On February 23, 2022, the Consumer Financial Protection Bureau (“CFPB”) released a factsheet regarding the interest rate used to calculate prepaid interest for adjustable-rate mortgages (“ARMs”) and step-rate loans under the price-based General Qualified Mortgage (“QM”) rule. 

The General Qualified Mortgage Final Rule, which took effect on March 1, 2021, includes a “price-based General QM definition.” The definitions states that a loan’s APR cannot exceed the average prime offer rate (“APOR”) for a comparable transaction by the amounts set forth in the Rule as of the date the interest rate is set [12 CFR 1026.43(e)(2)(vi)]. Generally, the threshold amount is 2.25 percentage points, but the rule provides higher thresholds for smaller loan amounts, for certain manufactured housing loans, and for subordinate-lien transactions. Additionally, if a loan’s rate can change within the first five years after the date on which the first regular periodic payment will be due, the maximum interest rate that may apply during the five-year period must be used in the APR calculation for purposes of price-based General QM rule.

The fact sheet provides examples of how prepaid interest, also referred to as “per diem” interest, is generally paid in arrears and included in APR calculations under Regulation Z.   For ARMs and step-rate loans, the fact sheet states that the maximum interest rate that can be applied during the five-year period after the date on which the first periodic payment will be due must also be used to calculate prepaid interest and negative prepaid interest as part of the APR calculation under the price-based General QM definition. 

To view the CFPB Factsheet for additional information, click here.

DocMagic is reviewing the updated information and will advise on any changes that are necessary to our calculation of the APR based on the highest rate achieved in the introductory period, which is used in the QM Price-Based Limit test.

Related Content:

• CFPB Announces 2022 HPML Appraisal Threshold Adjustments (1/25/2022)
• CFPB annual threshold adjustments for Regulation Z (11/3/2021)
• U.S. Treasury and FHFA suspend provisions of the PSPAs (10/20/2021)

DocMagic earned a spot on HousingWire’s coveted 2022 Tech100 list for the ninth straight year. The publisher’s Tech100 list includes the most innovative and impactful organizations in the industry today.

“This year’s list of Tech100 honorees proves once again that innovation within housing is vital in differentiating the organizations who will thrive and those who will be left behind,” said Clayton Collins,

CEO of HW Media. “This list spotlights the innovators that are making the housing sector better and more sustainable by increasing efficiency, improving user and borrower experiences and bringing elasticity and improvements to age-old processes.”

Over the course of 2021, DocMagic launched several new solutions designed to improve the borrower experience and make back-office staff more efficient. One of those solutions was eSign 3.0, a redesigned user interface that dramatically enhances the borrower experience. eSign 3.0 also offers lenders and settlement providers new features that help them more easily initiate remote online notarizations (RON) to enable fully paperless eClosings via its Total eClose™ platform.

2021 also saw the launch of DocMagic’s eDecision™ tool, which instantly determines e-eligibility and provides the most beneficial level of eClosing that a lender can offer borrowers. The automatic decisioning process begins as soon as the first set of disclosures is generated and continues to perform e-eligibility checks throughout the process.

In addition, DocMagic recently introduced AutoPrep™, a solution that applies AI, OCR and machine learning technology to instantly e-enable third-party documents, streamlining electronic document execution within its award-winning Total eClose™ platform. AutoPrep has been gaining steady adoption since being launched in 2020.

“We’re always innovating and enhancing our solutions to maximize customer success as our digital lending ecosystem advances,” said Dominic Iannitti, president and CEO at DocMagic.

DocMagic was the first vendor in the mortgage industry to launch a fully paperless eClosing solution, complete with remote notary capability. Total eClose was officially introduced in 2014 and has since become award-winning technology with widespread industry adoption.

Related Content:

• DocMagic’s Michael Morford recognized with 2021 Tech Thought Leader Award (12/20/2021)

• DocMagic's Lori Johnson wins 2021 Elite Women in Mortgage Award (12/18/2021)

• DocMagic's Gavin T. Ales wins Top 40 Under 40 Award (12/17/2021)

Fannie Mae released Selling Guide Announcement (SEL-2022-01) on February 2, 2022, to announce recent changes to their Selling Guide, including the following:

Desktop Appraisal – The new release for Desktop Underwriter will allow the use of Form 1004 Uniform Residential Appraisal Report (Desktop) for specific types of purchase transactions of one-unit principal residences with LTV ratios less than or equal to 90%. Effective March 19, 2022.

Homestyle Renovation – Updates require that Homestyle Renovation work be completed within 15 months of the closing date with extensions only being permitted due to extenuating circumstances beyond the borrower’s control. Additional information is provided in Servicing Guide Announcement (SVC-2022-01). Effective May 1, 2022.

Loan-level price adjustment credit for sale of HomePath properties – Fannie Mae will issue a $500 loan-level price adjustment credit to lenders to reimburse borrowers for the cost of an appraisal when specific eligibility requirements are met. Effective February 2, 2022.

Asset documentation for certain refinances underwritten in DU – Assets will not have to be documented when funds required to be verified are $500 or less. The policy does not apply to manually underwritten loans. Effective in DU Version 11.0 as of March 19, 2022.

Clarification of anti-money laundering provisions of the Bank Secrecy Act – Seller/servicers are required to report to Fannie Mae instances where the seller/servicer has been subject to penalties or enforcement activities for compliance failures or violations related to anti-money laundering regulatory requirements.

