(2/27/21 update: The new URLA: The No. 1 thing to do ASAP to ensure you're ready)

Starting March 1, 2021, all lenders who intend to sell closed residential mortgage loans to Fannie Mae or Freddie Mac will be required to use the new Uniform Residential Loan Application (URLA), the standard form that borrowers use to apply for a mortgage loan.

It’s a significant change for the mortgage industry; in fact, when the GSEs first announced the news in August 2016, it was the first substantial change to the form in 20 years.

How a new lender found success amid the pandemic: Download the MortgageCountry case study

The goal is to have a more consumer-friendly loan application experience while also moving the lending industry closer to digitizing the loan origination process.

Here are some of the key things you should know:

Biggest changes on the form

The redesigned URLA will replace Freddie Mac Form 65 and Fannie Mae Form 1003 and will require lenders to request more borrower information than ever before. It will have 94 new data points for a total of 236 data fields—making it 129% bigger than the previous form.

At the same time, the updated form is removing obsolete fields, such as requiring applicants to list their car’s make and model.

The redesigned URLA will also use clearer language and have a new layout that makes the information easier for technology to ingest, supporting the move toward digitization.

Shifting timelines

The date by which all lenders would be required to use the redesigned URLA has been repeatedly postponed. When the GSEs first announced the change in 2016, the new URLA was slated to be available in January 2018, with no mandated use-by date announced.

The GSEs later announced the mandatory implementation date would be Feb. 1, 2020. Late last year, however, at the direction of the Federal Housing Finance Agency, the required implementation date got pushed back to Nov. 1, 2020.

But that plan also got upended, this time by the pandemic. In April, the GSEs pushed back the mandated implementation date to March 1, 2021.

In the meantime, limited production began on Aug. 1 and open production will begin Jan. 1, 2021. The current URLA will be retired on March 1, 2022.

For more details on the current implementation timeline, check out this update from our Compliance Edge newsletter.

What else lenders need to consider

With so many new data requirements, lenders should get ready now for the new URLA to avoid any disruption to their business. For a time, lenders may need to be prepared to support both the old and new URLA forms concurrently.

Lenders should start by ensuring their LOS will offer end-to-end support for the redesigned form. Other technological updates will also be necessary; for example, those using static web contact forms will likely need to update their technology stack. 

Lenders need to communicate with their investors about where they are in the transition process. If the investors don’t also standardize on the new MISMO format, it may be more difficult and expensive for lenders to sell loans.

Related Content:

• FHFA, other agencies announce extension of COVID-related policies (9/16/2020)
• Why lenders still need print fulfillment—even if they're going digital (8/25/2020)
• 5 key questions about ID validation during RON (8/12/2020)

On Aug. 26, the Federal Housing Finance Agency (FHFA) announced an extension of its policies providing for Fannie Mae and Freddie Mac (the GSEs) to continue to purchase loans that entered a COVID-related forbearance prior to purchase. The GSEs’ policies were set to expire Aug. 31, but the announcement extends the policies to Sept. 30.

The policy extensions also include processing flexibilities allowed as a result of the pandemic, such as alternative methods for documenting income and verifying employment. You can view the FHFA announcement at their website.

RON: The last mile in the eClosing marathon

Additionally, on Aug. 27, HUD and the GSEs announced an extension of their moratoriums on foreclosures until Dec. 31. These were previously set to also expire on Aug. 31. The extension of the GSE moratorium will “protect more than 28 million homeowners with an Enterprise-backed mortgage,” said FHFA Director Mark Calabria. The Department of Veterans Affairs announced a similar extension on Aug. 24.

In addition to the FHFA extension of processing flexibilities related to COVID, the USDA also recently announced an extension of “Temporary Exceptions in relation to COVID-19 pandemic” that include exceptions for appraisal and inspection requirements and verifications. The USDA also announced an extension of its moratorium on foreclosures similar to that of HUD and the GSEs. You can find coronavirus-related information on the USDA's website.

Related Content:

• Why lenders still need print fulfillment—even if they're going digital (8/25/2020)
• 5 key questions about ID validation during RON (8/12/2020)
• Ginnie Mae, 3 FHLBanks start accepting eNotes (8/5/2020)

It may seem like the need for print fulfillment services is counterintuitive to digitizing the mortgage process, but the two things aren’t mutually exclusive.

There are several reasons why lenders going digital may still need some loan documents, such as initial disclosures, to be physically printed out and mailed to customers.

Compliance is key

Chief among them is compliance. The many regulations that guide mortgage lending — especially TRID (the TILA-RESPA Integrated Disclosure rule) — include specific compliance requirements to protect the customer.

