The Texas Department of Savings and Mortgage Lending (“SML”) published various revisions to Chapters 80 and 81, Title 7 of Texas’ administrative code in the Texas Register (see 37 Tex. Reg 3291 and 4866), which revisions affected the content and requirements of several disclosures. The SML publishes these disclosures on their website (http://www.sml.texas.gov/ResidentialMortgageLoanOriginator/rmlo_mb_forms.html) and newer versions of them were published by July 9, 2012. Continuing with its policy of duplicating legally prescribed and model forms, DocuTech will be updating its version of these disclosures to match the latest versions, to wit:
1. TX Mortgage Banker Disclosure (Cx2999) – This disclosure was originally required under 7 Tex. Admin. Code §81.7 (as well as Tex. Fin. Code Ann. §157.007), but §81.7 has now been repealed and substantively replaced by new §81.200(a). This document is required to be given by an originator to a residential mortgage loan applicant with an initial application for a residential mortgage loan. The language of this disclosure is specifically set forth in this new section and a copy is provided on the SML’s website. Cx2999 will be updated to reflect the latest revisions of this disclosure. In order to check the appropriate checkbox on the new version of the form, a new field prompt will be added in ConformX for Texas Initial Disclosures called “Disclosure Delivery Method”.
2. Disclosure of Multiple Roles in a Consumer Real Estate Transaction (Cx3581) – Although the requirements for this document have not been changed (it is still required under Tex. Fin. Code §156.303[a]), very slight changes (e.g. removal of the word “Texas” from the title of the document) will be made to make it conform more with the model form on the SML’s website. This document is required to be given by a mortgage loan company or a residential mortgage loan originator when such entity/person is acting also as a real estate broker, salesperson, or attorney in a transaction.
3. TX Residential Mortgage Loan Originator Disclosure (Cx3883) – Originally required under 7 Tex. Admin. Code §80.9 (and Tex. Fin. Code Ann. §156.004), this section has been repealed and substantively replaced by a new §80.200(a) (and a new §80.204[b][C]). The form is set forth in the regulation and is also published on the Department’s website. It is required to be given by an originator to a residential mortgage loan applicant with an initial application.
Of all the changes being made, this is the most substantive. This document (and Cx3883) has been reduced from three pages to one and no longer discloses the amount of compensation the originator will be receiving.
4. TX Mortgage Company Conditional Approval Letter (Form B) (Cx16683) – Formerly Cx5104, this document originally contained the disclosures required under 7 Tex. Admin Code §§80.22(b) & 81.2(b), which were to be provided by either mortgage bankers or residential mortgage loan originators (respectively), when either one provides “prospective loan applicant with confirmation that an application for a mortgage loan has been approved as to credit but not as to collateral . . .”
These two sections have been repealed and substantively replaced with new §§80.201(b) & 81.201(b) (both disclosures are still required under Tex. Fin. Code §156.105), with basically the same timing and condition requirements as before.
Due to the complexities of Texas law in distinguishing a difference between a banker and a residential mortgage loan originator, DocuTech has decided to “split out” the banker version of this disclosure into its own document (TX Mortgage Banker Conditional Approval Letter [Form B]; Cx16682). Since the requirements of these disclosures are such that they would unlikely print in a vast majority of cases, they will be available upon request. If any client would like to utilize them for their business, they should contact Customer Support or their Account Manager, but they will need to specify which version to use, based on whether they are considered a mortgage banker or a residential mortgage loan originator under Texas law.
5. TX Mortgage Company Conditional Qualification Letter (Form A) (Cx16685) – Formerly Cx5106, the configuration, purposes, and changes to this document are similar to those of the ones set forth in Item #4. Two disclosures were required under 7 Tex. Admin. Code §§80.22(b) & 81.2(a) (one to be given by mortgage bankers and another by residential mortgage loan originators) and both were combined into one document. Both administrative requirements have been repealed and have been substantively replaced with new §§80.201(a) & 81.201(a), respectively (both disclosures are still required under Tex. Fin. Code Ann. §156.105).
These disclosures are required to be given by either bankers or loan originators when a loan applicant is “conditionally qualified” for the loan. The bankers’ version of the document will be “split out” into its own document (TX Mortgage Banker Conditional Qualification Letter [Form A]; Cx16684). Like the disclosures in Item #4, these ones will be available upon request. Clients may configure them for their business by contacting Customer Support or their Account Manager, but again, they will need to specify which version to use, based on whether they are considered a mortgage banker or a residential mortgage loan originator under Texas law.
6. Texas Notice of Penalties for Making False or Misleading Statement (Cx12309) – Originally required under Tex. Fin. Code §343.105, it is now also required under 7 Tex. Admin. Code §80.204(b)(1)(E).
Although the language of this form is set forth in Supra, model forms of it have been published by both the Texas Department of Banking and the SML. Cx12309 has been based on the Department of Banking’s version, but will be revised to match the SML’s version, since this is newer than the Department of Banking’s version.
These new regulations took effect on July 5th, 2012. However, due to the significant lack of time between when they were finally published in the Texas Register (June 29th) and this effective date, the SML stated in their announcement of July 5th that “the Department will not begin citing violations during examinations for using an outdated version of the disclosures until September 1, 2012.”
Rather than wait until the last minute, DocuTech will be making these changes on August 1, 2012. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
July 25, 2012