Currently, Connecticut Private Mortgage Insurance (PMI) Disclosure (Cx1029), is configured to print for all Connecticut first lien primary residences in the Initial Disclosure package where Monthly Mortgage Insurance = Yes. The requirements for Cx1029 state that it must be provided by “any mortgage lender who requires a borrower to pay for mortgage insurance as a condition of obtaining a first mortgage loan” (Conn. Gen. Stat. Ann. § 36a-726[a]). A “first mortgage loan” is defined as “any loan made to an individual, the proceeds of which are to be used primarily for personal, family or household purposes, which loan is secured by a mortgage upon any interest in one-to-four-family residential, owner-occupied real property located in this state which is not subject to any prior mortgages. The term includes the renewal or refinancing of an existing first mortgage loan.” (Ibid.§ 36a-725). Since Connecticut Law is silent as to exactly what “owner-occupied” means, second homes, one-to-four-unit properties and investment properties may be considered “owner-occupied real property”, and therefore subject to the requirements of Conn. Gen. Stat. Ann. § 36a-726[a] cited above.
The CT PMI Disclosure contains mortgage insurance cutoff language that mirrors the Homeowner’s Protection Act (HPA) which requires that the PMI disclosure be provided “In any case in which private mortgage insurance is required in connection with a residential mortgage transaction (other than a residential mortgage transaction described in section 4902(g)(1) of this title)” (12 USC § 4903[a]). A “residential mortgage transaction” is defined as “a transaction consummated on or after the date that is 1 year after, in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained against a single-family dwelling that is the principal residence of the mortgagor to finance the acquisition, initial construction, or refinancing of that dwelling.” (Ibid. § 4901).
The HPA only applies to single-family dwellings that are the primary residence of the mortgagor, and the current cutoff language will continue to print if the HPA is applicable. However, since Connecticut Law requires PMI disclosure be provided for every first mortgage loan, as defined above, this could also include second homes, one-to-four-unit properties and investment properties that are not subject to the HPA cutoff rules. As such, Docutech is creating a dynamic document that will modify the content of the document based on the property type, in addition to the generic print conditions listed above. This will ensure that the Connecticut PMI disclosure requirement is being satisfied while providing the cancellation conditions to match investor (specifically FNMA and FHLMC) requirements. The default language which will print when Document Investor Institution ID (FI 32500) is not FNMA or FHLMC and the HPA is not applicable will be:
The mortgage loan for which you have applied will be secured by subject property which will not be your primary residence. As such, the termination requirements for mortgage guaranty insurance set forth under Federal and California law (12 USCA §§4901 et seq. and Cal. Civ. Code §§2954.7 & 2954.12 respectively) do not apply and the conditions for termination of this insurance (if any) are as follows:
[Field 56575 “MI Cancellation Conditions for Non-Primary Residence loans” if populated, else: “You do not have a right to initiate the cancellation of this guarantee while the mortgage exists.“]
In addition, the following information will always print on Cx1029:
Other Conditions (if applicable): [Field 56576 “Other MI Cancellation Conditions” if populated, else: “N/A“]
If applicable to your loan, specific cancellation and automatic termination rights and requirements will be provided in an annual notice as required by applicable law. Further details concerning Federal rules concerning the cancellation of mortgage guaranty insurance will be provided to you at closing in a “PMI Disclosure” made pursuant to 12 USCA § 4903.
These changes will be in effect on June 16, 2018. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
Update: The language printing when Document Investor Institution ID (FI 32500) is not FNMA or FHLMC and the HPA is not applicable has been modified to include:
The mortgage loan for which you have applied will be secured by subject property which will not be your primary residence, or your subject property is not a single-family dwelling.
This change is being made to include multiple-unit dwellings as a reason for why the HPA termination requirements do not apply. This change will be made immediately.
Update: Pursuant to further legal review, we have decided to modify the configuration of the CT PMI Disclosure (Cx1029) to remove the Occupancy = PrimaryResidence print condition. Since “owner-occupied” is not defined in the applicable statutes, it is possible to interpret the language to mean that Cx1029 should be given for Second Homes or Investment properties. Consequently, the configuration is being modified to accommodate a more conservative stance.
This configuration change will be in effect on July 6, 2018. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.