Cx5771 is given pursuant to the provisions of Mass. Gen. Laws Ann. ch. 183, §28C and Mass. Regs. Code tit. 209, §§53.03, 53.04, & 53.07, which require a lender to prove that a new home loan (as defined in Ibid. §53.02), which refinances a previous home loan, will result in a net tangible benefit to the borrower.
After being reviewed by DocuTech’s Legal Department, certain textual changes will be made to Cx5771, primarily for clarification and for grammatical purposes. The only substantive changes that will be made are the addition of a new clause in Section 1 of this document which, if selected, would indicate that the lender is exempt from proving a benefit, due to the fact that the borrower is able to recoup the cost of refinancing the new loan within two years (see Ibid. §53.04[d]) and the insertion of a lender’s recital before its signature line.
DocuTech has received several concerns about the 30-Day Notice of Claim section of Cx5771, which requires the borrower to mail to the lender a written demand for relief, before the borrower files a legal action or claim based on his belief that the transaction was not to his benefit. These concerns are founded on the language of Ibid. §53.07(1)(b), which states in relevant part the following:
“A lender may request that a borrower acknowledge receipt of such a worksheet or other documentation; provided, however, a lender shall not shift the burden to the borrower to demonstrate that a home loan is in the borrower’s interest; and provided further that a lender shall not require a borrower to sign a waiver of future claims under M.G.L. c. 183, § 28C or 209 CMR 53.00.”
However, the language of the 30-Day Notice of Claim does not shift the burden of proof to the borrower, nor does it require him to waive any future claims. Rather, it requires him to inform the lender if there is a potential problem with the transaction and allows the lender the opportunity to make an offer to cure the problem. This not only mitigates any damages and avoids any costly legal litigation for both parties, but also, due to the provisions of Mass. Gen. Laws Ann. ch. 183, §28C(b), it allows a court to deny rewarding a borrower costs and attorneys’ fees, if the judge determines that the lender made a reasonable offer to cure the defect and the offer was rejected by the borrower, before the borrower instituted any legal action.
These changes shall take effect April 07, 2012. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.
April 03, 2012