Pursuant to our yearly audit of state-specific disclosures, we will be creating the following disclosures for loans in which the subject property is located in Minnesota.
MN Request for Notice of Foreclosure (Cx18225)
Under Minn. Stat. Ann. §§ 580.032, 582.032, and 582.32, a person with interest in real property which may be foreclosed by advertisement, have a reduced redemption period, or be voluntarily closed upon, may record a request to receive notice of any of these events with the county in which the property is located in.
We will be producing new Cx18225 for fulfilling these statutes. The document discloses the name and address of the mortgagee, the legal description of the property, the mortgagee’s interest in the property (by referencing the mortgage), and contains a notary acknowledgment section.
This document will print under the following conditions:
- “Document Package” equals “Closing.”
- “LienPosition” equals either “SecondLien” or “Other.”
MN Non-Finance Charge Disclosure (Cx18226)
Minn. Stat. Ann. § 47.59(12)(a) requires financial institutions to comply with the Truth-in-Lending Act (“TILA”) when such is applicable to consumer loans. However, a separate disclosure is to be provided in connection with open-end credit accounts “if the financial institution imposes a loan fee, points, or similar charge that relates to the opening of the account which is not included in the annual percentage rate given pursuant” to TILA.
This disclosure is comprised of the following statutorily-prescribed text:
YOU HAVE BEEN ASSESSED FINANCE CHARGES, OR POINTS, WHICH ARE NOT INCLUDED IN THE ANNUAL PERCENTAGE RATE. THESE CHARGES MAY BE REFUNDED, IN WHOLE OR IN PART, IF YOU DO NOT USE YOUR LINE OF CREDIT OR IF YOU REPAY YOUR LINE OF CREDIT EARLY. THESE CHARGES INCREASE THE COST OF YOUR CREDIT.
We will now be providing this disclosure, along with an acknowledgment of receipt, in Cx18226. This document will be configured to print under the following circumstances:
- When there is any loan fee, point, or similar charge which is not marked as an APR item in ConformX.
- “Document Package” equals “Closing.”
- “HELOC” equals “Yes.”
MN Lower Investment Grade Disclosure (Cx18227)
Residential mortgage originators (including those licensed under the Minnesota Residential Mortgage Originator and Servicer Act), servicers, and otherwise exempt persons, who make or arrange residential mortgage loans which have a lower investment grade than what the borrower qualifies for, are required under Minn. Stat. Ann. § 58.13(1)(a)(18) to disclose to the borrower this fact and that they can obtain a loan with a lower interest rate and/or lower discount points. If the borrower wishes to continue with the lower investment grade loan, then their written consent must be procured.
For this requirement, we will be providing new Cx18227. This document will inform the borrower of the fact that they qualify for a higher investment grade loan, provides a simple explanation of what an investment grade is, explains that the borrower qualifies for a loan with a lower interest rate and/or lower discount points than the loan they applied for, and instructs the borrower that their consent must be obtained before a lower investment grade loan may be extended to them. There is also an area on the form for obtaining the borrower’s consent.
This document will be configured to print under the following conditions:
- “Document Package” equals “Initial Disclosure.”
Since we will not be aware of when this document will need to print (the information necessary to know is not collected by any Loan Origination Systems), it will only be assigned upon request. Once requested, it will not print in each Initial Disclosure package by default, but will instead be set to “View Only”. Loan officers will need to manually check this document to print for situations where they believe this document is required.
MN Lock-in Agreement (Cx18228)
Minn. Stat. Ann. § 47.206 requires the following:
“Subd. 2. Disclosures. A lender offering borrowers the opportunity to enter into an agreement in advance of closing shall disclose, in writing, to the borrowers at the time the offer is made: (1) a definite expiration date or term of the agreement, which may not be less than the reasonably anticipated closing date or time required to process, approve, and close the loan; (2) the circumstances, if any, under which the borrower will be permitted to close at a lower rate of interest or points than expressed in the agreement; (3) the steps required to process, approve, and close the loan, including the actions required of the borrower and lender; (4) that the agreement is enforceable by the borrower; and (5) the consideration required for the agreement.
