Recently amended Michigan State statute §445.1636 requires that “at the time a person applies for a mortgage loan, the lender shall provide the applicant with a copy of the special information booklet described in 12 CFR 1024.6, issued under the authority of the real estate settlement procedures act of 1974, Public Law 93-533.”
The CFPB is the authority over RESPA and has issued two different special information booklets under this authority; the “Shopping for your Home Loan: Settlement Cost Booklet” (for non-TRID Loans) and “Your Home Toolkit: A step-by-step guide” (for TRID loans).
Looking at the legislative history for the statute there is evidence that the Toolkit was the intended special information booklet:
- “The booklet addresses compliance with the requirement of the Truth in Lending Act and RESPA…”
- “The consumer Financial Protection Bureau’s special information booklet…is 28 pages long (which is the length of the Toolkit; the Settlement Cost Booklet is 48 pages).
Although the legislative history gives evidence that the Toolkit was intended, what was actually passed by the legislature does not give clear guidance on which booklet is to be given to the applicant. Until the Michigan legislature or the Department of Insurance and Financial Services directs otherwise, Docutech will provide the Toolkit for TRID loans and the Settlement Cost Booklet for non-TRID loans.
Additionally, the new law applies to all “mortgage loans” which is defined as “a loan or home improvement installment contract secured by a first or subordinate mortgage or any other form of lien or a land contract that covers real property located in this state that is used as the borrower’s principal dwelling and is designed for occupancy by 4 or fewer families.” The definition expressly excludes purchase transactions, reverse-mortgage transactions, open-end credit plans, and loan transactions in which the proceed are not used primarily for a personal, family, or household purpose. Thus, a “mortgage loan” primarily applies to refinance transactions.
Since Reg Z already directs lenders to provide the booklet to the applicant for purchases (see §1026.19(g)(1)(iii), Docutech will now provide the special information booklet for all loans in Michigan, not just purchases as required by federal law.
Instead of providing the Consumer Bill of Rights as required by the pre-06/13/2016 version of §445.1636, we will now provide the “Your Home Toolkit: A step-by-step guide” for TRID loans and “Shopping for your Home Loan: Settlement Cost Booklet” for non-TRID loans.
Also, the Michigan Legislature repealed §445.1637 which required the Consumer Caution Notice Disclosure and a list of the nearest available HUD-approved credit counseling agencies. Consequently, both of the disclosures contained in our MI Borrowers Bill of Rights and Consumer Caution Notice (Cx4970) and our MI HUD-Approved Counseling Agencies (Cx7276) have become unnecessary. Therefore, we will be retiring Cx4970 and Cx7276.
This change is to be effective June 13, 2016. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.