The First of July

by Fredric J. Gooch - General Counsel/VP of Compliance

The Fourth of July is a day that everyone looks forward to and is often referred to as the "Great American Holiday." For those in the compliance business it is a time to celebrate our independence or survival from the First of July. The First of July is definitely not a nationally recognized holiday, nor is it a day compliance professionals enjoy, as it is commonly a day when regulatory changes passed by state legislatures become effective. This year we saw several changes become effective on the First of July. Here is a list of new laws and regulations that went in to effect July first and the changes DocuTech has made to its products.

• Connecticut repealed the Secondary Mortgage Loan Act in Substitute House Bill 577 that went into effect July 1, 2008. Now all CT licensees will be under the Nondepository Mortgage Lenders and Brokers Act. Under the SMLA, the prepayment penalty limit was 3%; under the NMLBA, the prepayment penalty limit will be 6 months interest.
• Per Massachusetts Gen. Laws Ann. ch. 183 § 6D, effective July 1, 2008, every Massachusetts mortgage and assignment of mortgage should contain the name, post office address and license number of the mortgage broker and, if applicable, the mortgage loan originator. If no mortgage broker or mortgage loan originator was involved with the mortgage, it should be stated on the document.
• Per the revised requirements to Ohio Administrative Code §1301:8-3-07(H), effective July 1, 2008, lenders must clearly indicate the federal or state statutory authority pursuant to which a loan is made by prominently disclosing the information in the loan documents of second lien loans. Also, a disclosure with specific ARM related information must be given at least six months but not more than seven months before the initial scheduled reset date on second lien ARM loans with an initial fixed rate period.
• Washington House Bill 2770 went into effect June 12, 2008, and contains new restrictions on prepayment penalties for Adjustable Rate Mortgages.
• Wyoming passed Senate File 44, effective July 1, 2008, amending several provisions of the Residential Mortgage Practices Act. One of the new requirements is a Loan Origination and Compensation Agreement, to be given by brokers. The Wyoming notary acknowledgement language was also revised.