Document Changes
Our compliance team delivered a number of both minor and significant document updates in October. First American Docutech Corporate Counsel Tadayoshi Sakota took a closer look at form 4506-C and provided answers to some of the questions from lenders who are finding the IRS guidance less than satisfying.
We didn’t see a great deal of activity from state departments in September and nothing from the federal agencies or secondary market investors. That will likely change soon, as September saw the U.S. Senate confirming Rohit Chopra as the new Director of the Consumer Financial Protection Bureau. Our compliance team will keep you abreast of relevant changes the new Director decides to make.
As you plan for 2022, we understand the increasing focus on digitization and automation to combat margin compression. Likewise, the role of eClosing continues to be a priority to improve the customer experience, reduce costs, and close more loans faster. Historically, eClose functionality has been directly tied to a lender’s document generation engine. However, now you have the flexibility to quickly implement a hybrid eClosing process, regardless of which document generation engine you use.
A closing package for a mortgage loan is comprised of many different documents that serve varying purposes. There are disclosures mandated by state and federal law or investors that are provided to inform the borrower about important terms of the transaction. There are documents that are given by custom or tradition that serve many different purposes that are usually required by the lender. Then there are the most important documents in the loan package, the promissory note, and the security instrument. The promissory note is crucial because it is the physical manifestation of the borrower’s promise to repay the holder/lender. The security instrument is important because it is the agreement that creates the property interest that gives the lender the legal right to take possession of the property or collateral if the borrower defaults on their promise to pay.
Housing market potential continued to strengthen in August, according to our Potential Home Sales Model, increasing 0.05 percent compared with July. The market potential for existing-home sales is now nearly 10 percent higher than in August of 2020, when the housing market’s summer rebound was ramping up following the initial pandemic-driven decline in the spring.
Investors and the agencies were rather quiet in August and only one state required a change to its document set, and that wasn’t initiated by anyone in the state government. Instead, it was a decision by the CFPB that required a change for Georgia’s documents, as you will see below.
Welcome to the First American Docutech compliance roundup blog, recapping compliance-related document changes and updates that occurred in July. There were some changes from the states and federal government agencies last month, as well as several important document changes.
Every discussion regarding the legality of electronic signatures in the United States inevitably refers to the legal framework established by the Electronic Signature in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transaction Act (UETA). The ESIGN Act is a federal law that was enacted into law on June 30, 2020 and became effective on October 1, 2020. UETA is a model law that was proposed and approved by the National Conference of Commissioners on Uniform State Laws (NCCUSL) in July of 1999.
Not a great deal of regulatory activity in the month of June, as spring gave way to summer and many state houses sent their lawmakers on break. Still, there were a number of important changes that our compliance experts caught, and we summarize them for you below.
