How was the Florida Mortgage Brokerage Contract updated in version 5.401?

Introduction

Byte Classic version 5.401 contains an updated version of the Florida Mortgage Brokerage Contract that addresses issues raised by changes to Florida law, effective October 1, 2007. View the updated Florida regulations here.

This document describes some of the issues related to the forms within Byte Classic. It does not attempt to address every issue. The recommendations and interpretations outlined below do not constitute legal advice.

Disclosing the Maximum Yield Spread Premium

The previous form in Byte Classic 5.400 and earlier did not comply with the following new language in 494.0038, which states in part:

"If the mortgage brokerage business is to receive any payment of any kind from the lender, the maximum total dollar amount of the payment must be disclosed to the borrower in the written mortgage brokerage agreement as described in paragraph (a)."

The Florida Mortgage Brokerage Contract was updated accordingly in version 5.401 (revisions shown in bold below):

"The Borrower acknowledges that the Mortgage Brokerage Business, through its agent, has advised Borrower that the business will receive additional compensation from the lender based upon the mortgage program and terms that the Borrower has engaged the Brokerage Business to obtain in the form of a commitment, and said additional compensation will be a maximum of ___________, with the exact amount to be disclosed to the Borrower at least 3 business day prior to the time of settlement or closing."

Nature of Relationship with Lender

Section 494.0038 goes on to say:

"The mortgage brokerage agreement must state the nature of the relationship with the lender, describe how compensation is paid by the lender, and describe how the mortgage interest rate affects the compensation paid to the mortgage brokerage business."

We recommend creating an addendum to address this new requirement.

Final Disclosure

The regulation has a requirement for a final disclosure before the loan closes. BytePro does not contain a separate final disclosure document.

Disclosing the Paid-To Party on the GFE

The regulation also states:

"The good faith estimate must identify the recipient of all payments charged the borrower and, except for all fees to be received by the mortgage brokerage business, may be disclosed in generic terms, such as, but not limited to, paid to lender, appraiser, officials, title company, or any other third-party service provider."

We recommend modifying the closing cost defaults to address this requirement:

To modify the closing cost description on all new loan files, go to Customize / Utilities >> Default Closing Costs. Modify the line name to include the party that the fee is paid to. For instance, on line 804, you could change the line name to read "Appraisal Fee pd to Appraiser".

Because space is limited, some descriptions may not fit in the space provided. In this case you may wish add "pd to **" to the description, then modify the wording at the bottom of the GFE to include the full description. To modify that wording, go to Good Faith / Compliance >> Prepaids, then navigate to the Additional GFE wording at the bottom of the screen. You can set up multiple sets of default wording by clicking on the Edit button to the right of the field.