHCL test, please click here. If you have any questions, please contact DocMagic, Inc.'s Compliance Department.
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