As previously announced, the Washington Department of Financial Institutions have finalized amendments to their regulations and have published a new version of their model “Rate Lock Agreement” (available at: https://dfi.wa.gov/rulemaking/consumer-loan-act-rulemaking).
Following our policy of duplicating forms published by Government authorities for disclosure requirements, we will be updating our copy of the “Rate Lock Agreement” (Cx2792) to match the latest from the Department of Financial Institutions. Notable changes include:
- Changing the title of the document from “Interest Rate Lock Agreement” to “Residential Mortgage Interest Rate Lock Agreement” and including citations to Wash. Rev. Code Ann. § 19.146.030(2)(a) and Wash. Admin. Code § 208-620-510(3) (note: these are not the only requirements for the rate lock agreement, but they are the only ones listed on the Department’s modified, model form);
- Streamlining the first two paragraphs into two sentences;
- Removing the parenthetical text of the caption in the third row of the table on the form and changing the caption from “Describe Other Terms and Conditions [etc.]” to “Describe Other Terms and Conditions of the Interest Rate Lock:”;
- Re-formatting the second row in the table to match that of the modified form, which mostly incorporates the disclosures of the second and fourth rows from the previous version of the form; and
- Re-formatting the fourth row to disclose the charges or credits for discount points.
Regarding the disclosure of charges for discount points, Washington’s regulations do not provide any guidance as to whether only borrower-paid discount points or all discount points (regardless of payor) should be disclosed. Because the official definition of “discount points” is (inter alia) “a fee paid by a borrower” (see Ibid. § 208-660-006) and some other regulatory text limits the scope of discount points to borrower-paid amounts (see Ibid. § 208-620-555[e]), our standard will be to disclose only borrower-paid discount points. To this end, we will be using “Discount Points Percentage Of Loan Amount” (FI 20870) for disclosing the amount, but have renamed the field to the more specific “Borrower-Paid Discount Points Percentage Of Loan Amount”.
Regarding the disclosure of credits of discount points, such credits are usually given as a lump-sum and are disclosed as such on the Loan Estimate (albeit it is possible for specific credits to be given for them as well). Because ConformX will not know the intent behind each credit (whether it is for discount points or for some other purpose), we are taking a conservative approach with our standard and only disclosing lump-sum lender credits as a credit for discount points. We have created new macro field “Lump Sum Lender Credits Percentage of Loan Amount” (FI 137161) for this purpose, which divides the “Total Lump Sum Lender Credit Amount” (FI 97340) by the Loan Amount (FI 1058) and multiplies the result by 100. This should express the total TRID Lump Sum Lender Credits as a percentage of the Loan Amount, i.e., it is the lender lump sum credit, expressed in points, that the borrower receives for a higher interest rate.
These changes will go into effect on November 20, 2019. If you have any questions or concerns, please contact Client Support at 1.800.497.3584.