As previously announced, the Vermont Department of Financial Regulation has revised Vermont’s commitment letter administrative requirements. We provide Cx4671 for these requirements, as well as those of Vt. Stat. Ann. tit. 9, § 103.
Changes to Cx4671
Based on the revisions, we will be making the following changes to Cx4671:
- Due to revisions to several definitions in Vt. Admin. Code 4-2-5:2, administrative law only requires that the commitment letter be provided for a loan secured by a primary lien on a 1-to-4 family unit dwelling in which the owner resides (which can include second homes). However, Vt. Stat. Ann. tit. 9, § 103 practically requires the commitment to be issued for loans with any lien position. Due to these changes and the overlap between statutory and administrative provisions, we will be modifying the configurations for Cx4671 so that it prints under the following conditions:
- Document Package Type = Initial Disclosure
- Occupancy = PrimaryResidence OR SecondHome
- State Code = Vermont
- Adding the subtitle “(Long Form)”, for the reasons outlined in the next part of this announcement.
- Including the NMLS number of the lender after the “Lender” disclosure at the top of the form. We will also be including the NMLS number of the loan officer referenced in Section 9 within such section (which will be renumbered as Section 10).
- Including the manufactured/mobile home description table used in our generic “Manufactured Home Affixation Affidavit” (Cx43) into Section 1 for loans secured by such property.
- Revising the phrase “Loan Principal Amount” in Section 2 to state “Maximum Credit Limit” when the loan is a HELOC.
- For ARMs, adding a description of the index, margin, and changes to the interest rate within Section 3.
- Removing the current disclosure of points in Section 4. We will be adding three different types of disclosures in Section 4 for the following types of loans:
- Closed-End, Non-TRID loans: Amounts from HUD-1 Lines 801 through 803.
- HELOCs: The fees listed in our forthcoming, generic “HELOC Agreement” (Cx21652).
- TRID loans: Origination charges and points.
- Bolding all fee labels in Section 7, except “Principal and Interest”.
- Adding a new Section 8, which provides various descriptions of how the loans proceeds will be disbursed. The variations will be based on whether the loan is a HELOC, construction loan, or other type of loan. In addition, a disclosure of how often periodic payments will be made (g., monthly, biweekly, weekly) will also be included in Section 8.
- Adding a lender recital and signature at the end of the document.
New Cx22596
New Vt. Admin. Code 4-2-5:4(B) permits lenders to issue a shorter commitment letter for loans subject to TRID (TILA-RESPA Integrated Disclosure rule, primarily codified at 12 CFR §§ 1026.19[e] through [g], 1026.37, & 1026.38). This “short form” commitment letter must be provided in conjunction with the Closing Disclosure (“CD”), the generic copy of which we provide in “Pre-Closing” and “Closing” packages.
Because not all of our clients use our “Pre-Closing” package services, we will be providing the “long version” commitment letter (Cx4671) by default. However, for those client’s who wish to utilize the “short form”, we will be providing a new “VT Mortgage Loan Commitment Agreement (Short Form)” (Cx22596). This form will not print in any packages unless specifically requested by a client. Once requested, it will print under the following default conditions:
- Document Package Type = Pre-Closing
- Integrated Disclosure Loan Indicator = Yes
- Occupancy = PrimaryResidence OR SecondHome
- State Code = Vermont
When Cx22596 is assigned under the default print conditions, the configurations for Cx4671 must be customized to include “Integrated Disclosure Loan Indicator = No”, not only to ensure that a commitment letter is provided for non-TRID loans (e.g. HELOCs), but also to ensure that duplicate copies of commitment letters are not appearing in document packages for TRID loans.
The “short form” is a streamlined version of Cx4671 and only includes the following disclosures:
- Section 1 is replaced with a cross-reference to the CD;
- Section 2 is replaced with a disclosure of the rate lock expiration date (or prints “Not Applicable” if the rate has not been locked);
- Section 8 is renumbered to Section 3; and
- All other sections are removed.
Important Note About HELOCs
Because HELOC documents are customized based on each client’s business practices, disclosures of HELOC terms and fees in Cx4671 may or may not correspond with HELOC offerings provided by clients. For example, while we have included the fees disclosed in a draft of our forthcoming generic “HELOC Agreement”, these may not include fees disclosed in custom HELOC agreements provided by our clients. Our clients are encouraged to review with their own legal counsel the HELOC-version of Cx4671 to ensure that it complies with their own custom HELOC documents.
Effective Date
These changes and new Cx22596 will be available on September 29, 2018. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
DR 271361