For example, while the federal ESIGN Act paved the way for the legality of electronic signatures, the Uniform Electronic Transactions Act (UETA) allows customers to opt out of the electronic signing process and request paper documents. Even in an eClosing, borrowers may still prefer to have some or all of their documents papered out.

Don't rush to implement RON: Take these 3 steps instead

Even if borrowers don’t specifically request paper documents, they may simply neglect to respond to or accept electronic documents within the legally required time frame. And even though in such a situation it would be the borrower who dropped the ball, it is the lender who is on the hook for ensuring compliance.

TRID is a major factor

This is especially important when it concerns TRID. Print fulfillment is often used to provide the initial package, as lenders must provide the Loan Estimate (LE) to consumers within three business days of receiving the loan application.

If any compliance regulation is unmet then penalties for the lender can be costly; the smallest fine for a TRID violation is at least $5,000 per day for a single violation and can reach as high as $1 million per day for knowingly committing violations. 

What DocMagic can provide

That’s why DocMagic’s print fulfillment services are so important. Our print fulfillment supercenter in Torrance, California is a fully automated, centralized, and touch-free system. When the lender orders documents, a printer automatically feeds the paper documents directly into a system that scans and reads the bar codes to ensure that no documents are missing. The docs are then inserted into envelopes, sealed, and stamped — all without human intervention.

Even if the lender doesn't order documents, they're protected with DocMagic. If the borrower does not electronically consent to view initial disclosures, our system automatically prints fulfillment to satisfy TRID requirements. 

Our system logs and stores all actions, and lenders can review them and produce detailed information about any document's activity at any time; we can provide a detailed audit trail for proof of compliance. The result is a drastic reduction in the risk of errors, omissions, compromised data, and compliance-related fines.

Related Content:

• 5 key questions about ID validation during RON (8/12/2020)
• Ginnie Mae, 3 FHLBanks start accepting eNotes (8/5/2020)
• Happy National ESIGN Day! 5 facts you didn't know (6/30/2020)

Testing Information

The first big change with these forms is in the Uniform Loan Application Dataset, or ULAD, for short. This dataset is used to submit your application data to Fannie Mae and Freddie Mac. The GSEs mapped ULAD to MISMO version 3.4.  They used 3.4 because the GSEs would have to engage in extensive use of extensions to have used a lower version of MISMO. They also state that you must use ULAD to submit your data to Desktop Underwriter and your Loan Product Advisor if you're using the new, redesigned URLA. The two things need to go together. If you are interested in the data transmission of your application data to the GSE's automated underwriting systems, they did provide ULAD testing cases on their website, which you can find at fanniemae.com or freddiemac.com.

Changes to accommodate the new form will be enabled prior to the industry use date of July 1, 2019. If your account has access to DocMagic's staging environment, these changes are available for your review at this time. The application will be available during the update. You can activate the update by closing DocMagic Online and relaunching.

What do I need to do?

In order to generate the new forms, you must select "Use 2020 URLA" from the Tools > Options menu within DocMagic Online. If you do not select "Use 2020 URLA", DocMagic will continue to provide you with the existing URLA/Form 1003 until the mandatory date of February 1, 2020, at which time the new URLA form will be applied automatically.

How do I learn more?

The new URLA form introduces many changes in the way borrower information is captured and displayed, including bolstering certain areas of the application such as income verification, military service, assets and liabilities, homeowner counseling, and more in depth property information. For a complete overview of the new functionality we have prepared the following resource page and strongly encourage our DocMagic customers to become familiar with the new content and system changes. DocMagic URLA Resource Page

Understanding the New URLA

The new URLA is bringing us into the 21st century. Along with improving accuracy and the clarity of information being provided by the borrower, the coming changes will make the process more efficient for lenders. As with all changes, there is a learning curve. The key to preparing for a smooth transition is understanding the changes, identifying where they will be on the new forms and beginning testing to eliminate workflow interruptions.

The New Forms and How They Work Together

The Borrower Information Document is the main application form and the first form you will notice with formatting changes. The new layout now has a similar format to the LE and the CD which will make adoption much quicker. This form contains most of the information collected on the current 1003. Generally, one of these forms will be completed per borrower instead of seeing borrower and co-borrower on one application. It is important to note however, that you will see a combination of assets and liabilities for joint borrowers. 

Changes in Section 1

The first change to note is at the top of page 1.  The paragraph referencing joint borrowers has been replaced by a space for the Lender Loan No. / Universal Loan Identifier.  Starting in Section 1, where you would normally see borrower and co-borrower side-by-side, the form will now collect individual data starting with personal information. This is also where the borrower will indicate if they are applying for individual or joint credit.

