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Navigating the Regulatory Landscape



2Navigating the Regulatory Landscape. I DocMagic, Inc. I 800-649-1362 I ©2012

What’s Inside?

FROM THE DESK OF DOMINIC IANNITTI

President and CEO of DocMagic, Inc.

MANAGING COMPLIANCE RISK

A Message from DocMagic’s Chief Legal Officer and Chief Compliance Officer

INTRODUCTION

DocMagic: More Than Just a Document Provider

COMPLIANCE

The Calm Before the Storm

OPERATIONS

RESPA 2010 Audits

TECHNOLOGY

Business Continuity and Disaster Recovery at a Glance

3

4

6

8

9

16




From the Desk of Dominic Iannitti,

President and CEO of DocMagic

Dear Mortgage Professional,

Thank you for your interest in DocMagic’s Compliance eBook.

DocMagic is the leading provider of loan document preparation, compliance and

delivery technologies for the national mortgage industry. Our speed, efficiency

and robust compliance functionality have positioned us to manage the myriad of

regulatory changes our customers face every day. As a result, over 40,000 mortgage

and lending professionals (including competitors) rely on DocMagic for complianceinformation every month.

We continue to energetically and enthusiastically lead the charge to modify

behaviors and processes for the good of our customers and the protection of our

earth by the use of green technology. As a document technology leader for over

23 years, we are innovating more than ever and we are grateful that our industry

recognizes that fact.

In the following pages, we hope to convey our commitment to excellence and the

spirit and energy of the people who work to keep DocMagic #1 nationwide.

Sincerely,

Dominic Iannitti

President and CEO

DocMagic, Inc.



4Navigatingthe Regulatory Landscape. I DocMagic, Inc. I 800-649-1362 I ©2012

Managing Compliance Risk:

A Message from DocMagic’s Chief Legal Officer

and Chief Compliance Officer

The mortgage lending industry has faced

significant changes over the last three years –

more than at any time in the past. Looking at the

federal regulatory agenda, it seems that change

will be a constant for the foreseeable future. Many

of the Dodd-Frank Act regulations have yet to be

adopted and the mortgage environment still faces

uncertainty. Reacting to regulatory changes can be

expensive and time consuming. However, regulato-

ry compliance done right can create opportunities

for your business – it’s a proven way to reduce risk,

lower costs, gain efficiencies, and set yourself apart

from your competitors.

For a business to grow and thrive, its leaders have

to select the right tools and the right partners to

help them manage regulatory change and turn itinto an advantage.

DocMagic’s Compliance Department is dedicated

to providing you today with the tools and technol-

ogy you’ll need to thrive in tomorrow’s business

environment. We provide up-to-date compliance

information through our monthly electronic

publication,The Compliance Wizard , and quick

reference tools on a wide variety of topics. Our

customers have 24/7 access to the members of our

Compliance Team. Our DocMagic system audits

your loan data and returns compliance messages

and warnings at the click of a mouse. And we

provide these services in addition to DocMagic’s

core product, the production and delivery of loan

documents that comply with all applicable federal

and state laws and regulations.

To illustrate, DocMagic’s Compliance Department

prepared its customers in time for:

■ The new GFE and HUD-1/HUD 1-A Statements

under RESPA 2010

■ The timing requirements and APR variance

required by the MDIA

■ The updated TILA Statements pursuant to the

MDIA and Regulation Z

■ The Loan Originator Compensation Rule under

Regulation Z

■ Jumbo HPML requirements under TILA

Our Compliance Department laid out and pro-

grammed the new GFE and HUD-1/HUD 1-A

Statements and versions of the TILA Statement to

address various loan scenarios and built audits so

that our customers could determine their compli-

ance with the requirements of the MDIA, the Loan

Originator Compensation Rule, and the Jumbo

HPML. And, as we were updating our loan docu-

ments and building these audits, we responded to

hundreds of calls and emails from our customers

who called to inquire about our plans to comply

with these significant regulations and/or to discuss

varying interpretations of a particular provision.

We take pride in the fact that over 40,000 mortgage

professionals rely on DocMagic to provide them

with compliance information. These professionalsfrequently browse our compliance site:

www.docmagic.com/compliance/compliance-topics/

index for compliance information and resources.

Continued ‹




Managing Compliance Risk:

A Message from DocMagic’s Chief Legal Officer

and Chief Compliance Officer

We know we are doing something right when

compliance experts refer others to our site for

compliance information and resources.

Thank you for taking the time to review our eBook.

We think it offers a representative sample of what

DocMagic’s Compliance Team can do for you now

and in the future.

