Cal. Fin. Code § 50203(a) (West 2013) stipulates that a “licensee may not require a borrower to pay fees or charges prior to the residential mortgage loan closing,” with certain exceptions. One of these exceptions (under Subsection [a]) is for a commitment fee, provided a commitment agreement is entered into, which contains certain provisions, including that:
1. The agreement is to be signed by both the borrower and the licensee;
2. The terms and conditions of the loan are to be specified; and
3. The terms and conditions of the commitment (e.g. how long the commitment is irrevocable, the amount of the commitment fee and whether it is refundable, and conditions necessary to close) are also to be specified.
This requirement only applies to licensees under the California Residential Mortgage Lending Act.
In order to enable clients to charge a commitment fee and be in compliance, we will be providing new Cx16083 in Initial Disclosure packages for loans secured by property in California, when both “Mortgage Loan Commitment” equals “Yes” and “California License Type” equals “CA Residential Mortgage Lending Act.” Clients who wish to use their own commitment agreement in lieu of Cx16083 may do so by contacting their Account Manager or Client Support.
This document will be available on September 24, 2013. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
September 13, 2013