SigniaDocs, a Dallas-based eMortgage services provider, updated its loan documents to meet the Federal Reserve’s changes to Regulation Z, which take effect October 1. Regulation Z is a truth in lending rule aimed at protecting consumers who purchase non-prime mortgage products, and the changes come as part of the Home Ownership and Equity Protection Act (HOEPA). For “higher-priced loans” — loans with annual percentage rates that exceed Freddie Mac’s average prime offer rate by more than 1.5% for first mortgages and 3.5% for junior liens — lenders must now evaluate the borrower’s ability to repay and verify borrower income and assets. Lenders also must not have prepayment penalties for two years on most loans and establish escrow accounts for taxes and insurance. “Compliance with the new regulation can be tricky, especially as market rates fluctuate frequently,” said Tim Anderson, president of SigniaDocs. “SigniaDocs loan documents are already compliant with the new rules, but we’ve taken additional steps to assure our lenders are protected.” SigniaDocs’ system alerts the user when the additional disclosure information is required on a loan application. The system also allows for the electronic transmission of documents to borrowers. Write to Austin Kilgore.
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