The next change in this top section is the addition of fields for an email address and cell phone. 

There are two new sections within the personal information section of the Borrower Information Document. 

1. Military Service - This section collects information about Military veterans that can be used by the Veteran's Administration
2. Language Preference - This new section allows the borrower to indicate their preferred language. This informational question does not commit the lender to conduct the loan in the selected language. 

The new Employment and Income section has been improved by including those fields side by side for a more streamlined workflow. This new form supports the collection of loan application details that make it easier for underwriters to verify the income by source. For example: Employment entries include the income received at each employer and calls out other sources of income separately.  Section 1e, Income from Other Sources, is the first part of the form that asks the borrower to select from a provided list

Section 2

Assets And Liabilities

This is where  information from the borrower with regard to their assets and liabilities will be collected.  In sections 2a and 2b, there are fields for collecting bank accounts, retirement, and other accounts.  Similar to the last section, users will now be selecting from the categories that are provided.  For other assets, for example, you would put earnest money, sweat equity or other additional assets that the borrower owns.  Also note that this section includes a does not apply checkbox, and if that were true, this would be selected, and the section would collapse in the dynamic version of the form.

Section 3

Real Estate

In the new Real Estate section the table now includes the existing mortgages associated with each property instead of listing them in a separate Liability Section. Here the borrower will list the real estate that is owned by the property address, including certain detail about the property, such as the property value, whether or not they are going to sell it in this transaction, and whether or not there's any rental income from that property.  Immediately below that, will be a field to list any mortgages that exist on the property. This section, as with other sections in the dynamic version, will repeat as necessary until all real estate is listed.

 Section 4

Loan & Property Information

This is the first place on the form that you will see any actual loan information being entered.

In addition to the three choices in the occupancy field there is now a fourth option added for FHA Secondary Residence.  Underneath occupancy are two new questions referencing mixed-use property and manufactured home.

There are three new sections as part of the Loan and Property Information.

1. 4b allows the borrower to list any other new mortgage loans being taken on the property being bought or refinanced.  If there are no additional loans, the borrower will check the “Does not apply” box and the section will collapse.  If there are additional loans, the borrower will add the creditor name, lien type and position, and amount.
   
   
2. 4c is for rental income on purchase loans. The top line allows the borrower to provide expected gross monthly rental income for purchase loans. The lender then calculates the expected net monthly rent income amount. This section applies when the subject property is a 2-4-unit primary residence or investment property.  
   
   

3. 4d is where the borrower will report any gifts or grants that they will receive to help cover the cost of the loan by selecting from the provided list. The borrower would report the asset type, if the amount has been deposited, the source, using that list above, and then the value. This section will also be dynamic and expand or collapse as needed.

Unmarried Addendum

Important Deadlines for URLA

Beginning July 1, 2019, both Fannie Mae and Freddie Mac will allow the use of the redesigned Uniform Residential Loan Application ("URLA") published jointly by the Government-Sponsored Enterprises ("GSEs").  DocMagic systems will be updated to accommodate these new forms for loans with application dates of July 1, 2019 or later.

How do I learn more?

The new URLA form introduces many changes in the way borrower information is captured and displayed, including bolstering certain areas of the application such as income verification, military service, assets and liabilities, homeowner counseling, and more in depth property information. For a complete overview of the new functionality we have prepared the following resource page and strongly encourage our DocMagic customers to become familiar with the new content and system changes. DocMagic URLA Resource Page

Free Webinar! Your guide to new forms, updates, and deadlines

Join this FREE webinar designed to help you understand the revised Uniform Residential Loan Application (“URLA”) or 1003 form. DocMagic's Chief Compliance Officer, Gavin T. Ales will explain the new forms, compliance updates and the deadlines you need to be aware of. 

Understanding URLA — The New Loan Application

Register for our free webinar here!

• Key implementation dates & deadlines
• An in-depth look at important changes to the New URLA forms
• Examining additions to the Borrower Information Document 
• Changes to the Loan Application process
• The Unmarried Addendum
• Updates to currents systems and where to see them 

Get your questions answered as we walk through the URLA requirements in detail.

Gavin T. Ales is DocMagic’s Chief Compliance Officer. He has hands-on involvement in the development, implementation and maintenance of DocMagic’s compliance products and services. This includes managing DocMagic’s library of mortgage loan documents, which are used by lenders and brokers in all 50 states and the District of Columbia, monitoring legal and regulatory changes, and developing and maintaining DocMagic’s automated compliance tests and audits.

