April ’21 Compliance Recap

With state legislatures in session and a new administration beginning to work on their regulatory priorities, we saw many changes for loan document requirements in April. Several of the changes are regulators modifying rules to fit the current COVID-19 scenarios with states and officials working to maintain a streamlined and cohesive mortgage experience.

Remember that you will always be up to date, up to the minute, by following the posts in our compliance blog. Continue reading to learn about the compliance and document changes we saw in April.

RON Legislation Update:

West Virginia Enacts RON Legislation: On March 30, 2021, Gov. Jim Justice signed WV S.B. 469 which permanently authorized remote online notarizations (RON). Temporary use of RON was permitted prior to this during the COVID-19 pandemic. This bill takes effect on June 17, 2021. Learn more here.

Document Updates:

Power of Attorney on Compliance Agreement and Occupancy Statement: Although not legally required, First American Docutech provides a generic “Errors and Omissions/Compliance Agreement” as well as an “Occupancy Statement” for lenders to utilize. These documents are sworn to or acknowledged in the presence of a notary public. To provide better support for signers of these documents who are being represented by individuals with power of attorney, modifications are being made to fields to allow a borrower who is being represented to appear in the notarial acknowledgment. These changes went into effect on April 9, 2021. Learn more here.

Changes to COVID-19 Explanation of Loan Terms (POA) & Borrower’s Income Verification: With the lapse of the explanation of loan terms on May 1, 2021, configurations will be made to Cx23852 so that it only prints for loans intended to be sold to FHLMC and not FNMA in accordance to their varying requirements. The Borrower’s income verification form originally put in place to accompany the CARES Act has been modified due to ambiguity on the sunset period. Some language will be adjusted to showcase the possibility of permittance being withdrawn. These changes went into effect on April 10, 2021. Learn more here.

Adjustments to Alabama State Disclosure Audit: In accordance with regulations made by the Superintendent, the Banking Department has published models of both the “Explanation of Nontraditional Mortgage Products” and “Nontraditional Mortgage Payment Comparison” forms. To comply with these indirect requirements, First American Docutech has duplicated these model forms. Please note that they currently do not support graduated-payment mortgage loans at this time, so these documents will only print for interest-only loans. Modifications will also be made to Alabama’s “Fixed Rate Note,” “Anti-Coercion Insurance Disclosure” and “AL Mortgage Broker Agreement” forms. These changes went into effect on April 13, 2021. Learn more here.

Revisions to Anti-Coercion Insurance Disclosures: Earlier in the year First American Docutech announced revisions when used for loans secured in Colorado or Idaho. These adjustments are now being made to Georgia, Maryland, Mississippi, and North Carolina. The bulk of these changes consists of language alteration from “the lender” to an undefined person since these forms apply to more people than just the lender. These changes went into effect on April 13, 2021. Learn more here.

Required Field Prompt Update for Index Rate: As a result of the steady decline of the Secured Overnight Financing Rate (SOFR) the global required field prompt in ConformX for the current Index Rate (FI 16) has been modified to allow a 0.000% value in case it decreases to that point. This change went into effect on April 16, 2021. Learn more here.

2021 Updates to IRS Tax Return End Date Default Values: As a result of the federal income tax return filing deadline being postponed from April 15, 2021 to May 17, 2021, the “year or period requested” sections of the IRS Forms 4506-C “IVES Request for Transcript of Tax Return” and 4506 “Request for Copy of Tax Return” have been updated to default to 12/31/2020 for the “Requested Tax Return 1 End Date” and 12/31/2019 for the “Requested Tax Return 2 End Date.” This went into effect on April 17, 2021. Learn more here.

TN Lock-In Agreement: One of the loan terms within Cx14675 discusses the need for two checkboxes indicating whether or not private mortgage insurance is required with the loan. First American Docutech will be improving the logic used to select these checkboxes to best fit the bill. This went into effect on April 20, 2021. Learn more here.

Addenda to Closing Disclosure and Spanish Closing Disclosure: With the rollout of TRID 1.0 and 2.0, the CFPB has released a more explicit analysis on the matter regarding an itemized list previously requested. To accommodate clients who wish to provide an itemized list of recording fees the ‘Addendum to Closing Disclosure’ will be modified. This went into effect on April 21, 2021. Learn more here.

Updates to 4506-T/4506-C (Copy of Tax Form): As a result of the fact the IRS Form 4506-C may be completed and signed by someone acting as an attorney-in-fact for the borrower, we will be modifying the “Print/Type Name” section in the signature area of the form to print “power of attorney” names and related text for signatories who are attorneys-in-fact. This went into effect on April 27, 2021. Learn more here.

Various Texas Home Equity Loan Document Configuration Changes: With differences in loan types when going between FNMA’s classification and Texas’ Constitution, First American Docutech is adding a condition to Print Condition #2 to differentiate between a “cash-out refinance” according to FNMA and a Texas Loan. This went into effect on May 4, 2021. Learn more here.

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