Arkansas, Georgia, and North Carolina generally allow attorney fees to be excluded from each of their “Points and Fees Test” for their equivalents of high-cost mortgage loans, “if the borrower has the right to select the attorney from an approved list or otherwise.” (Ark. Code Ann. § 23-53-103[B][ii][h]; see also Ga. Code Ann. § 7-6A-2[B] & [G][ii] and N.C. Gen. Stat. § 24-1.1E[a][b])
To help clients provide documentation that their borrowers did have such a right, we provide Cx3846, which informs the borrower of such right as well as allowing them to defer the choice to another entity. Currently, there are three versions of Cx3846 for each of the aforementioned states, with language that is largely similar, with slight nuances. Pursuant to a review of these versions and each state’s requirements, we have decided to only provide one version of the document, with uniform language.
The substantive language of the three versions has been retained, in which the borrower acknowledges that they have a right to select a qualified attorney to perform title search and loan closings and that, if they do not choose an attorney, the lender or the mortgage broker (if any) will choose the attorney instead. The borrower may then indicate his choice of passing on the decision to another entity or to indicate which attorney they choose.
The language has also been revised to be more consistent (e.g. switching from a hybrid narrative to a first person one). Because the client is referred to by a proper noun in the document, references to the common noun mortgage broker will only print if “Lender is a Broker” equals “No,” to refer to the broker (if any) in a transaction in which a client is acting as a lender. The only substantive language which has been removed is a clause in the Georgia-specific version, in which the borrower may waive his rights under Georgia law to choose his own attorney.
Citations for the laws in all three states will continue to print based on the state that the property is located in. These changes will take effect on September 12, 2013.
September 4, 2013