DocuTech is pleased to announce that we will now be providing the following “state-specific” disclosures for loans secured by property located in the Commonwealth of Puerto Rico:
HELOC Breakdown of Costs Disclosure (Cx18548)
P.R. Laws Ann. tit. 7, § 1057a* requires the following, in relevant part:
“No grantee, member of this Board of Director, of the Committee, executive officer, official, employee or agent of the grantee shall:
(14) Fail to furnish the clients a substantially exact breakdown of the costs of the mortgage loan or loans before granting same.”
While the Itemization of Amount Financed 01-01-10 (Cx14644) is sufficient for fulfilling this requirement for most loans, we will be providing Cx18548 for home equity lines of credit (HELOC) loans.
The document discloses all fees associated with the loan. The annual fee is disclosed separately, plus the fees for late charges, “bounced” checks, and expedited facsimile transmissions containing an explanation of such fees.
As will be the case for all of our Puerto Rico-specific disclosures, each paragraph in English will be followed by a translated version of such paragraph in Spanish.
This document will print under the following conditions:
- Document Package = Initial Disclosures
- Document Package = Closings
- HELOC = Yes
- State Code = Puerto Rico
PR Anti-Coercion Insurance Disclosure (Cx18546)
P. R. Laws Ann. tit. 26, § 2713 contains many of the same so-called “anti-coercion” insurance provisions which have been enacted in nearly all states (i.e. provisions which prohibit a person from requiring the borrower to obtain insurance through a particular insurance agent or company). However, two unique features of this law are that it requires the following in regards to the selection of insurance which benefits the lender:
“If the insurance applies solely to the vendor, lender or depositor’s interest and the insurance is contracted for, or in behalf of, one of these persons said vendor, lender or depositor or any person in his behalf shall furnish a list before the contract is formalized to the assignee, depositary or borrower, of not less than five (5) insurer that qualify for the insurance in accordance with the standards established under subsection (2)(a) of this section, from which list the assignee, depositary or borrower shall select the insurer that is chosen for the insurance.” (Ibid. § 2713[3][a])
Also, the following provision:
“The power to obtain insurance through a certain person, producer or solicitor, or any particular insurer pursuant to subsection (1) of this section may be delegated by the assignee, depositary or borrower to the vendor, lender or depositor only be express mandate. Such mandate shall expire once it has been fulfilled and the vendor, lender or depositor shall not be able to revoke or replace the designation made upon obtaining the insurance without the express consent of the assignee, depositary or borrower.” (Ibid. § 2713[4][a])
In order to comply with this section of law, we will be providing Cx18546, which will contain the following:
- A notice informing the borrower that no person shall require them to select a particular insurance provider. The borrower’s lender may, however, reject the borrower’s selection based on uniformly applied, reasonable standards.
- A dynamic list of insurance providers for lender’s title insurance and private mortgage insurance (both insurances which apply solely to the lender’s interest). To generate this list, we will be using the following field series:
- Fee 902 Service Provider Name X
- Fee 1101 Service Provider Name X
- Fee 1104 Service Provider Name X
Each series will contain up to six fields, so up to six providers may be listed on the document.
- There will be a paragraph informing the borrower that the provisions of the document do not apply to group life or disability insurance, credit insurance, or loans granted by life insurers, due to the excepts set forth in § 2713(6).
- There will also be a paragraph informing the borrower of his option to allow the lender to choose the insurance provider on their behalf. At the end of the document, the borrower may either sign:
- The first acknowledgment of receipt of the document, which includes an indication that they wish to retain their right to choose the insurer(s) and insurance policy(ies) for their loan; or
- A Mandate and second acknowledgment of receipt, where they authorize the lender to select the insurer(s) and insurance policy(ies), as well as acknowledging that they understand the ramifications of delegating this choice to the lender.
This document will print under the following conditions:
- Document Package = Initial Disclosures
- State Code = Puerto Rico
PR Conflict of Interest Disclosure (Cx18547)
P.R. Laws Ann. tit. 7, § 1057a(4) prohibits grantees from “act[ing] on behalf of more than one of the parties to a transaction without their knowledge or express consent.”
To accommodate this requirement Cx18547 will be provided, which contains a simple disclosure that the lender is acting on behalf of another party in the transaction, followed by an explanation of this role using field series “Conflict of Interest – Obligations Party Name X” and “Conflict of interest – Obligations Explanation X.” If these field series are blank, then a blank line will print.
In signing the acknowledgment of receipt of the document, the borrower will also be consenting to the lender’s acting on behalf of the listed parties in the listed roles.
This document will print under the following conditions:
- Conflict of Interest = Yes
- Document Package = Initial Disclosures
- State Code = Puerto Rico
Note About Puerto Rico Loan Programs
While these new disclosures will be available for use, DocuTech does not currently support all loan programs in Puerto Rico. Clients are advised that if they plan on generating document packages for loans secured by property in Puerto Rico that they contact their Account Manager first to determine whether DocuTech does or can support the types of loans that the client is planning on extending in this Commonwealth.
These documents will be available on October 14, 2014. If you have any questions or concerns about these documents, please contact Client Support at 1.800.497.3584.
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* Citations in this article are made to the English language version of Puerto Rico’s Leyes de Puerto Rico Anotadas, as provided by Westlaw.
October 7, 2014
DR 150752