2007

A Holiday Message

Fri, 14 Dec 2007 15:44:14 -0800

From Dominic Iannitti, DSI President and CEO

The Holiday Season is a very special time. As each year comes to a close, we take a few moments to be thankful for the many blessings we have enjoyed throughout the year. While I find myself thankful all year long for the many wonderful people in my life, whether they are family, fellow employees of DSI, our customers or our partners... it's important that we all take the time to share those feelings with those we care about.

Disclosures Mandatory Beginning of 2008

Sun, 16 Dec 2007 14:15:31 -0800

A number of disclosures will become mandatory at the beginning of 2008. The new disclosures as well as a description of the new laws requiring the disclosures are outlined as follows:

DocMagic to Add North Carolina Rate Spread Home Loan Audit

Mon, 17 Dec 2007 10:41:08 -0800

North Carolina has created a new category of predatory loan, the so-called "rate spread home loan." The new law is contained in North Carolina G.S. Section 24-1.1F (a copy of the bill enacting this new section is available here).

Fannie Mae / Freddie Mac 2008 Loan Limits

Sun, 16 Dec 2007 16:30:28 -0800

Both Fannie Mae and Freddie Mac have announced that conforming loan limits for 2008 will remain unchanged for a third year in a row. Conforming loan limits for most of the U.S. are: $417,000 for loans secured by single-unit properties; $533,850 for two-unit properties; $645,300 for three-unit properties; and $801,950 for four-unit properties. Conforming loan limits for Alaska, Hawaii, Guam and the Virgin Islands are 50% higher than the foregoing limits for the majority of the U.S.

Texas Constitutional Amendments Governing Home Equity Loans Become Effective December 4, 2007

Fri, 14 Dec 2007 14:00:44 -0800

On November 6, 2007, Texas voters overwhelmingly passed HJR 72, which amended the portion of the Texas constitution governing home equity loans (closed - and open - end, cash-out refinance transactions involving owner-occupied (homestead) property). The amendments became effective on December 4, 2007, the date when the official canvass of the votes was held.

New Jersey Increases Maximum Principal Loan Amount Subject to High Cost Act for 2008

Tue, 18 Dec 2007 11:45:58 -0800

The New Jersey Home Ownership Security Act of 2002 (the "Act") provides for annual review and adjustment to the maximum principal amount of a loan that may be subject to the Act. For 2007, only loans with principal loan amounts not exceeding $400,001.50 are subject to the Act. For 2008, the maximum principal amount of a loan that may be subject to the Act has been increased to $411,777.45. Loans with principal amounts exceeding that figure will not be subject to the Act's provisions. The revised amount is effective for all applications received by a lender on or after January 1, 2008. To view a copy of the New Jersey Department of Banking and Insurance Bulletin 07-21, click here. Please contact the DocMagic Compliance Department if you have any questions or comments.

Several Matrices Added to DocMagic's Disclosure Matrices Page

Fri, 14 Dec 2007 15:16:41 -0800

DocMagic, Inc.'s Compliance Department has prepared and added the following disclosure matrices to its Disclosure Matrices Page:

1. Federal Multistate Disclosures
2. FHA Default Disclosures
3. Pipeline Matrix
read more

New Maine Anti-Predatory Lending Law

Tue, 18 Dec 2007 11:49:13 -0800

The new Maine anti-predatory lending law (Public Law, Chapter 273) makes significant changes to, among other things, various provisions of the current Consumer Credit Code relative to "residential mortgage loans," and a particular subset of residential mortgage loans defined as "high-rate, high-fee mortgage" loans. The new law becomes effective January 1, 2008. We are making the necessary programming changes to conform to the new anti-predatory lending requirements of Maine law.

To view Maine's High Cost Memo, click here.

Colorado Adopts Emergency Rule Regarding Prepayment Penalties

Tue, 18 Dec 2007 14:45:34 -0800

The Colorado Director of the Division of Real Estate has adopted an emergency rule regarding prepayment penalties effective December 14, 2007. The Director adopted the rule "in order to address the high rate of foreclosures in Colorado resulting from particular prepayment penalties." A copy of the emergency rule is available online here.

Colorado Adopts Emergency Rule on Reasonable Inquiry and Tangible Net Benefit

Sun, 16 Dec 2007 13:18:49 -0800

On December 4, 2007, the Colorado Division of Real Estate adopted an Emergency Rule interpreting Section 12-61-904.5 of the Colorado Revised Statutes as it relates to reasonable inquiry and tangible net benefit. The emergency rule applies to mortgage brokers and clarifies what is meant by making a reasonable inquiry concerning a borrower's current and prospective income, existing debts and other obligations, and any other information known to the mortgage broker. After making such inquiry, the rule states that the broker must use his or her best efforts to recommend, broker or originate a residential mortgage loan that takes into consideration the information submitted by the borrowers.

State Statutes Restricting or Prohibiting the Use of Social Security Numbers

Sun, 16 Dec 2007 16:22:12 -0800

Written by Joyita Basu*

Currently, more than 25 states have adopted laws restricting or prohibiting the collection, use or disclosure of an individual's Social Security number ("SSN"), and theses laws generally apply to all commercial entities.1 In addition to the SSN disclosure laws discussed in this article, other state laws also may regulate the collection, use or disclosure of SSN data; for example, this article does not address state laws that regulate the collection, use or disclosure of SSN data by insurance entities, given the specialized nature of those laws.

Texas HELOC Document Packages

Mon, 17 Dec 2007 11:12:02 -0800

DocMagic recently added Texas HELOC document packages for IndyMac. All of the Texas HELOC loan programs and their corresponding plan codes that are available in DocMagic are shown below.

CitiMortgage Programs Now Use DocMagic’s Prepayment Penalty Forms

Mon, 17 Dec 2007 14:04:05 -0800

Effective October 26, 2007, CitiMortgage Loan Programs (for the Correspondent Loan Division) ceased including CitiMortgage's prepayment penalty forms in its closing packages and instead began including DocMagic, Inc.'s multistate and state-specific prepayment penalty forms whenever a loan involves a prepayment penalty. For more information about CitiMortgage's loan programs, please visit the Investor Updates page or e-mail the Enterprise Investor Relations Department with any questions concerning these loan programs.