Subd. 3. Agreements to be in writing. A borrower or lender may not maintain an action on an agreement unless the agreement is in writing or is permitted by subdivision 4, expresses consideration, sets forth the relevant terms and conditions, and is signed by the borrower and the lender.”
While not necessarily defined as such, this requirement basically sets forth the content of any lock-in or commitment agreements entered into by borrowers and lenders.
New Cx18228 will be provided to meet the requirements of this section of law. It will set forth some of the basic terms of the loan (particularly the rate of interest being locked), the amount of any lock-in fee (and when and if it is refundable), terms concerning the expiration of the Agreement, an area for describing the circumstances (if any) under which the loan will close at a lower rate or points then set forth in the Agreement, an area for describing the steps which need to be taken to close the loan, and a statement that the Agreement is enforceable and that the borrower may bring suit for any breach of its terms.
This document will print under the following conditions:
- “Document Package” equals “Initial Disclosure.”
- “Base Type” equals “Conventional.”
- “Rate-Lock Initiated?” equals “Yes.”
- When the principal amount of the loan is less than $200,000.
- When the loan is not being used for a business (including investment) or agricultural purpose.
- “State Code” equals “Minnesota.”
MN Commitment Agreement (Cx18229)
As set forth above, Minn. Stat. Ann. § 47.206 requires certain content to be in any lock-in or commitment agreements, so we will now be providing Cx18229 which meets the requirements of this section.
This commitment agreement will include:
- A disclosure of some of the basic terms of the loan being committed to;
- An area for describing the circumstances (if any) under which the loan will close at a lower rate or points then set forth in the Agreement;
- An explanation of the circumstances in which the lender reserves the right to not extend the loan (e.g. the borrower fails to provide required documentation);
- An area for clients to enter additional terms or conditions;
- An area for describing the circumstances (if any) under which the loan will close at a lower rate or points then set forth in the Agreement;
- An area for describing the steps which need to be taken to close the loan:
- A disclosure of the amount of the commitment fee (if any);
- An explanation of when the commitment agreement expires, what the effects of such will be, and the circumstances under which the commitment can be renewed; and
- A disclosure of the fact that the agreement is enforceable and that the borrower may bring suit against the lender for any breach of its terms.
Cx18229 will print under the same conditions as Cx18228, except that instead of the “Rate Lock Initiated?” equals “Yes” condition, the print condition will be based on whether a commitment is being issued.
MN Disclaimer of Loan Terms (Cx18230)
Finally, Minn. Stat. Ann. § 47.206(5) requires the following:
“An oral or written statement of current loan terms and conditions, including interest rates and number of discount points, is not an offer or an inducement by a lender to enter into an agreement. A written statement of current loan terms and conditions must be accompanied by a disclaimer that the statement is not an offer to enter into an agreement and that any offer may only be made pursuant to subdivisions 3 and 4.”
We will now be providing Cx18230 for this requirement. The document informs the borrower that any documents in their package, which are not written agreements (such as lock-in and commitment agreements), and which disclose the terms or conditions of the loan, are not an inducement by the lender to enter into an agreement. There is also text explaining the provisions of the aforementioned subdivisions 3 and 4 concerning what a written agreement is, as well as explaining that oral agreements may be made under certain conditions.
This document will print under the following conditions:
- “Document Package” equals “Initial Disclosure” or “TILA Redisclosure.”
- “Base Type” equals “Conventional.”
- For single-unit properties only.
- When the principal amount of the loan is less than $200,000.
- When the loan is not being used for a business (including investment) or agricultural purpose.
- “State Code” equals “Minnesota.”
These documents will begin appearing in packages starting September 16, 2014. If you have any questions or concerns about these documents, please contact Client Support at 1.800.497.3584.
September 8, 2014
DR 144043 – 144049