The Colorado Division of Real Estate ("Division") adopted a new rule (4 Colo. Code Regs. 725-3, Rule 5-1-2) regarding Mortgage Loan Originator Disclosures that requires, among others, a separate disclosure to each borrower that itemizes all third-party fees and costs to comply with the provisions of Colo. Rev. Stat. Ann. § 12-61-914(2)(b). According to Section 12-61-914(2)(b), a mortgage loan originator must provide the borrower a written disclosure that contains the following information: The itemized costs of any credit report, appraisal, title report, title insurance policy, mortgage insurance, escrow fee, property tax, insurance, structural or pest inspection, and any other third-party provider's costs associated with the residential mortgage loan.
Under Rule 5-1-2, Section 5, Paragraph 3, the disclosure must include mortgage loan originator and borrower signatures and dates in which the disclosure was completed and signed. Furthermore, Rule 5-1-2, Section 5, Paragraph 3 prescribes that this third-party fee disclosure must be provided to the borrower:
Within three (3) business days after receipt of a loan application or any moneys from a borrower;
If, after the initial written disclosure is provided, a mortgage loan originator enters into a lock-in agreement, within three (3) business days thereafter, including Saturdays, and prior to the borrower signing loan closing documents; and
If, after a mortgage loan originator enters into a lock-in agreement, the annual percentage rate increases from the annual percentage rate disclosed earlier by more than 1/8 of one (1) percentage point, within three (3) business days of such change and prior to the borrower signing loan closing documents.
A third-party fee disclosure is required, because the Director of the Colorado Division of Real Estate has declared that due to the RESPA 2010 changes, the Good Faith Estimate (GFE) no longer meets the disclosure requirements set forth in Colo. Rev. Stat. Ann. § 12-61-914(2)(b). Prior to the effective date of RESPA 2010 on January 1, 2010, the Director deemed the GFE that was in effect before January 1, 2010 met the requirements of § 12-61-914(2)(b).
Accordingly, DocMagic's Compliance Department will be creating a Third-Party Fees Disclosure (DocMagic file name: COTPFD.MSC) that will appear in both broker - and lender - originated predisclosure and pre-closing packages and as an optional form in Forms List under the Services menu of DocMagic. As the Disclosure is required to be used, beginning June 14, 2010, it will be made available prior to this effective date. The Colorado State Disclosure Matrix will provide more details once this Disclosure becomes available. If you have any questions regarding this Disclosure, please contact DocMagic's Compliance Department.
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