Revived Loan Programs: Correspondent Division of Chevy Chase Bank

Mon, 17 Dec 2007 15:11:54 -0800

As Chevy Chase Bank ("Chase") revived its correspondent loan programs, effective on November 9, 2007, DocMagic, Inc. is offering these programs once again. However, Chase's loan programs will no longer be under DocMagic's former loan program codes. The revived loan programs now have the same plan codes as Chase's plan codes and descriptions so that they are readily identifiable to the DocMagic user. This hopefully will result in eliminating any confusion by the DocMagic user about which loan program to select. Chase's new loan programs may be viewed here. To view other investors' loan programs currently posted to our Compliance site, please visit the Investor Updates page. Please contact Customer Service at (800) 649-1362 if you have any questions.

Modification to Standard Florida Packages

Mon, 17 Dec 2007 15:13:39 -0800

Previously, both a Pre-Application Disclosure (FLPAD.MSC) and Lender Application (FLLA.DSC) returned in Florida predisclosure packages, while the Lender Application also returned in closing packages. DocMagic, Inc.'s Compliance Department has decided to remove the Pre-Application Disclosure from Florida predisclosure packages as the Lender Application accomplishes the same purpose as the Pre-Application Disclosure and is more comprehensive in terms of the fees it references. To view the Florida disclosure matrix posted on DocMagic's compliance page, click here.

New Form: Generic Net Tangible Benefit Form Available

Mon, 17 Dec 2007 15:14:36 -0800

In response to customer requests, DocMagic, Inc.'s Compliance Department has prepared a Borrower's Certificate of Net Tangible Benefit (BCNTB.DSC) that may be used where a specific net tangible benefit form or worksheet is not required by applicable state law. To request this form in your package, please contact DocMagic's Customer Service Department.

Investor Updates

Sun, 16 Dec 2007 15:27:26 -0800

This month DSI posts updates to the loan programs of Branch Banking & Trust (BB), Chevy Chase Bank, F.S.B., CitiMortgage, Inc. (Broker Division), Freedom Mortgage Corporation, Homecomings Financial, LLC, IndyMac Bank, Residential Funding Corporation, SunTrust Mortgage, Inc., Taylor, Bean and Whitaker Mortgage Corporation, U.S. Bank, N.A., and Wells Fargo Bank, N.A. 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.

At Your Service: Negative Prepaid Interest (Updated December 2007)

Mon, 10 Dec 2007 10:55:43 -0800

Recently we wrote about the changes we made to the DocMagic software's treatment of negative prepaid (also known as "odd-days" or "per diem") interest for Countrywide-specific loan plans to bring them in line with Countrywide's policies. That prior article provides some useful background and is available here. Since that time, a handful of additional investors have requested comparable treatment of negative per diem interest for their respective loan plans.

New/Revised Documents - November 2007

Fri, 14 Dec 2007 14:51:14 -0800

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 October 2007.

New/Revised Documents - December 2007

Fri, 14 Dec 2007 15:05:32 -0800

Newly Added FHA Plans to Use Average Outstanding Balance Method

Wed, 17 Oct 2007 11:28:50 -0700

Document Systems, Inc. ("DSI") has noticed in the last couple of months that FHA loan programs have been one of the most selected loan programs by its customers. FHA loans appear to be replacing the once popular subprime and Alt-A loans. The purpose of this article is to describe the two methods that the DocMagic software employs to calculate the declining mortgage insurance premium.

North Carolina Fee Limitation Audit

Wed, 17 Oct 2007 11:13:45 -0700

Under applicable North Carolina law (N.C. Gen. Stat. § 24-1.1A(c); N.C. Gen. Stat. § 24-8(a); N.C. Gen. Stat. § 24-1.2A(b)), only certain fees may be charged on home loans that are first lien residential loans (not equity lines) between $10,000 and $300,000 and made by a lender who is either:

Culpepper IV - 11th Circuit Rules Again on Legality of YSP

Wed, 17 Oct 2007 10:54:05 -0700

RESPA, Section 8, prohibits "impermissible referrals", that is, the payment of a thing of value for the referral of settlement service business when little or no activity is performed in return for such payments. HUD issued several Statements of Policy ("SOP") to explain the activities a mortgage broker may perform to be permissibly compensated for acting as a mortgage broker. Such policy statements covered lender payments to mortgage brokers, including those payments referred to as "yield spread premiums" (or "YSPs").

Updated Form: Florida Mortgage Brokerage Services Agreement

Wed, 17 Oct 2007 10:49:35 -0700

Document Systems, Inc. ("DSI") has updated its Florida Mortgage Brokerage Services Agreement (FLMBBSA.MSC) pursuant to Senate Bill 1824. In the "Mortgage Brokerage Fee" section, the Agreement now provides for the total amount of the mortgage brokerage fee, comprised of the amount(s) paid by the borrower and the lender. In the "Lender Compensation" area under this section, we removed the range of fees to be paid by the lender and added the maximum amount that the broker could be receiving from the lender (i.e., YSP). These changes became effective October 1, 2007. If you have any questions concerning this disclosure, please contact Customer Service, at (800) 649-1362.

New Form: CA DRE Mortgage Loan Disclosure Statement/Good Faith Estimate, Nontraditional Mortgage Product (1-4 Residential Units)

Wed, 17 Oct 2007 10:47:15 -0700

The California DRE Mortgage Loan Disclosure Statement/Good Faith Estimate, Nontraditional Mortgage Product (One to Four Residential Units) (RE885.MSC) is now available to customers upon request only. This disclosure was prepared based on the model form (RE 885) provided by the Department of Real Estate (DRE) and in accordance with Section 2842 of Title 10 California Code of Regulations. If you wish to add this disclosure to your account, please contact Customer Service, at (800) 649-1362.

