New Disclosure Required for Non-Traditional or Sub-Prime Mortgage in California (RE 885)

New loan comparison calculations for non-traditional and subprime mortgage disclosures in California have recently caused lenders to scramble.  Lenders are now required to provide disclosures that compare different sample loan scenarios that reflect the borrower’s proposed loan amount.  Short notice given by regulators and the complex nature of the calculations has made it difficult for mortgage document providers to perform the calculations needed to generate a compliant disclosure.  Many lenders are using spreadsheets or manually calculating each scenario by hand to complete the RE form 885 required by the California Department of Real Estate or the Comparison of Sample Mortgage Features developed by the California Department of Corporations.

The State of California requires lenders and brokers licensed under the California Finance Lenders Law, the California Residential Mortgage Lending Act and real estate brokers under the Real Estate Law to implement "best practices" when making non-traditional or subprime mortgages.  They must adopt the policies and procedures in the Guidance on Nontraditional Mortgage Product Risks and the Statement on Subprime Mortgage Lending.

Included in these "best practices" is a new disclosure that compares various sample loan scenarios for the borrower.  California Real Estate Brokers must provide RE Form 885 to borrowers within three business days of a completed loan application or before the borrower signs any documents that obligate them to the loan (Cal. Code Regs. tit. 10, § 2842(a),(b).)  California Residential Mortgage Lenders and Finance Lenders must give one of the following disclosures within three business days after receipt of a completed loan application: 

1. Comparison of Mortgage Transaction issued by the California Department of Corporations
2. RE Form 885 issued by the California Department of Real Estate
3. Any other form that compares different loan scenarios that reflect the borrowers proposed loan amount (10 CA ADC § 1436(d).)

DocuTech is pleased to announce that our latest version of ConformX can remove this headache and hundreds of other regulatory burdens from lenders by automatically calculating and populating the correct data for loan comparison disclosures.  As always DocuTech maintains the compliance of these documents and warrants their accuracy. 

Drop your calculator, close your spreadsheet and contact a DocuTech client support representative today!  800.497.3584