Gavin specializes in mortgage banking compliance; federal and state regulatory compliance; financial services law; real estate law; and consumer credit law, among other disciplines.

Gavin holds a J.D. from American University’s Washington College of Law, and a BBA with a concentration in Economics as well as a BA in International Studies, both from the University of Mississippi. He is licensed to practice law in California and Maryland.

Introduction to TRID 2.0

Throughout the month of September Chief Compliance Officer, Gavin Ales, will introduce some of the major changes coming with TRID 2.0 and provide clarification for each topic along with expert commentary on the new regulations, what has changed and what it means to be compliant.

Training and Education Manager, Ron Carillo, will show you how and where to get started testing TRID 2.0 implementation inside DocMagic.

Below, you’ll find the topics for current and upcoming episodes of TRID Talks.

Got questions about TRID 2.0? Contact us at trid@docmagic.com

TRID Talks Episodes

• Introduction to TRID 2.0
• Rounding & Truncation on LE & CD
• Seller Credits
• Trusts & Non-borrowers
• Closing Costs Expiration Date
• Simultaneous, Subordinate Lien Loans
• Construction/CTP Changes
• Principal Reduction

{{cta('b0e2d27c-6c8f-430f-9f60-50e7ce041315')}}

Overview of TRID 2.0

When do you need to comply with the new rules?

• The Consumer Financial Protection Bureau (CFPB) has set the mandatory effective date of TRID 2.0 for October 1^st, 2018.

What to expect from 2.0?

• Closing the ‘Black Hole’ effective earlier this year in June
• Clarification of “no tolerance fees”
• Several additions to Appendix D/Construction loan clarification
• Written List of Providers (WLP)
• Re-disclosures after Rate Lock
• Cost reductions after initial LE

{{cta('8640f8e7-7182-4907-ac61-547f27501e69')}}

Rounding & Truncation on the LE & CD

Prior to TRID 2.0 for percentages stated that you could disclose percentages up to three or four decimal places. DocMagic took the position that we would always disclose three decimal places. Anywhere you see a percentage shown on the loan estimate or the closing disclosure in your loan terms or in your calculations disclosures it will be calculated to three decimal places. The current rules also state that where there is a whole number disclosed as a percentage, for example 4.000, it would not be disclosed to three decimal places, but rather would be disclosed as a whole number. 

• Whole numbers disclosed as a percentage are not disclosed to three decimal places but as a whole number
• The rule for disclosing percentages to three or four decimal places has changed
• If there’s a trailing zero we will truncate before the trailing zero
• Prepaid daily interest should now be disclosed to two decimal places

Another change would be to the prepaid daily interest amount that occurs on both the Loan Estimate (LE) and Closing Disclosure (CD). The daily interest is the amount that is being multiplied by the number of prepaid days to get a total prepaid interest number. DocMagic currently displays that number to four decimal places because there is no restriction on that under the original TRID rule and we have always used up to four decimal places in our calculations. TRID 2.0 specifically says that the prepaid daily interest amount should be disclosed to two decimal places. So, we’ll be truncating at the second decimal place, but please note, our calculations will continue to operate on a calculation that’s based on four decimal places.

{{cta('96b9c915-98db-43d0-b797-e3390fe37164')}}

Seller Credits & Negative Prepaid Interest

Seller Credits - Did this change?

When Calculating Cash to Close on the Closing Disclosure, if the amount disclosed for seller credits on the last disclosed LE differs from the amount disclosed on the CD, the creditor must include a disclosure referring the borrower to the seller credit amount. Currently, this disclosure would only refer the borrower to page 2 where closing costs paid by seller are itemized. Under the Rule, this disclosure must also refer to the general credit that is disclosed in the Summaries of Transaction. DocMagic has automatically updated the language disclosed in the “Did this change?” section to reflect this change.

Negative prepaid interest and the impact on 'Total Interest Calculations'

Traditionally DocMagic has always considered the negative prepaid interest amount in the total interest calculation. Our systems treat it consistently in other calculations such as total payments, finance charge, and APR. Under the original TRID rule the effect of negative prepaid interest was not clear. TRID 2.0 clarifies that rule:

• The negative prepaid interest amount must be considered as a negative in the total interest percentage

The new TRID 2.0 rule only addresses the effect of negative prepaid interest in the total interest percentage. The rule indicates that you must consider negative prepaid interest in the total interest percentage. DocMagic believes that this should be treated consistently across these calculations based on informal guidance received from the CFPB. If you have an existing configuration option set to ignore negative prepaid interest in your calculations, it will need to be removed to be compliant with the new TRID 2.0 rule.