New Form: Nevada "Commercially Reasonable Means or Mechanism" Worksheet

Wed, 17 Oct 2007 10:43:02 -0700

A new disclosure has been added to Nevada's State Build. The Nevada "Commercially Reasonable Means or Mechanism" Worksheet (NVCRMMW.MSC) became effective on October 1, 2007, and a model disclosure is provided by the Nevada Mortgage Lending Division. The Worksheet was prepared pursuant to AB 440, which amended NV Rev. Stat. 598D.100, and in accordance with Mortgage Lending Division Letter 2007-2, the Division's interpretive opinion of AB 440.

New Form: Arkansas Disclosure Certification

Wed, 17 Oct 2007 10:39:22 -0700

A new disclosure has been added recently to Arkansas' State Build. The Arkansas Disclosure Certification (ARDC.MSC) was created pursuant to Rule 5010-2 of the Rules of the Fair Mortgage Lending Act and its use was required beginning on October 1, 2007. The Disclosure Certification will appear in all Arkansas closing packages where the origination type is either a lender or broker. If you have any questions concerning this disclosure, please contact Customer Service, at (800) 649-1362.

FHA Prepayment Disclosure Statement

Wed, 17 Oct 2007 10:36:52 -0700

A number of customers have recently inquired whether Document Systems, Inc. ("DSI") offers HUD's Disclosure Statement Notice to Mortgagor at Loan Closing Regarding Prepayment ("Disclosure"), as provided in Mortgagee Letter 92-19. Please note that, as confirmed by a couple of underwriters at Santa Ana, California's HUD Office, this Disclosure is obsolete and has been replaced with HUD 92900-B (see "About Prepayment" section of form). If you have any questions regarding the contents of this article, please contact DSI's Compliance Department.

Investor Updates

Wed, 17 Oct 2007 10:20:51 -0700

This month DSI posts updates to the loan programs of Aurora Loan Services, LLC, Freedom Mortgage Corporation, GMAC Bank, and Homecomings Financial, LLC 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.

At Your Service: California Impound Account Statement

Wed, 17 Oct 2007 10:16:41 -0700

Under Civil Code Section 2954(a), a voluntary escrow account may be set up "if, prior to the execution of the loan or sale agreement, the seller or lender has furnished to the purchaser or borrower a statement in writing, which may be set forth in the loan application, to the effect that the establishment of such an account shall not be required as a condition to the execution of the loan or sale agreement, and further, stating whether or not interest will be paid on the funds in such an account." The California Impound Account Statement (CAIAS.MSC) satisfies the requirements of Section 2954(a) and is available upon request. To add this form to your California predisclosure and/or closing packages, please contact Customer Service, at (800) 649-1362.

To view all At Your Service Articles, click here.

New/Revised Documents - October 2007

Wed, 17 Oct 2007 10:02:58 -0700

Colorado Adopts “Reasonable Inquiry and Tangible Net Benefit” Emergency Rule

Wed, 26 Sep 2007 15:21:32 -0700

Earlier this year, the Colorado legislature passed legislation (HB 07-1322 and SB 07-216) that, among other things, impose an affirmative duty of good faith and fair dealing by mortgage brokers with borrowers, including, without limitation, the duty (a) to make a "reasonable inquiry" into a borrower's current and prospective financial condition based on information submitted by the borrower, and (b) to not recommend or induce a borrower into a loan transaction that does not have a "reasonable, tangible net benefit" to the borrower. These duties are codified in new C.R.S. Section 12-61-904.5. In order to "clarify uncertainties regarding reasonable inquiry and tangible net benefit" requirements in the new law, the Colorado Director of the Division of Real Estate has adopted an emergency rule (a copy of which is available here). The emergency rule became effective on September 4, 2007. The emergency rule should be read in its entirely. This article will highlight some of the more interesting and important provisions of the emergency rule.

New York Amends High-Cost Home Loan Law

Wed, 26 Sep 2007 15:20:32 -0700

The State of New York has amended their predatory lending law, effective October 14, 2007. Senate Bill Number 5618 raises the principal loan amount threshold above which the predatory lending law would not apply from $300,000 to $417,000, increasing the number of loans potentially covered by the law's provisions.

Trustee Named as Grantee in Washington’s Security Instruments

Wed, 26 Sep 2007 15:19:32 -0700

As DocMagic, Inc.'s Washington security instruments list the name of the trustee as a "grantee" on the first page, a customer questioned the validity of adding the trustee's name. To assure the customer that DocMagic was in compliance, DocMagic's Compliance Department contacted a few county auditor's offices to determine whether or not the trustee must be listed in addition to providing the customer with the following legal explanation.

CHARM Booklet Revised

Wed, 26 Sep 2007 15:18:32 -0700

On December 29, 2006, the Board of Governors of the Federal Reserve System announced the availability of a revised version of the Consumer Handbook on Adjustable Rate Mortgages ("CHARM booklet") by the Board and the Office of Thrift Supervision (OTS). The CHARM booklet provides information to consumers about the features and risks of adjustable rate mortgage loans. Under Regulation Z, lenders must provide a copy of the CHARM booklet or a suitable substitute to borrowers of every application for an ARM loan.

FHA Revises and Clarifies Borrower’s Closing Cost Guidelines

Wed, 26 Sep 2007 15:17:32 -0700

In Mortgagee Letter 2006-04, FHA rescinded paragraph 5-2 of handbook HUD 4000.2 REV-3 that lists the closing costs and fees that may be charged by the mortgagee to the mortgagor on an FHA loan. According to ML 2006-04, "mortgagees may charge and collect from mortgagors those customary and reasonable costs necessary to close the mortgage." It is up to the mortgagee to decide what fees are customary and reasonable for each transaction. Please be aware though that FHA will not allow "mark ups." Only the actual cost for the service may be charged to the mortgagor. Fees that may not be included are tax service fees and origination fees that are greater than 1% on forward mortgages.

