3 NYCCR 38.6(a)(1)(viii) requires that prior to taking a Lock-In Fee, a mortgage banker or exempt organization must disclose to an applicant ”whether private mortgage insurance is required and the conditions under which such insurance would no longer be required.” Docutech’s NY Lock-In Forms (Cx5099, Cx3710, and Cx3588) are modeled after the New York Lock-In Agreement found on the NY DFS website (http://www.dfs.ny.gov/banking/mbforms.htm). Docutech has modified our NY Lock-In Forms to disclose the conditions under which mortgage insurance would no longer be required. We have added the following language for conventional loans:
“You may terminate your mortgage loan guaranty insurance when the unpaid principal amount of the real estate loan represents 75% or less of the real estate’s appraised value at the time the loan was made. However, if your mortgage is on a single family dwelling that is your primary residence, then your loan may be eligible under federal law for earlier termination. A checkmark in the box below denotes whether your loan insurance may be terminated sooner. If so, you will be provided prior to closing with additional information explaining how the federal law may affect your mortgage insurance.”
Additional language and a checkbox has also been added to the NY Lock-In Forms that states: “Your loan insurance may be terminated sooner, under federal law.” The checkbox associated with this sentence will check if the property is the borrower’s primary residence and is not a 2 unit/duplex or a 3+ unit dwelling.
These changes will be in effect on October 13, 2017. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.