{{cta('d7e459f8-906d-4f85-851f-9c7f42fccce9')}}

Trusts & Non-borrowers

Changes to Borrower Situations

There are two borrower situations that vary from the typical borrower situation where there is a borrower that is both on the loan and on the title.

Rescindable Transactions (e.g. re-finance)

The first example of one of these situations would be a rescindable transaction, a re-finance being the most common example where you have persons that are only on title but are not borrowers. In this situation you are required to provide the closing disclosure to those persons.

The Original TRID Rule

• Defined those non-borrowing persons who are on title only, or maybe not even on title, still as a borrower
• Non-borrowing persons would still appear on page 1 of the closing disclosure under the label borrower
• They would also appear on the signature lines for them to sign and confirm that they received a copy of the closing disclosure in compliance with the original TRID requirement
• Non-borrowing persons receive the closing disclosure because they have a title interest in the property

The TRID 2.0 Clarification

• Requires those non-borrowing persons who are on title only, or maybe not even on title, still as a borrower
• Does not require Non-borrowing persons would still appear on page 1 of the closing disclosure under the label borrower. (They do have a right to rescind.)
• Limits the borrower listing on page one to those persons who are actual borrowers on the loan

This helps with some of the confusion where persons, who are non-borrowers, may wonder why they would be listed as a borrower.

Inside DocMagic

Under TRID 2.0, if you have a title only person or a non-borrowing spouse (which is called a non-title spouse here at DocMagic) you would enter those as you have previously.

We have automatically updated our systems, to not show that person as a borrower on page one but they will still appear on page five under the signature lines, if you have signature lines.

Trusts

The other unique situation that is clarified under TRID 2.0 is making a loan to a trust. A trust is an entity that may not otherwise meet the definition of consumer, meaning a natural person.

However, in the original TRID rule there was discussion about how the rule still applies to loans that are made to trusts. In those situations, you would look through the trust to find who will be the beneficiary of the loan, as well as the beneficiary of the trust and that would be the individual(s). According to the consumer protection statute seeking to protect consumers, that would still apply in a loan to a trust.

The one change, based on that analysis, was that the rule indicated the disclosure should be provided to the beneficiaries of the trust (aka the actual consumers who are benefiting from the loan).

However, recognizing the legal relationship of the trust as borrower, the rule clarifies that your disclosure should be made to the trustees as representatives of the trust.

As a DocMagic user these configurations will take care of themselves in the programming. You can continue to enter in transactions as usual.

{{cta('2f35b06e-95f8-487a-89b1-01dcd8986dda')}}

Changes to the Closing Costs Expiration Date

The first change to the Closing Costs Expiration Date in TRID 2.0 is how many days are allowed between the issue date on the LE and the Closing Costs Expiration Date. The Closing Costs Expiration Date is the date by which your consumer must provide an Intent to Proceed to lock-in the closing cost estimates.

Under the original rule it was written in a way that limited the number of days to only allow 10-business days between your issue date and the Closing Cost Expiration Date.

The Original TRID Rule

• Only allowed 10 days between your issue date and the Closing Costs Expiration Date

This rule seems to unintentionally contradict the original GFE rules from 2010 that state the requirement had always been to be at least 10 days.

The TRID 2.0 Clarification

• Now allows at least 10-business days or more between the issue date of the LE and the Closing Costs Expiration Date.

To accommodate that change DocMagic has added a configuration option to our system to allow users to indicate the number of days they would like to use for calculating the Closing Cost Expiration Date.

Changes to the Closing Costs Expiration Date after the Initial Disclosure

The next change to the Closing Costs Expiration Date is what happens once the Initial Disclosures are finished and you're now issuing a re-disclosed LE.

The Original TRID Rule

• Once the Closing Costs Expiration Date was set that would be the date that would appear on the subsequent LE’s once the borrower had provided their Intent to Proceed

That could be confusing for borrowers because the Closing Costs Expiration Date would not update and could result in the date sometimes being in the past. For example, if you issued a disclosure on the 13th but had previously issued a Closing Costs Expiration Date with a date of the 10th.

The TRID 2.0 Clarification

• Once the borrower has provided an intent to proceed, then you would blank out your Closing Costs Expiration Date on your subsequent LEs

DocMagic users don’t need to update their configurations as this is already taken care of in the programming of our form. However, if you are not providing an Intent to Proceed date before, under the original TRID rules, you would want to do that now. If DocMagic has an Intent to Proceed date, it will blank out the Closing Costs Expiration Date. But if there’s no intent to proceed date, the Closing Costs Expiration Date would continue to appear.