Maine Notice to Consumers

Wed, 26 Sep 2007 15:16:32 -0700

DocMagic, Inc. is now making available in Maine predisclosure packages where the origination type is broker a Maine Notice to Consumers ("Notice") (MENTC.DSC). The Notice mirrors the model form provided by the Office of Consumer Credit Regulation and is based on Me. Rev. Stat. Ann. tit. 9-A, Section 10-303, which states:

Tennessee Affidavit of Affixation

Wed, 26 Sep 2007 15:15:32 -0700

A Tennessee Affidavit of Affixation ("Affidavit") (TNAOAMH.MSC) is now available in lenders' closing packages whenever the secured property is a manufactured home. The Affidavit was prepared in accordance with Tenn. Code Ann. § 55-3-138 and is used so that the borrower may certify, among other things, that the manufactured home is affixed to real property. Customers wishing to request removal of this Affidavit from Tennessee closing packages when the secured property is a manufactured home should contact Customer Service, at (800) 649-1362.

Investor Updates

Wed, 26 Sep 2007 15:14:32 -0700

This month DSI posts updates to the loan programs of 1st National Lending Services, Aurora Loan Services, LLC, First National Bank of Arizona, Freedom Mortgage Corporation, Homecomings Financial, LLC, U.S. Bank, N.A. and Wells Fargo Bank, N.A. 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.

At Your Service: California Request for Notice of Default Fields Now Populate

Wed, 26 Sep 2007 15:13:32 -0700

At the end of DocMagic, Inc.'s California junior-lien security instruments is a Request for Notice of Default and Foreclosure under Superior Mortgages or Deeds of Trust ("Request for Notice"). The Request for Notice is a form that enables the junior-lien lender to request that any holder of a lien that is superior to the junior-lien holder's lien notify that junior-lien holder of any default by the borrower under the superior encumbrance and of any sale or other foreclosure action.

New/Revised Documents - September 2007

Wed, 26 Sep 2007 15:12:32 -0700

New Mexico to Conduct Unannounced Examinations

Fri, 24 Aug 2007 09:56:26 -0700

Division, will be conducting unannounced examinations of mortgage lenders and brokers over the next 90 days, beginning August 20, 2007. The purpose of the examinations will be to investigate predatory mortgage lending practices in New Mexico and identify individuals operating as unregistered mortgage brokers. For more details, click here.

Master and Short Form Deeds of Trust/Mortgages Coming Soon!

Fri, 24 Aug 2007 09:54:14 -0700

Fannie Mae and Freddie Mac have jointly developed Master and Short Form security instruments for first mortgage loans as part of their continuing efforts to lower homeownership costs for borrowers and achieve greater efficiencies in the residential lending industry. Fannie Mae has released Master and Short Form security instruments for twenty-six (26) states that permit use of a Master and Short Form. These Master/Short Forms may be used in lieu of the Fannie Mae/Freddie Mac uniform first mortgage security instruments. To view Fannie Mae's Announcement 07-13 regarding the Master/Short Forms, click here.

Fannie Mae LIBOR Indices Discontinued

Fri, 03 Aug 2007 17:25:14 -0700

In Announcement 06-21, Fannie Mae advised that it will cease publishing new values for its London Interbank Offered Rate (LIBOR) indices, effective June 28, 2007, and will no longer accept delivery of any mortgage loans tied to its LIBOR index that are closed after that date. Any lender who is using the Fannie Mae LIBOR index to adjust the interest rate of an adjustable-rate mortgage loan (ARM) must now use a replacement index if the interest rate lookback date falls on or after July 31, 2007. Fannie Mae has also discontinued use of its Uniform Instrument Forms 3518, 3519, 3136, and 3137 that are tied to its LIBOR index. Accordingly, we have removed our generic loan programs containing these Forms. For more details, please refer to Announcement 06-21.

If you have any questions regarding this update, please contact DocMagic's Compliance Department.

Impac Suspends Alt-A Loans; New Plans in Effect

Fri, 24 Aug 2007 09:50:43 -0700

Impac has suspended funding of its so-called Alt-A Loans and currently has no plans to originate these loans in the near future. Impac is only funding loans that are eligible to be sold to government-sponsored agencies.

Georgia Prepayment Penalty Defaults to 2-Year, Tiered 2%/1%

Fri, 24 Aug 2007 09:41:26 -0700

Recently a number of customers have called to inquire into why their Georgia prepayment penalty forms are not populating correctly when they enter a prepayment penalty period greater than 24 months. These customers have been entering 36-month prepayment penalty periods.

Department of Corporations’ Model Form: California Per Diem Interest Disclosure

Fri, 24 Aug 2007 09:40:03 -0700

Pursuant to the request of lenders who are licensed by the California Department of Corporations (DOC), DocMagic, Inc. is now making available a model form prepared by the DOC that complies with California Civil Code Section 2948.5 regarding the disclosure to the borrower of per diem interest charged on residential mortgage loans. The form name is CAPDID.DOC. However, note that DocMagic's Per Diem Interest Disclosure (CAPDID3.MSC) will continue to serve as the default disclosure in California closing packages. Customers desiring the DOC's model form will need to contact Customer Service to specifically request replacement of DocMagic's Per Diem Interest Disclosure with the model form.

New Compliance Tool: Mortgage and Deed of Trust States Matrix

Fri, 24 Aug 2007 09:38:28 -0700

In response to customer inquiries about whether a particular state commonly uses a deed of trust or mortgage as its security instrument, DocMagic's Compliance Department has prepared a matrix that sets forth this information.

Here is the matrix: Mortgage and Deed of Trust State Matrix.

Investor Updates

Thu, 23 Aug 2007 16:46:46 -0700

This month DSI posts updates to the loan programs of 1st National Lending Services, Aurora Loan Services, LLC, Bear Stearns, Chase - Wholesale Division, CitiMortgage, Inc. (Correspondent Division), Countrywide Home Loans (Correspondent), Credit Suisse First Boston (Correspondent), Decision One Mortgage Company, LLC, EMC Mortgage Corporation, Encore Credit Corporation, Freedom Mortgage Corporation, GE Money Bank, DBA WMC Mortgage, GMAC Bank, GreenPoint Mortgage Funding, Inc., Impac Funding Corporation, Option One Mortgage Corporation and U.S. Bank N.A. 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.

