Pursuant to our yearly audit of state disclosures, we will be making the following changes to the following documents which print in document packages for loans secured by property located in Wisconsin:
WI Mortgage Second (Cx515) and Fixed Rate Note Wisconsin Second (Cx1080)
Wis. Stat. Ann. § 422.303(3) requires a “Notice to Customer” to print “immediately above or adjacent to the place for the signature of the customer” on “every writing evidencing the customer’s obligation to pay under a consumer credit transaction,” which transaction is primarily a second lien loan of a principal amount of $25,000 or less (but, for purposes of Ibid., excludes open-end credit plans, such as HELOCs).
Both our standard Wisconsin second lien note and mortgage contain this Notice. However, in order to have it print only under the right circumstances and in the right manner, we are configuring this notice to print when “Loan Amount Less Than or Equal to 25k” (Field Index 46077) equals “Yes.”
In addition, Item #1 of the notice, which states, “Do not sign this before you read the writing on the reverse side, even if otherwise advised” will be removed, pursuant to the instructions found in Ibid.§ 422.303(4) which state that this item “is not required when no terms appear on the reverse side of the writing,” which is applicable to our documents. All other items of the notice will be renumbered accordingly.
WI Property Tax Escrow Option (Cx1023)
Due to the options allowed under Wis. Stat. Ann. §§ 74.11 & 74.12 for property taxes to be paid in lump or installment payments and how it relates to the payment “Option #3” (which authorizes the escrow agent to pay property taxes “when due”), we will be adding clarifying text to the first sentence in the first paragraph following “Option #3” for the Initial Disclosure version of the form, so that it states the following:
“The Escrow Agent will make annual payments in the manner which will be requested, or, if I have requested Option #3, I may ask the Escrow Agent to make payments in installments, if applicable and in accordance with the options available in the taxation district (see Wis. Stat. Ann. §§ 74.11 & 74.12).”
For the Closing version of the form, Option #3 will be revised so that it states the following:
“The Escrow Agent will pay the property taxes when due. [Checkbox] If allowed by applicable law, I further ask the Escrow Agent to make such payment in installments in accordance with the installment payment options available in the taxation district that the subject property is located in.”
The checkbox may be manually selected by the borrower.
We will also be changing the configuration of this document so that it will print when “Lien Position” equals “First Lien” and “Occupancy” equals “Primary Residence,” in addition to current conditions.
HELOC Mortgage – WI (Cx1353)
We will be configuring the text “Construction” to appear before “Mortgage” in Cx1353 when “New Construction?” (Field Index 1179) does not equal “No,” in order to fulfill the requirements of Wis. Stat. Ann. § 706.11(1m)(b)(3) concerning captioning the mortgage to be a “construction mortgage” in order to give advances under such mortgage the senior priority over intervening liens between advances.
Anti-Coercion Insurance Disclosure (Cx2778)
We will be replacing the phrase, “The lender shall not require” with “No person shall require” in order to more closely match the relevant provisions of Wisconsin’s “anti-coercion” laws. We will also be adding the following as a second paragraph:
“This does not prevent the reasonable exercise of a person from approving or disapproving the insurer selected to underwrite the insurance or to determine the adequacy of the insurance offered.”
The citation on the document will also be changed to “Wis. Stat. Ann. §§ 134.10 & 628.34(5).”
Advanced Fee/Application Disclosure (Cx2783)
We will be removing the lender signature lines from this document, since they are not required under Wis. Stat. Ann. § 138.052(7e)(b) or Wis. Admin. Code, DFI-BKG § 43.02(11) & (14). We will also be formatting these citations on the document to more closely match Blue Book standards.
WI Adjustable Rate Mortgage Information Statement (Cx3951)
This document is provided due to the provisions of Wis. Stat. Ann. § 138.056(3m) & (6), which require, inter alia, a disclosure of “the borrower’s prepayment rights on receiving notice of a change in the interest rate.”
These rights are set forth in the “Prepayment Penalty” section of the document, which are based partly on the provisions of Ibid. § 138.055(3)(f). In order to make any research into these rights easier for both lenders and borrowers, we will be including a citation to this section of law within this section of the document. All citations will also be formatted to comply more closely with Blue Book standards.
We will also be adjusting the configurations for this document so that it will now print when “Lien Position” equals “First Lien,” in addition to current conditions.
WI ARM Prepayment Penalty Notice (Cx9109)
We will be modifying the first paragraph to specify that a prepayment penalty may be charged if prepayment is made within three years of the closing of the loan, to more specifically refer to the limitations on prepayments set forth in Wis. Stat. Ann. § 138.056(3m) for ARMs.
We will also delete the last sentence in the last paragraph and include a citation to Ibid. § 138.056(3m)(a), as well as to include an acknowledgment section for the borrower to sign.
Configurations for this document will also be changed so that it will print when “HELOC” equals “Allow Any,” in addition to current conditions.
WI Consumer Disclosure Statement (Cx14546)
This document is a duplicate of the model “Consumer Disclosure Statement” published by the Wisconsin Department of Financial Institutions on their website (http://www.wdfi.org/fi/mortbank/forms.htm). To make our document conform more with the model form, we will be left-aligning the property address at the beginning of the document, rather than center-aligning it as it is now.
