June 30, 2014
IDS Compliance is well into the process of preparing its proprietary software system for the
TILA-RESPA Integrated Disclosures ("TRID"). As such, from time to time over the next year,
we'll do posts with information regarding some of the industry hot topics creating a buzz; and
where applicable, how IDS plans on tackling disclosure-related hot topics with its system.
Today's hot topic relates to the six points of information that once obtained by the lender trigger
a requirement to provide the applicant with a Loan Estimate within three days. The six points of
- Consumer's name
- Consumer's income
- Consumer's SSN
- Property address
- Property's estimated value; and
- Loan amount sought
A good way to remember these six items may be to think of the sought-after information as the
three things you want to know about every borrower and the three things you want to know
about every property.
The above items of information are similar to the current RESPA triggers to disclose the GFE,
with the exception that the current RESPA rule included a seventh "catchall" trigger that allowed
lenders to hold off on disclosing the GFE until other items were gathered. For the purposes of
the Loan Estimate under the new rule, the "catchall" to delay disclosure is gone.
June 23, 2014
Many IDS packages include a PATRIOT Act disclosure entitled "Patriot Act Disclosure: Borrower Identification." This disclosure states "The named individual must present at least two (2) forms of identifying documents for review…." While the law technically does not require two forms of identification, the reason this form defaults to two forms of identification is because IDS has chosen to follow the advice of the Federal Financial Institutions Examination Council Bank Secrecy Act/Anti-Money Laundering InfoBase, which has published the following on its website:
Verification Through Documents
A bank using documentary methods to verify a customer’s identity must have procedures that set forth the minimum acceptable documentation. The CIP rule gives examples of types of documents that have long been considered primary sources of identification. The rule reflects the federal banking agencies’ expectations that banks will review an unexpired government-issued form of identification from most customers. This identification must provide evidence of a customer’s nationality or residence and bear a photograph or similar safeguard; examples include a driver’s license or passport. However, other forms of identification may be used if they enable the bank to form a reasonable belief that it knows the true identity of the customer. Nonetheless, given the availability of counterfeit and fraudulently obtained documents, a bank is encouraged to review more than a single document to ensure that it has a reasonable belief that it knows the customer’s true identity. (Emphasis Added).
For a "person" other than an individual (such as a corporation, partnership, or trust), the bank should obtain documents showing the legal existence of the entity, such as certified articles of incorporation, an unexpired government-issued business license, a partnership agreement, or a trust instrument.
The portion that has been bolded provides the basis of IDS Compliance's reasoning for setting "two (2) forms of identifying documents" as the standard verbiage on this form.
June 16, 2014
IDS Compliance has changed how Mortgage Loan Commitments are generated in 40 states
where there is little or no governing law for Mortgage Loan Commitments. For these states,
Mortgage Loan Commitments are acceptable but not required. Although a common instrument
in the industry, many states' laws don't reference Mortgage Loan Commitments at all. For states
that don't regulate Mortgage Loan Commitments, the agreement is made under the common
law for contracts.
Previously, IDS automatically included this document in all initial disclosure packages; however,
as it is not a necessary disclosure, IDS Compliance has made it so that lenders must select
a checkbox on the State Specific page of an IDS Loan File before it will generate in the initial
June 9, 2014
IDS has already completed integration of the MERS Rider into its system. The MERS Rider
page in the Setting section of the IDS website has been updated to read:
By default, the 3158 MERS Rider and accompanying security instrument will start
appearing in MERS Originated Mortgage (MOM) closing loan packages that use the
FNMA/FHLMC Uniform Security Instrument for MT, OR, or WA where the note date is
on/after Oct 15, 2014. You may start using the 3158 MERS Rider sooner per FNMA
FHA does not use the current FNMA/FHLMC uniform security instruments. Because of
this, the 3158 MERS Rider will not work on FHA loans. We have created a new FHA
MERS Rider to be used in place of the 3158 MERS Rider for FHA loans.
Generally speaking, junior lien security instruments do not use the current FNMA/
FHLMC uniform security instruments. Because of this the 3158 MERS Rider will not
work on these junior lien loans. We have created a new 2nd Mtg MERS Rider to be used
in place of the 3158 MERS Rider for these loans.
HELOC security instruments do not use the current FNMA/FHLMC uniform security
instruments. Because of this, the 3158 MERS Rider will not work on these HELOC
loans. We have created a new HELOC MERS Rider to be used in place of the 3158
MERS Rider for these loans.
Please note: If your company has created custom MERS security instruments in MT,
OR, or WA, you may also need to create your own MERS Rider and modify your custom
MERS security instruments.
IDS Customers can change the date that these documents begin to generate in Settings.
June 2, 2014
As a result of these decisions, and pursuant to the MERS® System Procedures Manual, MERS should only be referenced as the nominee for the Lender on the deed of trust, or in subsequent documents appearing in the chain of title in these states.
In response, Fannie Mae and Freddie Mac have announced the publication of the Mortgage Electronic Registration Systems, Inc. Rider (“MERS Rider”) (Form 3158) to modify the standard security instruments used in these states.