At Your Service: New Form - Texas Notice of Penalties for Making False or Misleading Written Statement

Thu, 23 Aug 2007 16:35:31 -0700

A new disclosure, the Texas Notice of Penalties for Making False or Misleading Written Statement (File name: TXNOP.MSC), has been added to the Texas disclosure matrix pursuant to H.B. No. 716. H.B. No. 716, which becomes effective on September 1, 2007, was enacted to prevent mortgage fraud and provide for criminal penalties for those persons found guilty of committing such fraud.

New/Revised Documents - August 2007

Thu, 23 Aug 2007 16:28:35 -0700

Minnesota Amends Residential Mortgage Lending Laws

Tue, 31 Jul 2007 16:23:40 -0700

The Minnesota legislature has enacted significant changes to the state's residential mortgage lending laws, effective August 1, 2007. Minnesota HF 1004 and SF 998 are the product, in part, of the Minnesota Attorney General's 11-member Predatory Lending Task Force announced in December, 2006. The Minnesota Department of Commerce has published both a brief summary of the bills available, as well as an FAQ. In this article, we will briefly highlight some of the more legal significant changes and describe some additional audits we will be implementing in our DocMagic software to better assist you in complying with these changes.

Security Instruments Modified to Add Non-Title Spouse As Borrower

Tue, 31 Jul 2007 16:21:50 -0700

Based on further research provoked by comments from a number of DocMagic customers, we have modified all security instruments to add the name of the non-title spouse (NTS) under the definition of "Borrower." Previously, the NTS name appeared only in the signature block of the security instruments. (See prior articles on DocMagic's handling of a NTS here and here.)

20-Year Repayment Option for Generic HELOCs

Tue, 31 Jul 2007 16:19:49 -0700

DocMagic has added a 20-year repayment period to all of its Generic Home Equity Lines of Credit (HELOCs) plan codes. Now the following draw periods -- 5, 10, or 15 years may be used in conjunction with either a 0, 5, 10, 15 or 20 year repayment period. Use plan codes HELOC1 through HELOC8. For more detailed information, click here. Also, click here for an explanation of the DocMagic HELOC audits.

MERS’ Street Address Added to Indiana Security Instruments

Tue, 31 Jul 2007 13:15:07 -0700

In response to a recent announcement by Mortgage Electronic Registration Systems, Inc. (MERS), Fannie Mae will soon be posting a mandatory change if a lender elects to name MERS as the mortgagee of record (as nominee for the beneficiary). That change is based on Indiana Senate Bill 232, which adds a new subsection (b) to Indiana Code § 32-21-2-3, as follows:

“Notice” Provisions in Second-Lien Security Instruments Revised

Tue, 31 Jul 2007 13:13:31 -0700

DocMagic's Compliance Department has revised the "Notice" provision in its second-lien security instruments (Paragraph 12 in most security instruments) to provide that any notice to either the lender or borrower required or to be given under the security instrument shall be provided by first-class mail. Previously, the security instruments provided that notice was to be given by certified mail. Although the prior "Notice" provision was adequate, the Compliance Department decided to revise the "Notice" provisions to render them consistent with the "Notice" provisions in the Fannie Mae security instruments.

New Compliance Tool: Finance Charges Matrix

Thu, 02 Aug 2007 16:39:05 -0700

For DocMagic customers' ease of reference, DocMagic's Compliance Department has prepared a matrix that reflects a list of various fees and charges (with DocMagic's charge codes) that are found in the dropdown menu of fees/charges for both DocMagic Online and DocMagic for Windows, DocMagic's defaults designating whether or not such fees/charges are finance charges, and the applicable citation to Section 226.4 of Regulation Z or the Official Commentary to Reg. Z upon which the defaults are based. Note that where a particular fee or charge, such as the flood certification fee, can be either a finance charge or not a finance charge, note that such fee/charge is listed twice with a different charge code assigned.

Here is the matrix: Finance Charges Matrix

Click below for our three-part series of articles on finance charges:

Montana Mortgage Loan Origination Disclosure

Tue, 31 Jul 2007 13:10:38 -0700

DocMagic's Compliance Department has revised its Montana Mortgage Loan Origination Disclosure to comply with Senate Bill 92, which becomes effective October 1, 2008. SB 92 revises the Montana Residential Mortgage Lender Licensing Act ("Act"). Among other statutes, SB 92 amends Montana Code Annotated § 32-9-124 by requiring a mortgage loan origination disclosure to provide:

Investor Updates

Tue, 31 Jul 2007 12:51:32 -0700

This month DSI posts updates to the loan programs of ABN AMRO Mortgage, American Home Mortgage, Aurora Loan Services, Chevy Chase Bank F.S.B., 1st National Lending Services, Option One Mortgage, and Bear Stearns 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.

At Your Service: New Form - Colorado Mortgage Broker Disclosure

Tue, 31 Jul 2007 12:47:56 -0700

A new disclosure, the Colorado Mortgage Broker Disclosure (File name: COMBD.MSC), has been added to the Colorado disclosure matrix. Colorado House Bill 07-1322 was enacted as a measure to prevent mortgage fraud and became effective on June 1, 2007. Among the many new statutes that have become law through H.B. 07-1322, Colorado Revised Statutes § 12-61-914 requires a mortgage broker to provide a borrower with a written disclosure of numerous items concerning the borrower's loan within three (3) days after receipt of a loan application or any moneys from the borrower.

New/Revised Documents - July 2007

Tue, 31 Jul 2007 12:45:04 -0700

Bona Fide Discount Points Update

Mon, 25 Jun 2007 16:11:00 -0700

Early last year, we published an article describing the changes we made to DocMagic for Windows (DMW) and DocMagic Online (DMO) regarding the creation of a bona fide discount point "flag" for purposes of the state-specific high cost tests we perform. Before the bona fide flag was created, the state-specific high cost tests had generally assumed that all discounts points paid by a borrower to a lender were bona fide and, therefore, were excludable from points and fees to the maximum amount permitted. Now, discount points are treated as bona fide if the bona fide box is checked; if the bona fide box is left blank, the discount points are not treated as bona fide. This method of designating discount points as bona fide or not has worked well since its inception.

