The Iowa Payment Reduction Fee Disclosure, cx1906, prints in Iowa Initial Disclosure packages when Discount Points are charged in order to meet the disclosure requirement found in Iowa Code Ann. §535.8(3):
“Prior to accepting an application for a loan which includes a payment reduction fee, the lender shall provide the potential borrower with a written disclosure describing in plain language the specific terms which the loan would have both with the payment reduction fee and without it. This disclosure shall include a good faith example showing the amount of the payment reduction fee and the reduction in payments which would result from the payment of this fee in a typical loan transaction.”
The “good faith example” has been modified for Adjustable Rate Mortgages to include the Margin and Index values. In addition, new optional field prompts have been added to ConformX Iowa Initial Disclosures on loans with Discount Points to populate the “Without Payment Reduction Fee” side of the example:
- What the interest rate would have been if discount points had not been charged, also called Par Rate
- Loan Amount if Discount Points are Not Charged
- Monthly P&I if Discount Points are Not Charged
- ARM Margin if Discount Points are Not Charged
- ARM Index if Discount Points are Not Charged
If these fields are not entered, the “Previous Loan” fields will continue to print in the “Without Payment Reduction Fee” column, just like they are currently. The regular Loan Amount, ARM Margin, and ARM Index will print by default for those areas of the column.
The document enhancements will go out this evening.
July 5, 2011