Ky. Rev. Stat. Ann. §286.8-120(7) requires the following in regards to commitments:
“All ‘letters of commitment,’ or any other contracts or agreements between prospective borrowers and a mortgage loan company or a loan broker, where the borrowers employ services, for a fee or commission, to obtain a loan commitment or funding from a lending institution shall indicate the terms and conditions thereof, including a full and detailed description of the services the broker or company undertakes to perform, a specific statement of the circumstances in which the broker or company will be entitled to obtain or retain consideration and the period that such agreement shall remain in effect.” (Ky. Rev. Stat. Ann. §286.8-120)
For years, DocuTech has been providing Cx3826 to clients for use in complying with this provision. Due to its general and broad requirements, the format of Cx3826 was kept simple and open-ended, enabling clients the flexibility to particularly describe the services and considerations that apply to their particular transactions.
However, this flexibility also required clients to input large amounts of textual data, which was cumbersome. In order to keep its flexibility, as well as to streamline the amount of data that is manually entered, DocuTech will be changing the format of this document as follows:
1. The disclosure of the effective days of the agreement will be moved to the very beginning of the document and will be changed to stipulate that the agreement will remain in effect until a borrower obtains a loan, their application is denied, either party cancels the agreement, or a new agreement is entered into (previously, the agreement would be effective for a certain number of days).
2. The disclosure of the services that will be provided will include a list of hardcoded text, which a client may check to indicate which services apply. There will also be a section where a client may enter additional services which are not already listed (previously, a client had to manually enter all text). This disclosure is set forth in §2 of the document.
3. A new disclosure stating whether the broker/loan company is or is not the provider of credit will be added as §1.
4. The conditions under which the borrower is obligated to pay the broker/loan company will be expanded to include dynamic text which will print depending on whether the broker/loan company will be paid by the borrower or the lender. These conditions will be set forth in §3.
5. A new disclosure concerning the actual cost of the broker/loan company’s services will be added, including a reference to the Itemization of Amount Financed for details concerning the compensation. This will be set forth in §4.
6. The “Other Agreements” section will remain, but as §5. This will continue to enable clients to manually enter other terms and conditions to this document, if desired.
7. The borrower’s acknowledgment will be changed so that the borrower is agreeing to the terms and considerations of the agreement, rather than simply acknowledging that they received the document.
These changes will go into effect on Monday, May 21, 2012.