SunTrust Mortgage Converts Agency Treasury ARM Index to LIBOR ARM Index

Mon, 25 Jun 2007 16:10:00 -0700

According to SunTrust Mortgage Bulletin COR 07-063, effective on Monday, June 11, 2007, SunTrust Mortgage converted its Agency 3/1, 5/1 and 7/1 Treasury Arms (Fully Amortizing & Interest Only) to Agency 3/1, 5/1 and 7/1 LIBOR Arms (Fully Amortizing & Interest Only). Thus, effective with all new Agency ARM loan applications, registrations and/or lock-ins taken on or after Monday, June 11, 2007, the only available index will be the one year London InterBank Offered Rate (LIBOR). As SunTrust will not grant any lock-in extensions and re-locks, all Agency ARMs with a Treasury index must be locked by close of business, Friday, June 8, 2007 and closed no later than the lock-in expiration date.

Additional Articles Available on Right to Rescind

Mon, 25 Jun 2007 16:09:00 -0700

In the article, "A Borrower's Right to Rescind," published in our May, 2007 issue of The Compliance Wizard, we indicated that we would be publishing more articles on the subject of a borrower's right of rescission. These articles are now available in this issue and are as follows:

Alabama Consumer Credit Act

Mon, 25 Jun 2007 16:08:00 -0700

The Consumer Credit Act, commonly referred to as the "Mini-Code," became effective on October 1, 1997. The following information pertains to licensing and prepayment requirements under the Mini-Code.

New Compliance Tool: Impound Requirements Matrix

Mon, 25 Jun 2007 16:07:00 -0700

DocMagic's Compliance Department has prepared a matrix that shows state-specific requirements applicable to impound/escrow accounts and whether fees associated with such accounts are permissible and/or subject to restrictions.

Here is the matrix: Impound Requirements Matrix.

CalFHA Revises Homeownership Program Documents

Mon, 25 Jun 2007 16:06:00 -0700

Pursuant to Program Bulletin #2007-11, the California Housing Finance Agency (CalHFA) has revised some of its Homeownership Program documents for conventional loans. For more details about this update, please read Program Bulleting #2007-11. Please note that DocMagic, Inc. has updated its CalHFA Homeownership Program plans accordingly.

Oklahoma Updates Maximum Late Charge

Mon, 25 Jun 2007 16:05:00 -0700

The Oklahoma Consumer Credit Commission has updated its annual dollar amounts under the Uniform Consumer Credit Code. These new dollar amounts go into effect July 1, 2007. Among the dollar amounts is the maximum late charge that may be imposed on closed-end loans where the loan has an APR greater than 13%. Under Oklahoma's Consumer Credit Code, a late charge equal to the greater of the dollar amount established by the Consumer Credit Administrator or 5% of the unpaid amount of the installment may be assessed for a payment that is not paid in full within 10 days of its due date. The maximum dollar amount established by the Consumer Credit Administrator has been increased from $20.50 to $21.00, effective on July 1, 2007.

Paralegal Graduates: A Not So Common Graduation Story

Mon, 25 Jun 2007 16:04:00 -0700

On June 8^th, 2007, DocMagic, Inc.'s paralegal, Mark Delgadillo, walked at his commencement ceremony at El Camino College in Torrance, California, where he earned his Associate of Science degree and Paralegal Certificate. Mark previously interned with DocMagic's Legal/Compliance Department where he proved his capacity to work hard and succeed. DocMagic hired Mark as a paralegal in its Legal/Compliance Department in June, 2006.

At Your Service: New Form - DC Domestic Partnership Addendum to Uniform Residential Loan Application

Mon, 25 Jun 2007 16:02:00 -0700

DocMagic, Inc.'s Compliance Department has created a District of Columbia Domestic Partnership Addendum to Uniform Residential Loan Application (dcdpa.msc) ("Addendum") to enable customers to determine whether a borrower is involved in a domestic partnership when the secured property is the borrower's residence.

Investor Updates

Mon, 25 Jun 2007 16:03:00 -0700

This month DSI posts updates to the loan programs of Chevy Chase Bank, SunTrust Mortgage, Taylor, Bean and Whitaker Mortgage Corp., and Wells Fargo 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.

New/Revised Documents - June 2007

Mon, 25 Jun 2007 16:01:00 -0700

APR Calculation for Open End Lines of Credit (HELOCs)

Tue, 22 May 2007 12:09:00 -0700

Unlike the Annual Percentage Rate (APR) calculation for closed-end transactions, the APR for HELOCs "does not include costs other than interest."1 Accordingly, the HELOC APR does not include finance charges that would typically be included in the APR calculation for closed-end transactions.

A Borrower's Right to Rescind

Tue, 22 May 2007 12:08:00 -0700

The Truth in Lending Act (TILA) provides consumers with the right to rescind certain consumer credit transactions.1 This rescission right (which is spelled out both in TILA and in its implementing regulation, Regulation Z (12 CFR §226.15 for open-end credit and §226.23 for closed-end credit)) applies to all borrowers and any consumer whose ownership interest in his or her principal dwelling is subject to a security interest. The following transactions are exempt from the right to rescind:

New Indymac Form 5016 Added: Borrower's Income Affidavit

Tue, 22 May 2007 12:07:00 -0700

Now available to correspondent lenders of Indymac Bank is Form 5016, the Borrower's Income Affidavit. This Form will be needed for Indymac's Stated Income documentation loans delivered under its Preferred Delegated Underwriting program (PDU). The document provides the borrower with important information related to the use of stated income documentation and requires a certification regarding the amount of income.

Rhode Island Disclosures Updated

Tue, 22 May 2007 12:06:00 -0700

The Rhode Island Department of Business Regulation, Division of Banking, has updated each one of the model disclosures set forth in the final version of Regulation 3. Any enforcement action related to these disclosures will cover transactions initiated or pending after June 1, 2007. To read more about the final version of Regulation 3, please read our April, 2007 issue of The Compliance Wizard.

