Beginning January 1, 2010, mortgage brokers who arrange federally related mortgage loans must use the new Good Faith Estimate (GFE).  Two of the three California Department of Real Estate (DRE) Mortgage Loan Disclosure Statement (MLDS) forms (RE883.MSC and RE885.MSC), include a HUD-approved version of the old GFE.  Therefore, the GFE provisions in both forms are not compliant with the new Real Estate Settlement and Procedures Act (RESPA) rules, effective January 1, 2010.  The DRE is in the process of getting approval from HUD to combine the new GFE with the RE883.MSC and RE885.MSC forms.

The DRE has published on its website a notice regarding the combined MLDS/GFE forms in RE883.MSC and RE885.MSC.  Brokers, who previously used RE883.MSC, must now provide two separate disclosure forms to borrowers - the MLDS (RE882.MSC) and the new GFE (GFE.LTR).  The MLDS (RE882.MSC) and the new GFE (GFE.LTR) will together meet the disclosure requirements of RESPA and the California real estate law.  RE882.MSC is substantially identical to RE883.MSC except for the absence of an incorporated GFE.  Accordingly, customers should remove RE883.MSC from their loan packages and substitute it with RE882.MSC.

Brokers who previously used RE885.MSC for non-traditional mortgage products must not only continue to provide borrowers with RE885.MSC, but they must now also provide the new GFE form to the borrower at the time of providing RE885.MSC.  To avoid borrower confusion as RE885.MSC contains the old GFE, we have created a new form (RE885X.MSC) to be used in lieu of RE885.MSC that crosses out the old GFE provisions on page 1, including the itemization of fees and the following sentence: "The numbers listed beside the estimate generally correspond to the numbered lines contained in the HUD-1 Settlement Statement which you will receive at settlement if this transaction is subject to RESPA."  We have also added the following notice on the form: "*SEE ATTACHED GOOD FAITH ESTIMATE."  Accordingly, customers should request that DocMagic's Customer Service Department remove RE885.MSC from their loan packages and substitute it with RE885X.MSC.

Please note that the new GFE (post-2010) should return in the same package as RE882.MSC and RE885X.MSC, satisfying the disclosure requirements of the CA DRE and HUD.  To add RE882.MSC or RE885X.MSC to your loan package, please contact DocMagic's Customer Service Department.