We hope that you consider asking us to join you as

your partner in mortgage compliance. If you would

like more information and/or a demo on our com-

pliance services, please don’t hesitate to contact us.

Very truly yours,

Melanie A. FelicianoChief Legal Officer

DocMagic, Inc.

Laurie Spira

Chief Compliance Officer

DocMagic, Inc.

Melanie A. Feliciano Laurie Spira




Introduction


First and foremost, mortgage brokers and lenders need

robust technology that can generate loan documents

throughout the loan origination process. While these

mortgage professionals may initially select DocMagic for

its technology, they ultimately stay with DocMagic -

because its loan documents are backed by comprehen-

sive compliance services and superior customer service

that can be relied upon from the very first day of the

relationship.

In a recent interview, Dominic (“Don”) Iannitti, President

and CEO of DocMagic, Inc., dba Document Systems, Inc.

(“DSI”), could not emphasize enough that customer

service is the Number 1 priority:

“I think our most successful achievement is consistently providing

superior customer service. Our goal is simple... complete customer

satisfaction. Typically, companies say that but they don’t accom-

plish it consistently. It’s the companies that actually do, that do

well and stand the test of time. That is the ty pe of company we are

and we are very proud of it.”

Don further added:

“. . . From the beginning, it has been our goal of always providing

exemplary customer service that has driven DSI. . .Many firms talk

about providing service to the customer, but to me, you cannot

separate excellent service from the cus tomer. You can’t have one

without the other. Our softwar e has been and continues to be

one way we deliver on that customer service promise.”

From Customer Service to Enterprise InvestorRelations, Technical Support and Information

Technology, In-House Fulfillment Services and the

Compliance Department, and throughout every other

department of the DocMagic organization, DocMagic’s

employees understand that customer service must be

an integral part of their department’s function.

Appreciating the fact that the DocMagic customer

may be at the closing table when they call on

DocMagic personnel for assistance, DocMagic

maintains an open-door policy so that any department

within the organization can interface with another

easily and quickly.

DocMagic knows that technology needs to be scal-

able so that loan documents can consistently be

generated in just a few seconds, no matter how many

document packages are processed in a day. Integration

services with a wide variety of loan origination systems

are invaluable for customers who value efficiency and

consistency. DocMagic also recognizes that processing

loan documents without any compliance backing could

leave the customer in a vulnerable position, subject to

negative consequences in which the customer’s loan

cannot be sold to a secondary market investor or wherethe customer’s regulator orders that the customer pay a

fine or refund the borrower for noncompliance on some

level.

Accordingly, another way that DocMagic delivers on

its customer service promise is providing compli-

ance services that work in tandem with the DocMagic

application. DocMagic’s in-house Legal/Compliance

Department works tirelessly to ensure that forms and

documents are always compliant with applicable federal

and state laws and government-sponsored enterprises’

guidelines. In addition, compliance resources are posted

on DocMagic’s Compliance website, providing transpar-

ency on the nuts-and-bolts of DocMagic’s high-cost tests

and compliance audits.

Continued ‹

https://www.docmagic.com/compliance/wizard/2006/february-2006/don-iannitti-interview






Introduction


Following is a brief summary of many, but not all, of the

services that the Compliance Department provides:

■ Loan Packages. DocMagic offers a number of

different loan packages, including:

(1) Application; (2) Pre-Qualification; (3) Adverse

Action; (4) Initial Disclosure; (5) Underwriting;

(6) Processing; (7) Forms List for interim processing

disclosures; (8) Pre-Closing; (9) Re-Disclosure;

(10) Closing; and (11) Loan Modification.

■ Loan Programs. DocMagic has thousands of loan

programs that customers may use. In addition,

DocMagic, upon customer request, has created unique

loan programs, including, but not limited to, FHA’s Good

Neighbor Next Door Program, a New York CEMA

program, HELOC programs, and Fannie Mae’s Home

Affordable Modification Program (HAMP).

■ eDisclosure. All loan packages up to closing,including, but not limited to, Application, Adverse

Action, Initial Disclosure and Re-Disclosure loan pack-

ages, can be sent electronically using DocMagic

eSign, which complies with the federal ESIGN Act.

■ ClickSign. For a nominal fee, customers can arrange

to have the borrower(s) electronically sign loan docu-

ments, using the ClickSign feature in DocMagic eSign.

■ TILA Calculations are guaranteed.