New Compliance Tool: Wet/Dry Settlement Matrix

Tue, 22 May 2007 12:05:00 -0700

DocMagic's Compliance Department has prepared a matrix that shows whether each state, including the District of Columbia, requires a wet settlement. A "wet settlement" means that funds and all loan conditions need to be on the table at the time of closing. A "dry settlement" means that there are no funds available at closing.

Here is the matrix: Wet/Dry Settlement Matrix.

DocMagic's Employee of the Quarter - Josie Sepulveda

Tue, 22 May 2007 12:04:00 -0700

In 1989, Josie came to Document Systems, Inc. ("DSI") to proof loan documents back when loan packages were still being sent out by mail. She then left DSI and learned about different aspects of our mortgage industry, working for both American City Mortgage (now Pinnacle) and Marina Mortgage (now American Home Mortgage), and funded loans. She later came back to DSI in 2002 and is now working in the Enterprise Investor Relations Department where she assists investors as well as our Customer Service Department with various investors' programs and related issues. Josie is always active here at DSI, creating loan programs and helping customers in quick fashion. All the while, she does it with a smile and with everyone's best interest at heart.

Members of Legal/Compliance Department Attend Conference in New Orleans

Tue, 22 May 2007 12:03:00 -0700

Renee Cleary, Esq. and Melanie A. Feliciano, Esq., both Assistant General Counsel in DocMagic's Legal and Compliance Department, attended the Legal Issues and Regulatory Compliance Conference in New Orleans from May 6 to May 9, 2007. Topics covered at the Conference included Federal and state law developments, anti-abusive lending requirements, fair lending and Home Mortgage Disclosures Act (HMDA), disaster planning, nontraditional product developments, data security, privacy, Fair Credit Reporting Act (FCRA), Fair and Accurate Credit Transactions (FACTA), Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act (TILA), mortgage fraud, secondary market issues, enterprise risk management, eMortgage developments, class action litigation, preemption, servicing and more.

Investor Updates

Tue, 22 May 2007 12:02:00 -0700

This month DSI posts updates to the loan programs of 1st National Lending Services, ABN AMRO Mortgage Group, Inc., GE Money Bank, A Federal Savings Bank DBA WMC Mortgage, Greenpoint Mortgage Funding, Inc., U.S. Bank, N.A., UBS Investment Bank and The Winter Group 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.

At Your Service: Ohio Model Disclosures Updated

Tue, 22 May 2007 12:01:00 -0700

The Financial Institutions Division of the Ohio Department of Commerce has updated two (2) of its model disclosures, the Business Relationship Disclosure Notice (OHBRDN.MSC) and the High Loan to Value Disclosure - Addendum to Mortgage Loan Origination Disclosure Statement (OHHLTVD.MSC). These model disclosures may be viewed here.

New/Revised Documents - May 2007

Tue, 22 May 2007 12:00:00 -0700

FIS Flood Services and DocMagic Partner to Offer Flood Zone Determinations

Wed, 18 Apr 2007 14:48:01 -0700

DocMagic, Inc. is pleased to announce that it has partnered with FIS Flood Services (FIS) to offer flood zone determinations to DocMagic software users. Effective on or about May 1, 2007, FIS will become DocMagic's primary, but not exclusive, flood determination provider for DocMagic. We believe this change will allow us to provide the highest level of automation and customer service that you, our customers, demand and deserve. This change should be completely seamless and involves no changes in cost or to the flood ordering process. DocMagic will continue to utilize our current primary flood determination provider, LandAmerica Tax and Flood (formerly Nationwide TotalFlood Services Inc.), as the primary backup flood determination provider.

Negative Prepaid Interest

Wed, 18 Apr 2007 13:11:43 -0700

Rhode Island Finally Adopts Regulations Implementing Home Loan Protection Act

Wed, 18 Apr 2007 13:04:30 -0700

The Rhode Island Department of Business Regulation (DBR) has finally adopted Regulation 3, which implements the Rhode Island Home Loan Protection Act (HLPA). There are numerous, substantive differences between the text of the emergency regulations issued on December 29, 2006 and the final version of the Regulations. To view a redlined version of Regulation 3, click here. For a description of the material, substantive changes, click here for the Concise Explanatory Statement.

NJ and NY High Cost Tests Enhanced to Automatically Exclude Mortgage Insurance Charges and Impounds

Wed, 18 Apr 2007 11:41:52 -0700

We have recently updated our New Jersey and New York high cost tests to automatically exclude mortgage insurance charges (MIP Cash and MIP Financed) entered in the "Charges/Fees" screen, as well as any PMI/MMI premium amounts (both first year premiums and premiums paid on a monthly basis) entered in the "Impounds" screen. Please feel free to contact DocMagic's Compliance Department if you have any questions regarding this enhancement.

Fees Allowed for Texas Secondary Mortgage Loans

Wed, 18 Apr 2007 11:23:38 -0700

DocMagic customers who do not regularly originate Texas second-lien loans are surprised to learn that they can only collect certain fees under certain circumstances. The purpose of this article is to explain under which circumstances the fee restriction would apply and to enumerate the fees that a lender may collect.

Balloon Payments Matrix

Wed, 18 Apr 2007 10:51:31 -0700

DocMagic's Compliance Department has prepared a matrix that shows whether each state, including the District of Columbia, allows balloon payments to be made for purchase money first-lien loans, non-purchase money first-lien loans, purchase money junior-lien loans, and non-purchase money junior-lien loans; whether any restrictions apply to balloon payments; and the citations to governing legal authority.

Here is the matrix: Balloon Payments Matrix.

Conferences - Upcoming Events

Wed, 18 Apr 2007 10:49:31 -0700

Friday, May 4 -- Stop by our booth (Booth # 9) at the New Mexico Association of Mortgage Brokers Convention at the Market Place Exhibit Hall in the Sandia Casino & Resort in Albuquerque, New Mexico, from 2:00 to 6:00 p.m.