Subordinate Lien Transactions

Disclosing Simultaneous Subordinate Lien Transactions

Under the original TRID rule the Cash to Close for Subordinate Lien Transactions would show large amounts, amounts that could be somewhat off putting to consumers.

The Original TRID Rule

• Cash to Close could show large amounts especially in the Sale Price

The TRID 2.0 Clarification

• The main change is to ignore Sale Price

The CFPB streamlined their rules for how to do the Cash to Close for simultaneous transactions. Users now ignore sale price both for the Cash to Close and the disclosures. There is also the option to remove any reference to a seller on these transactions.

Inside DocMagic

At DocMagic we’ve added a new data point to our model so that we know when to trigger these new rules. DocMagic online will indicate when a transaction is a simultaneous subordinate lien transaction.

{{cta('d4057ea0-b681-4ba0-b189-ac3b26499eef')}}

Construction and Construction-to-Permanent Loans

Changes made for Inspection and Handling Fees

One of the changes that the CFPB made in TRID 2.0 relates to post-consummation inspection and handling fees and how those are disclosed on the LE and CD. These are fees that would usually be collected during the period of the construction phase, for example, for multiple draws and if there is a draw fee for each, and for inspections that need to take place prior to the lender approving the draws, and there's a fee for that inspector. Those would be examples of post-consummation inspection and handling fees.

Under the original rule says these fees are not disclosed as normal closing costs like every other cost to the loan on the Loan Estimate and Closing Disclosure. Rather, they need to be disclosed to the borrower, but not as closing costs.

• Post-consummation inspection and handling fees need to be disclosed on an addendum to the LE and the CD.
• On that addendum you will see an aggregate amount of these inspection and handling fees instead of an itemized listing of each of the construction and inspection and handling fees.

Additionally, because these fees are not closing costs, it means that they won't be considered in the Cash to Close that the borrower needs to bring to the closing table.

The TRID 2.0 Clarification

• The new rule says that these costs need to be defined as loan costs

It typically refers to those costs that are in the origination charges section and in the services you can, borrower did, and cannot, and borrower did not shop for section.

On the Loan Estimate those are the charges on the left side of the form or on the CD those are the charges on the top half. It's important to note this because it means that while they're not considered closing costs and not considered in the Cash to Close calculations, they are considered in certain other disclosures, like the TRID total of payments amount. the TRID total of payments amount includes all payments of principle interest, MI, and loan costs. It also means that these charges are considered in the in-five-years calculations and they also need to be considered as finance charges.

Inside DocMagic

DocMagic is taking care of all of that for users: the disclosures, the consideration and total of payments, the consideration of in-five-years, and the consideration as a finance charge and in the APR

TRID 2.0 Changes to Construction Loans

The changes to Construction Loans relate primarily to how Appendix D requires a creditor to disclose a construction loan. There are generally two options under Appendix D that you can disclose a construction loan.

1. The amount of the advances is not known nor is the time at which those advances would take place
2. The other one is when the entire commitment amount is dispersed at closing

DocMagic follows option #1 where the amounts are not known nor is the time at which they're going to be made. So that means that you disclose the interest only payment during the construction phase as equal to the interest payment on half of the commitment amount, meaning the amount of money that's dispersed at close, or dispersed during the construction phase to the borrower. However, the construction loan agreement will indicate that the borrower, nevertheless, is required to pay interest on the amounts outstanding for the period of time they are outstanding.

The Original TRID Rule

• Under the original TRID rule you were allowed to disclose the appendix D amount and leave it at that, and that first bullet point under the original TRID rule would have referred to the first change that could have occurred but would have ignored those changes that would have occurred during the construction phase.

The TRID 2.0 Clarification

• Under TRID 2.0 you must disclose the amount based on half the commitment amount, but in the loan terms section on page one of the Loan Estimate it asks, “may this amount increase after closing”.

So, where you've got the monthly principle and interest amount, that amount would be based on half of the commitment amount. And then where you see the question, “Can this amount increase after closing?” you’ll see that we're answering, yes.

{{cta('837be7e1-d2b1-40fa-b21c-dbe9cfee9f3c')}}

Principal Reductions

Principal Reductions for a tolerance cure

A tolerance cure is where a lender has exceeded the legal limit amount that was based on the amount that they originally disclosed on the loan estimate for a charge.

At closing, if the amount exceeds the tolerance for either zero percent or the 10 percent amount, that amount must be cured. The rule requires that certain language appear on the form to indicate that the amount includes or is for amounts that exceed those legal limits.

