Compliance Statement: Docutech and Niche Mortgage Loan Laws

All states have laws which apply to a broad variety of mortgage loans (e.g., California Residential Mortgage Lending Act, Mississippi S.A.F.E. Act, etc.), but a significant number of them also have laws which apply to a small “niche” of mortgage loan laws. For example:

• • Laws which only apply to a specialized group of mortgage brokers or lenders; for example, laws applying to “credit services organizations” which are defined as persons who can obtain an extension of credit for a buyer (thus including mortgage loans), but for the purpose of assisting a buyer in improving her/his/their credit record or history (which excludes most mortgage loans; see Ariz. Rev. Stat. Ann. § 44-1701 for an example).
  • Laws which are intended to apply to small loans (mortgage or otherwise), such as the Florida Consumer Finance Act (Fla. Stat. Ann. §§ 516.01 et seq.), which applies to loans of $25,000 or less. Most mortgage loans are not made in so small amounts.
  • Laws which apply to loans with high interest rates, such as the Florida Consumer Finance Act, which applies to loans with an interest rate greater than 18% (see § 516.01[2]). One would have to remember when the San Francisco 49ers went to their first Super Bowl to also remember a time when mortgage loan rates were close to this threshold.

Because these laws only apply to a small “niche” of loans, Docutech generally does not provide generic support for these laws, unless a client informs us that they are planning to make such loans (at which point, we consider whether support for these laws are feasible or not).

On June 30, 2020 Gov. Brian P. Kemp (R) signed into law S.B. 462 (2020), which reformed the Georgia Industrial Loan Act (Ga. Code Ann. §§ 7-3-1 et seq.) into a new Georgia Installment Loan Act. Under the Georgia Industrial Loan Act, “real estate loan or mortgage companies” were exempt from its provisions (see Ibid. § 7-3-6[b], prior to June 30, 2020).

However, under the Georgia Industrial Loan Act, no such exemption exists (for reasons not specified, though they must be good considering one of the sponsors of the bill has the last name of “Gooch”). Thus, this Act applies to “installment loans” which are defined as “a contract or agreement to make a loan to an individual in an amount of $3,000.00 or less, including the renewal or refinancing of any such loan.” (Ibid. § 7-3-3[7], post June 30, 2020).

This definition can apply to mortgage loans, but because the amount of the loan must be so small, Docutech will not provide support for the Georgia Industrial Loan Act, though we can look into providing such support if a client intends to be licensed as an installment lender under this Act. Clients may inform us of their intent by contact Client Support at 1.800.497.3584.