■ Anti-Predatory Lending Tests. The DocMagic

application provides predatory lending tests,

including Section 32; the Fannie Mae/Freddie Mac 5%

Points and Fees Test; state high cost tests and audits,

including the Connecticut Nonprime Home Loan Audit,

Maine Rate Spread Home Loan Audit, Maryland Higher-

Priced Mortgage Loan Audit, New York Subprime Home

Loan Audit, and North Carolina Rate Spread Home Loan

Audit.

• Each high cost test (not audit) and the Fannie

Mae/Freddie Mac 5% Points and Fees Test includes a

high-cost details screen.

■ Higher-Priced Mortgage Loan (“HPML”) Audit.

This audit identifies whether a loan is a higher-priced

mortgage loan. In addition, DocMagic offers an HPML

prepayment audit in cases where the terms of an HPML

provide for a prepayment penalty.

■ Mortgage Disclosure Improvement Act (MDIA)

Audits, including:

• the seven-business-day waiting period audit;

• the three-business-day waiting period audit;

and

• the APR threshold variance audit.

■ Compliance Audit Screen. Each DocMagic loan

worksheet provides a compliance audit screen.

■ Compliance Website. The Compliance Department’s web-

site is abundant in compliance resources, including disclosure

matrices, a late fee matrix, a state-specific permissible fee matrix,

and many, many more.

■ The Compliance Wizard. The Compliance Department

publishes a complimentary monthly, electronic compliance

newsletter that apprises its readers of legal developments in the

mortgage industry, introduces new compliance resources that

have been posted recently to the Compliance website,

and informs its customers of enhancements to the DocMagic

application to address those legal developments.

■ On-Call Compliance Department. Members of the Legal/

Compliance Department are available 24/7 to handle

compliance-related emails and telephone calls.

Except for ClickSign, ALL of the above-mentioned compliance

services are included in DocMagic’s loan processing fee, which

comprises a very small fraction of the loan amount. Many

other services are included in the processing fee, including

data validation audits and many other compliance audits not

mentioned above. Plus, phone calls to any department within

DocMagic to handle customer inquiries are free of charge. Feel

free to contact DocMagic’s Customer Service Department, at

(800) 649-1362, or its Compliance Department, if you have any

questions regarding the contents of this ar ticle. ■

https://www.docmagic.com/compliance/high-cost-memos/index

https://www.docmagic.com/compliance/high-cost-memos/fannie-mae






https://www.docmagic.com/compliance/high-cost-memos/state-specific


https://www.docmagic.com/compliance/wizard/2008/august-2008/ct-nonprime-home-loan-audit

https://www.docmagic.com/compliance/wizard/2009/february-2009/md-higher-priced-mortgages

https://www.docmagic.com/compliance/wizard/2008/nov-dec-2008/ny-subprime-audit

https://www.docmagic.com/compliance/high-cost-memos/nc-rate-spread-audit





https://www.docmagic.com/compliance/wizard/2008/july-2008/hc-details

https://www.docmagic.com/compliance/wizard/2009/september-2009/hpml-audit


https://www.docmagic.com/node/2601/#prepay





https://www.docmagic.com/node/2401/#seven

https://www.docmagic.com/node/2401/#three

https://www.docmagic.com/node/2401/#apr

https://www.docmagic.com/compliance/wizard/2009/august-2009/loan-detail-report


https://www.docmagic.com/compliance/compliance-topics/index

https://www.docmagic.com/compliance/dsi-process/index



https://www.docmagic.com/compliance/wizard/2009/february-2009/md-higher-priced-mortgages

https://www.docmagic.com/compliance/wizard/2008/nov-dec-2008/me-rate-spread-audit

https://www.docmagic.com/compliance/wizard/2008/august-2008/ct-nonprime-home-loan-audit

https://www.docmagic.com/compliance/dsi-process/index

https://www.docmagic.com/compliance/wizard/2008/july-2008/hc-details

https://www.docmagic.com/compliance/compliance-topics/index


https://www.docmagic.com/node/2401/#apr

https://www.docmagic.com/node/2401/#three

https://www.docmagic.com/node/2401/#seven



https://www.docmagic.com/compliance/high-cost-memos/state-specific


https://www.docmagic.com/compliance/high-cost-memos/section-32

https://www.docmagic.com/compliance/high-cost-memos/index




Dodd-Frank Act:

The Calm Before The Storm

The Dodd-Frank Wall Street Reform and Consumer

Protection Act (“the Act”) was signed into law on

July 21, 2010. More than 800 pages long, the Act

requires a rulemaking process that could take as

long as five years and could result in as many as 250

rules from 20 different regulatory agencies. Mort-

gage lending professionals are especially interested

in the progress being made on implementing the

requirements of Title IX, which addresses credit risk retention for asset-backed securities, Title X, which

establishes the Consumer Financial Protection Bureau

(the Bureau), and Title XIV, the Mortgage Reform and

Anti-Predatory Lending Act.