Loan secured by properties located in Guam – Delivery of mortgages for properties located in Guam are no longer required to be specifically negotiated, so lenders will no longer see the restriction in Desktop Underwriter. Effective February 2, 2022, with message to be removed from Desktop Underwriter as of March 19, 2022.

Freddie Mac released Bulletin 2022-2 on February 2, 2022 to announce recent changes to their Selling Guide, including the following:

Desktop Appraisals – For Loan Product Advisor submissions on or after March 6, 2022, a desktop appraisal will be accepted for certain purchase transactions and must be completed the Uniform Residential Appraisal Report (Form 70D) Eligibility requirements can be found Selling Guide Section 5601.7. Clarification is also provided for determining automated collateral evaluation (ACE) appraisal waiver eligibility. Effective March 6, 2022.

Quality Control – The selling guide has been updated to state that documentation of income, employment or sources of funds used in the original underwriting process received from a third-party service provider designated by Freddie Mac is not required to be reverified if the report was accessed directly from the service provider’s electronic database and there is no evidence of misrepresentation in any part of the underwriting. Effective February 2, 2022.

Income and Assets – Tax Returns. Updates have been made for age of tax return requirements for the 2020 tax year, to reflect dates specific to the 2021 tax year. The updates include requirements applicable in the event of a future IRS filing due date extension, replacing previous requirements based on the IRS filing due date extension issued in May 2021. Effective February 2, 2022.

Income and Assets – Home Equity Line of Credit (HELOC). Updates have been made to specify that a HELOC is considered an eligible source of funds towards a down payment, closing costs and reserves, provided that the mortgage file includes evidence that the HELOC is secured by the borrower’s real property and proceeds have been disbursed. Effective February 2, 2022.

User Forms and Certificates – Announcement of retirement of specific Loan Selling Advisor authorized user and certification forms and updates to certificate of incumbency forms. Additionally, the Affordable Merit Rate Mortgage Note and Rider have been retired and removed from published Uniform Instruments.

Related Content:

• GSE IMPLEMENTATION OF DESKTOP APPRAISALS (2/8/2022)

• GSEs announce plans to limit purchases to loans meeting revised General QM rule (5/11/2021)

• CFPB rescinds 7 pandemic-related policy statements (4/7/2021)

DocMagic announced the integration of multiple digital lending solutions with Take Three Technologies’ (“Take3”) cloud-based and seamless loan origination system (LOS), LoanMAPS™. The new integration empowers clients by eliminating the need for an initial disclosure desk and closing department reducing full-time employee volumes and slashing clients’ costs to produce loans. LoanMAPS users will generate compliant loan documents that are e-enabled for eSignature and eClosing capabilities. The combined solutions enhance the initial disclosure process, streamline closings, and provide users with an efficient and simplified mortgage process.

“The integration that we developed with Take3’s LoanMAPS LOS is seamless, giving users the ability to harness several of our solutions to optimize the borrower experience, reduce lender costs and ensure compliance,” stated Steve Ribultan, director of business development at DocMagic.

 LoanMAPS, a cloud-based LOS, runs off a standard internet browser accessible from the user’s desktop, laptop computer, or mobile device. Automating the entire lending process for mortgage bankers, LoanMAPS applies AI and sophisticated business logic to implement newfound efficiencies across the system from production through post-closing. Additionally, unlike most commercially available LOSs, LoanMAPS also includes a robust CRM, POS, and Report Generator, which eliminates the need to add third-party applications, dramatically lowering the cost to originate loans while maximizing productivity. Take3 encourages clients to take their Cost to Produce Challenge and see how much they can save with LoanMAPS.

“A team of mortgage lenders developed LoanMAPS after decades of experience working with other solutions. We realized the value that having one technology provides in terms of one database and one training system,” stated Anita Padilla, CEO of Take 3 Technologies. “LoanMAPS was built by mortgage bankers, for mortgage bankers.”

Padilla continued: “From its conception, LoanMAPS was developed with the objective to give lenders the flexibility to grow their volume while saving time and money, alleviating compliance and underwriting guideline concerns, and slashing the total cost to manufacture loans. Working with a proven industry leader like DocMagic enables us to optimize the overall value that LoanMAPS offers.”

DocMagic’s Audit Engine fully automates data and document validation at all phases of the lending process to ensure accuracy and compliance. Continuous automated compliance checks validate that the documents are always generated in compliance with federal, state and investor rules and regulations. The integration with LoanMAPS also ensures that TRID rules are adhered to at all times, eliminating costly errors.

“The interface between DocMagic and LoanMAPS has been hugely beneficial in streamlining our entire initial document disclosure process and ensuring compliance,” said Gail Maes, Vice President of Operations at Megastar Financial. “The ease of use it gives our customers helps elevate the borrower experience and complements the intuitive functionality that LoanMAPS gives our back-office staff.”

Take 3 Technologies is also integrating DocMagic’s Total eClose™ platform with LoanMAPS. Total eClose automates the entire eClosing process via a single-source solution that guides users through an efficient eClosing experience, allowing them to securely eSign and eNotarize a loan from anywhere via a simple internet browser. The addition of Total eClose to LoanMAPS saves borrowers significant amounts of time at the closing table and helps lenders enhance the borrower experience.

Related Content:

• SimpleNexus enables fully digital loan closings with DocMagic’s eVault, eNote tech (9/29/2021)

• ICE Mortgage Technology deploying DocMagic’s eVault tech for Encompass LOS (6/14/2021)

• AmeriSave leverages DocMagic’s Total eClose, doc gen solutions to maximize productivity (6/10/2021)