The Original TRID Rule

• A Tolerance cure was only done through lender credits

If there was a tolerance cure you would see it at the bottom of the closing cost details and the general lender credit amount. You would see language about this amount includes X dollars that exceeds legal limits. And then that same language pretty much would also appear in the cash to close table for the total closing cost amount, as well, under the did this change disclosure.

The TRID 2.0 Clarification

• The rule recognizes that you can also provide a tolerance cure via a principle reduction.
• It also modifies the ‘did-this-change’ language that would appear in the cash to close table for total closing costs and will refer the borrower to the principle reduction language that they'll see in the summaries of transaction or in the payoffs and payments table in the alternate disclosure.

Inside DocMagic

The change requires the ‘did-this-change’ language to be different in the cash to close table when it's a principle reduction for a tolerance cure, DocMagic had to control how when that data was being entered as a tolerance cure.

Under the original TRID rule, if there was a principle reduction, you could simply type that into the summaries of transactions and you could do that with our service of DocMagic online or through your LOS.

Just simply free form in your principle reduction language and your amount into the summaries of transaction table and that would automatically adjust the cash to close in the cash to close table as well as at the bottom of the summaries of transactions. That functionality will still exist under TRID 2.0. Additionally, if you have a principle reduction that's not for a tolerance cure, you would continue to enter that principle reduction in the same way.

{{cta('52b7a2c6-f498-4c0d-8b2b-8055ef480e44')}}

Maintaining an effective Compliance Management System (CMS) entails each lender’s structured plan for meeting regulatory compliance. Developing training manuals and documents — the people, training, procedures — is just part of implementing a working CMS. It’s critical for lenders to implement automated technology solutions to ensure standardization, consistency and verifiable compliance across their entire operation. 

Electronic document generation coupled with automated compliance is key to delivering a verifiable service protecting all parties in the mortgage process. Providing a scalable and adaptable set of tools, DocMagic’s automated compliance solution allows lenders to respond quickly and easily to shifting regulatory requirements. 

What sets DocMagic apart

DocMagic’s automated compliance solution provides data validation checks and audits throughout the entire mortgage process. Maintaining an unbroken chain of electronic evidence is critical for mitigating risk and to deliver proof of compliance to auditors. 

With automated compliance integrated within a suite of digital mortgage technology, everything can be offered in one streamlined system. “Compliance automation technology supplied by a single vendor means flexibility, scalability and real efficiency of due diligence efforts,” said Dominic Iannitti, president and CEO of DocMagic.

How it works

DocMagic’s automated compliance solution consists of in-house compliance, seamless XML document preparation, the Automated Audit Engine, Loan Detail Report, an extensive library of electronic SMARTDocs, eSign, eDelivery, and eClosing technology along with integrated eNotary, eVault and SmartREGISTRY technology. 

Utilizing embedded signatures and notary tags from the start, data is audited at the loan level; including data validation, compliance review, TRID tolerance, QM/ATR, predatory lending, RESPA, GSE salability analysis and more. 

Every process, audit and data transaction is electronically tracked, logged and recorded. The eVault houses the entire audit trail, accessible at any time to support a lender’s CMS requirements. “Our certified eVault preserves the authoritative digital ownership of electronic records. This is crucial for clients looking to the future as the loan market continues to transition to a paperless process,” Iannitti said.

“We tell lenders not to settle for short-term fixes but to focus on the long term. DocMagic’s  automated compliance supports your CMS now, and readies you for digital adoption,” Iannitti said.

What Customers Say:

Customers know that at any given time, a complete audit trail can be provided to show proof of compliance. Our compliant process ensures authentication of original documents passing between owners, regardless of how many duplicate electronic files there may be of the same record. DocMagic’s eVault has been thoroughly vetted by Fannie Mae, Freddie Mac, and MERS to compliantly support eVaulting services.  And to back it up, DocMagic offers lenders an extensive set of reps and warrants backed by an insurance guarantee.

As featured by HousingWire, July 2018

Mutual customers get seamless access to SmartCLOSE™ to share closing information in real-time

MOUNT LAUREL, N.J. and TORRANCE, Calif.  – KeyStoneB2B, the fintech solution that delivers competitive advantages for financial services leaders, and DocMagic, Inc., the premier provider of fully-compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, today announced a partnership to provide DocMagic’s SmartCLOSE™ through the KeyStoneB2B platform. This partnership enables mortgage lenders and settlement service agents using the KeyStoneB2B platform to connect seamlessly to SmartCLOSE, a central portal for sharing and collaborating on documents, data and fees. DocMagic’s GSE-certified solution satisfies every phase of the entire Uniform Closing Dataset (UCD) mandate.

