As previously announced, Virginia’s regulations governing lock-in agreements and loan commitments have been amended (see http://blog.docutechcorp.com/compliance-news-virginia-changes-requirements-lock-ins-commitments). These documents are required under 10 Va. Admin. Code §§ 5-160-10 & 5-160-30(A) & (B). Substantive amendments include the following:
- No longer stipulating that a lock-in agreement may be entered into before or after a mortgage loan approval;
- Requiring lock-in agreements and loan commitments to be signed by both the applicant/consumer and the entity extending such documents;
- Listing the name of the mortgage lender or mortgage broker issuing the lock-in agreement in such agreement;
- In regards to the commitment, if the rate is permitted “to float” for a period before it is set at the mortgage lender’s prevailing rate, a disclosure of such and that such a setting of the rate must occur three days prior to settlement;
- In regards to the lock-in agreement, a disclosure of the fact that any terms not “locked” by the agreement will be subject to change until three days prior to settlement.
In order to conform with these changes, we will be making the following changes to our standard Virginia lock-in agreement (Cx14674) and commitment agreement (Cx14686):
- Cx14686
- Changing the text of the second bullet in Section 6 to state the following:
- “If you have not locked in, the above rate and other terms are estimates. Such rate and terms are subject to change until three (3) days prior to settlement. They will be set at the mortgage lender’s prevailing rate and points at the time they are finalized.”
- Changing the text of the second bullet in Section 6 to state the following:
- Cx14674
- Removing the Lender name, address, and phone number from the top left corner of the document.
- Adding the caption “Entity Extending Lock-in Agreement:” under the listing of the borrower(s) names. After this caption, the name and contact information of the mortgage lender or mortgage broker will appear, dependent upon how Field # 18205 (Lender is a Broker) is set.
- In order to avoid confusion, we will be replacing the proper noun “Lender” (which refers to the entity extending the lock-in agreement) with the term “Entity”, which is suitable for referring to either a mortgage lender or mortgage broker.
- Removing the sentence, “You will be notified as to whether or not your application is approved” from the first paragraph, in order to be neutral on whether the agreement was issued before or after loan approval.
- Modifying the third-to-last paragraph before the signature acknowledgments to state the following:
- “Any terms not locked-in by this lock-in agreement are subject to change until three (3) days prior to settlement.
These changes will take effect on May 15, 2017. If you have any questions or concerns about this update, please contact Client Support at 1.800.497.3584.
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