WI Mortgage Broker Agreement (Cx14547)
This document is a duplicate of both versions of the model “Mortgage Broker Agreement” form found on the Department of Financial Institutions website. In order to make it conform more with the model form, we will be left-aligning the property address. We will be deleting, from the closed-end version of the document, “(check one)” in the “Loan Type” line and deleting “be” from the selection line used for identifying the loan as having negative amortization or not. For the open-end version of the document, we will be deleting a duplicative “a” from the selection line used for identifying the lien position of the loan.
WI Loan Commitment (Cx15918)
In the sixth paragraph (concerning whether the commitment fee will be refunded or not), we will be revising the second sentence to add a disclaimer that a refund (or lack thereof) of the fee is subject to applicable law, as well as reformatting the checkbox areas to make them consistent with this new text.
We will also be updating the citation to Wis. Admin. Code, DFI-BKG §§ 40.01 (5) & (6) and 43.02(12) & (13) to match Blue Book standards, as well as deleting the lender signature lines, since they are not required under the law.
WI Explanation of Personal Obligation (Cx16043)
Subsection (a) will be modified so that, when it prints for closed-end loans, it will disclose the amount of the loan as the last clause. We will also be modifying this Subsection to print the following, alternative text when “HELOC” equals “Yes”:
“(a) You have agreed to pay amounts owing or to be owing in the future as a result of charges made by [name of borrowers] on his or her charge account with [name of lender] in an amount not exceeding $[HELOC credit limit amount].”
We will also be adding the following text at the end of Subsection (b) when “HELOC” equals “Yes”:
“If you wish to terminate your guarantee with respect to future transactions, you must notify [name of lender] in writing.”
These alternative texts are promulgated in Wis. Admin. Code, DFI-WCA § 1.35.
We will be changing this document to print as a standard document (rather than “upon request,” as it is now) and print when “Loan Amount Less Than or Equal to 25k” (Field Index 46077) equals “Yes,” in addition to current conditions.
New WI Addendum to Loan Application (Cx18412)
This new document is being provided due to the provisions of Wis. Stat. Ann. §§ 422.308(1) & 766.56(2)(b) and contains two parts which largely mirror the sample “Open-End Credit Application Sample” and “Marital Property Agreement Notice” forms published on the Department of Financial Institutions website (https://www.wdfi.org/wca/business_guidance/creditors/open_end_credit_plans/sample_open-end_credit_applications.htm).
The “Open-End Credit Application Sample” part will print when “Loan Purpose” (Field Index 1063) equals “HELOC.” The form basically discloses to the borrower how the APR is calculated, when finance charges are assessed, what the annual fee is, and discloses any other charges being made in connection with the loan.
The annual fee will disclose the “Home Equity Annual Maintenance Fee” (Field Index 28735) if it has a value. However, if “Home Equity Annual Fee” (Field Index 22106) equals “Yes,” then the amount of “$25.00” will print.
Under “Other Charges,” the first three are late payments, returned checks, and any expedited delivery of a Demand Statement. These will print the following amounts:
Late fees: “Amount of late fee” (Field Index 22146) for the charge and “Late Charge Number of Days” (Field Index 1023) for the number of days late. If no values are present for both fields, then “$10.00” and “10 days” will print by default, respectively.
Returned checks: “Home Equity Returned Check Fee” (Field Index 30461) or, if no value is present, then “$15.00.”
Expedited delivery fee: “Demand Statement Expedited Delivery Fee” (Field Index 32507) or, if no value is present, then “$30.00.”
A dynamic list of all other fees being charged will print in the document, based on what is imported into ConformX, and will disclose the amount of the charge, the corresponding HUD line, and a description of the fee.
The “Marital Property Agreement Notice” part of the document will print all the time. This notice generally informs the borrowers that no marital property agreement, unilateral statement, or court decree adversely affects the interest of the creditor, if the creditor is furnished a copy of such documents prior to the time the credit is granted.
This new Addendum, which is intended to print with the Uniform Residential Loan Application (our Cx4193), will print for Wisconsin loans under the following conditions:
- “Loan Amount Less Than or Equal to 25k” equals “Yes.”
- “Lien Position” equals “Second Lien.”
- “Document Package Type” equals either “Initial Disclosure” or “Closing.”
New WI Covered Loan Disclosure to Borrower (Cx18444)
Wis. Stat. Ann. § 428.208 and Wis. Admin. Code, DFI-BKG § 46.03 require, in connection with a “covered loan,” a disclosure containing prescribed text warning the borrower of the potential problems which may occur by obtaining a covered loan, as well as advising them about their responsibility to pay taxes and insurances and to continue making mortgage payments to existing creditors.
We will be providing this new document pursuant to these laws. It will print under the following conditions:
- “Document Package Type” equals either “Initial Disclosure” or “Closing.”
- “State – HCL” equals “Yes.”
These changes and the two new documents will begin appearing in document packages on April 16, 2014. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
April 9, 2014
DR 147606, 147607, and 149892