Click here to view the 2007 Conference Schedule NOW!

DocMagic Assistant General Counsel Selected for International Volleyball Events

Wed, 18 Apr 2007 10:48:05 -0700

Assistant General Counsel, Renee Cleary, was selected by USA Volleyball to be one of two female beach volleyball players to represent the USA in the North, Central American, and Caribbean Volleyball Confederation's (NORCECA's) events in Guatemala and Puerto Rico. NORCECA is the continental confederation that represents its thirty-five (35) member countries at the International Volleyball Federation (FIVB) level. The FIVB is responsible for, among other things, the staging of Olympic and World Championship zone qualification tournaments, as well as continental championships for both men and women in Indoor and Beach Volleyball. "We're very excited to have been selected and are looking forward to representing the United States," said Cleary. From April 16-22, Cleary will be playing in Guatemala City, Guatemala with Jenny Kropp, a former All America middle hitter from Nebraska and a member of the 2000 NCAA Women's Collegiate Volleyball Championship team. Then from May 18-20, Cleary will team up in San Jose, Puerto Rico with Jennifer Lombardi, a participant in last year's World University Games.

Investor Updates

Wed, 18 Apr 2007 10:32:04 -0700

This month DSI posts loan programs of Hyperion Capital Group, LLC and Nomura Credit & Capital, Inc. and updates to the loan programs of Chase - Wholesale Division, Chevy Chase Bank, CitiMortgage - Correspondent Division, Countrywide, GMAC Bank, Homecomings Financial, LLC, J.P. Morgan Chase Bank, N.A. (Correspondent), NovaStar Mortgage, Inc, Option One Mortgage Corporation, Residential Funding Corporation, Sovereign Bank - Wholesale, and Wells Fargo Bank to its Compliance page. Note that the ARM and fixed rate loan programs of GreenPoint Mortgage Funding, Inc. have been updated and combined into one matrix. 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.

At Your Service: New Texas Notice of Confidentiality Rights

Wed, 18 Apr 2007 10:27:05 -0700

Texas Governor Perry signed House Bill 2061 on March 28, 2007, which became effective immediately. H.B. 2061 amends Texas Property Code Section 11.008, which prohibits the preparer of a deed or deed of trust from including an individuals social security number in a document presented for recording and adds a disclosure requirement to an instrument transferring an interest in real property to or from an individual. HB 2061 amends the disclosure requirements, providing that "an instrument transferring an interest in real property to or from an individual must include a notice that appears on the top of the first page of the instrument in 12-point bold face type or 12-point uppercase letters which reads substantially as follows:

New/Revised Documents - April 2007

Wed, 18 Apr 2007 10:20:05 -0700

HUD Increases RESPA Penalties For Inflation - Why Not Fix the Rest?

Wed, 21 Mar 2007 11:43:47 -0700

In this issue we are pleased to republish an article written by Howard Lax of the law firm of Lipson, Neilson, Cole, Seltzer & Garin, P.C. in Bloomfield Hills, Michigan. To better understand Howard's article, some historical context may be helpful. In order to address widespread consumer confusion and complaints surrounding the mortgage servicing transfer process, RESPA was amended in 1990 to add a new Section 6 (12 U.S.C. 2605). Specifically, Section 6 required HUD to develop a model disclosure statement to be given to mortgage loan applicants containing the following information: (i) the possibility of the assignment, sale, or transfer of servicing rights to the loan; and (ii) the lender's historical practice in assigning, selling, and transferring servicing of loans, or, as an alternative to providing the historical data, a statement that the lender had previously sold servicing. Lenders were also required to keep a signed acknowledgment of receipt of the disclosure statement in the applicant's loan file. A copy of the model Servicing Disclosure Statement developed by HUD is available here. In 1996 Section 6 of RESPA was amended to eliminate the historical data provisions and the acknowledgment requirement. HUD issued proposed amendments to their regulations in 1997 to conform to the RESPA amendments; however, those regulations have never been adopted. Howard is quite correct to take HUD to task for failing to act in the more than 10 years that have passed since the RESPA amendments discussed in his article.

To view Howard's article, please click here.

Private Mortgage Insurance

Wed, 21 Mar 2007 11:27:13 -0700

On July 29, 1998, the Homeowners Protection Act of 1998 (the "Act"), also known as the "PMI Cancellation Act," became effective. ("PMI" refers to private mortgage insurance.) The Act applies to residential mortgage transactions consummated on or after July 29, 1999.

Prepayment Penalty Matrix

Wed, 21 Mar 2007 11:30:50 -0700

To better serve our customers, we've created a DocMagic Prepayment Matrix that lists our verbiage for hard, soft and state-specific prepayment addenda and riders. This matrix provides loan types and limitations for when particular verbiage appears. Also, the DocMagic form names and citations are listed.

New Loan Programs: UBS Investment Bank

Fri, 09 Mar 2007 11:11:58 -0800

Effective on Friday, March 9, 2007, preexisting loan programs of UBS Investment Bank ("UBS") were purged, and DocMagic users now have to download new loan programs of UBS. DSI's release of these new loan programs is designed to match UBS' loan programs so that they are readily identifiable to the DocMagic user. This hopefully will result in eliminating any confusion by the DocMagic user about which loan program to select. UBS' new loan programs may be viewed here. To view other investors' loan programs currently posted to our Compliance site, please visit the Investor Updates page. Please contact Customer Service at (800) 649-1362 if you have any questions.

2007 Conventions, Conferences, Tradeshows and Expos

Tue, 30 Jan 2007 12:23:50 -0800

Find the mortgage lending convention, conference, trade show and expo schedules in one location on DocMagic's website. Bookmark this page and check back often. We'll be updating this list throughout the year. Also, look for DocMagic at the events marked with an * so that you can stop by and say hello!

Click here to view the 2007 Conference Schedule NOW!

If there are events that you'd like to add to our list, please email us at compliance@docmagic.com. Thanks for your valuable feedback, and we look forward to a great 2007!