Assuring accuracy and consistency in loan data, documents and fees prior to closing has traditionally been a big challenge for lenders, due not only to the large amount of information being passed back and forth between lenders and numerous settlement service providers, but also to the amount of times the information contained in the file changes.

“Loan information changes on a moment to moment basis, and without a central system of record, lender compliance relies on multiple parties involved in the transaction, and their ability to proactively connect with each other to reconcile data, fees and information,” said Dominic Iannitti, CEO of DocMagic. “With the amount of detail and the number of people involved, it’s almost impossible to achieve completely accurate and consistent information unless there’s a single system of record.” 

“Now that our lender customers have seamless access to SmartCLOSE, they and their settlement service providers can establish an accurate, always-updated single system of record, which will save them a lot of time and prevent a lot of potentially costly errors and inconsistencies,” said James V. Luisi, chief information officer and chief technology officer for KeyStoneB2B. “Plus, they benefit from a host of other features, not the least of which is compliance with the GSEs’ UCD mandate prior to its June deadline.”

In addition to its function as a collaboration hub, SmartCLOSE can also be used to generate and deliver GSE-certified UCD (Uniform Closing Dataset)-compliant files to Fannie Mae and Freddie Mac, prior to the GSEs’ June deadline. According to an announcement by Fannie Mae and Freddie Mac, file submissions that are not UCD-compliant no longer result in a warning, but rather will be escalated to critical or fatal severity and not be accepted in either GSEs’ delivery system as of June 25, 2018.

Other SmartCLOSE benefits include:

• Synchronized collaborative workflow
• Real-time chat and instant messaging
• Continuous compliance and TRID tolerance monitoring
• Automated event and audit logging
• Bi-directional integration with leading Loan Origination Systems
• Integrated eDelivery of borrower disclosures
• Certified MISMO 3.3 compliant XML data and document exchange
• Captures the required borrower and seller data information for
• Embedded XML Closing Disclosure (CD)

 “Quality, compliance and efficiency are top concerns of most lenders and also three of the top benefits of an electronic process,” said Dominic Iannitti, president and CEO of DocMagic, Inc. “Together with companies like KeyStoneB2B, DocMagic is showing lenders not only how easy it is to attain these three components, but also how cost-effective it is as well.”

 To schedule a demo of the KeyStoneB2B and DocMagic’s SmartCLOSE solution, email Morell.Maison@KeyStoneB2B.us or call 561.614.5935.

About DocMagic:

DocMagic, Inc. is the leading provider of fully-compliant loan document preparation, compliance, eSign, eDelivery and comprehensive eMortgage services for the mortgage industry. Founded in 1988 and headquartered in Torrance, Calif., DocMagic, Inc. develops software, mobile apps, processes and web-based systems for the production and delivery of compliant loan document packages. The company’s compliance experts and in-house legal staff consistently monitor legal and regulatory changes at both the federal and state levels to ensure accuracy. For more information, visit www.DocMagic.com.

About KeyStoneB2B:

KeyStoneB2B is an advanced fintech solution with lending process automation that elevates the competitive advantage for financial services leaders. Based on 30+ years of industry and IT expertise, KeyStoneB2B is a robust communications, command and control order management platform that simplifies and speeds the mortgage lending process from months to days. KeyStoneB2B optimizes mortgage servicing, real estate financing and processes for title, appraisal, credit, verification, flood determination, automated valuation models, real estate owned products and more. The technology can be white-labeled offering lenders white-glove service for greater productivity and cost management. Learn more at www.KeyStoneB2B.us.

Join us at the 2017 Digital Mortgage Conference in sunny San Francisco, CA! At DocMagic, our goal is to make it easy for you to implement successful Uniform Closing Dataset (UCD) submissions to the GSEs.

A GSE-CERTIFIED UCD SOLUTION PROVIDER:
Generate & deliver UCD files to your GSE of choice UCD file with embedded PDF of the CD Borrower (and seller) data in the UCD file format Integrated via DocMagic’s API Our GSE-Certified solution is ready NOW... and allows you to satisfy 100% of the mandate far in advance of the 2018 deadline.

Come see our UCD DIGITAL INNOVATION demo:
Thursday, September 28th, 1:30 PM (PST) SmartCLOSE™ solves many of the key challenges between lenders and settlement providers. Join us as we demo the latest SmartCLOSE™ capabilities — electronic generation and delivery of XML UCD files, containing both borrower and seller data, to the GSE of your choice.
Add to Calender!

Schedule a Meeting with Us Now!
Meet us at kiosk #9 to learn how we can support your eMortgage and UCD process.
Schedule A Meeting Now!