Although some of the Dodd-Frank Act require-

ments have been implemented in the almost two

years since the Act was signed, the most significant

impact is likely to be felt in the next 18 months. By

July 21, 2012, the Bureau is required to propose rules

and model disclosures that combine the disclosures

required under the Truth-in-Lending Act ( TILA) and

sections 4 and 5 of the Real Estate Settlement Proce-

dures Act (RESPA) into a single, integrated disclosure.

Consumers and the industry (including the members

of DocMagic’s Compliance Department) have been

actively involved in reviewing prototype disclosures

through the Bureau’s “Know Before You Owe” project,

which put draft disclosures online to obtain public in-

put. The Bureau has also conducted consumer testing

and is currently engaged in a Small Business Regula-

tory Enforcement Fairness Act (SBREFA) panel process,

which will examine the impact of the proposed

disclosure changes on small businesses. The prototype

disclosures and the SBREFA documents suggest that

the proposed rule and model disclosures will be asignificant departure from the current TILA and RESPA

disclosures.

In addition to the requirement to combine the

current TILA and RESPA disclosures, Title XIV of the Act

amends TILA and RESPA to require new disclosures

that must be provided in the Loan Estimate or Settle-

ment disclosures. Title XIV a lso adds other new disclo-

sure requirements that aren’t specifically included in

the Loan Estimate or Settlement Disclosures. Title XIV

provides that these regulations or amendments to

the consumer law must be final by January 21, 2013,

with an effective date not later than January 21, 2014.

Although the Bureau has stated a belief that final

regulations implementing these Title XIV disclosures

simultaneously with the final TILA-RESPA rule would

improve the overall effectiveness of the disclosures, it

may not be possible to issue a final TILA-RESPA rule by

January 21, 2013. Accordingly, the Bureau is consider-

ing a proposal to use its authority to exempt lenders

from the Title XIV disclosure requirements temporarily

until the TILA-RESPA disclosure rule takes effect. Until

the TILA-RESPA rule is proposed, though, the industry

can’t know exactly what to be prepared for, and what

the effective date is likely to be.

While DocMagic’s Compliance Department is patiently

awaiting Dodd-Frank developments, it is preparing

for what might be, based on what we know today.

For example, we have identified new data points that

we may need to collect to complete the TILA-RESPA

disclosures based on previously-published prototypes.

We are also identifying opportunities to build audits

and tests for the ability-to-repay rule and qualified

mortgage definition. We also have plans in place in

case final regulations for Dodd-Frank are not adopted

by January, 21, 2013.

Rest assured, DocMagic’s Compliance Department

remains poised to have our customers in compliance

with Dodd-Frank, on time. In the coming months, as

Dodd-Frank regulations are proposed and finalized,

we will keep you apprised of developments, including

any planned audits, tests, forms and enhancements to

the DocMagic application. ■




Operations

RESPA 2010 Audits

Introduction

The following three articles were previously published in The Compliance Wizard,

DocMagic’s monthly electronic newsletter. The first two ar ticles describe the audits

implemented to comply with RESPA 2010, including, but not limited to, the Zero

Tolerance and 10% Tolerance Thresholds, and the update to those audits based on

the RESPA Technical Corrections and Clarifying Amendments (“Amendments”) that

were effective on August 10, 2011. We also provide an article describing alternate

programming subsequently implemented to the HUD-1 to accommodate an

alternate interpretation of the Amendments.

DocMagic’s RESPA 2010 Audits (Published February 2010)

Based on the nature of customer inquiries into DocMagic’s Customer Service

and Compliance Departments, industry professionals seem to have acquired a

greater comfort level regarding the new RESPA requirements. As DocMagic’s

prior articles have addressed the “basics” of the RESPA 2010 Rule and explained

how the DocMagic application operates to handle RESPA’s 2010 requirements,

it is appropriate now to introduce the various RESPA 2010 audits thatDocMagic implemented in January, 2010.

I. Expiration Date of Estimate For All Other Settlement Charges Audit

Under Reg. X Section 1024.7(c),

“. . . the estimate of the charges and terms for all settlement services must be

available for at least 10 business days from when the GFE is provided, but

it may remain available longer, if the loan originator extends the period of

availability. The estimate for the following charges are excepted from this

requirement: the interest rate, charges and terms dependent up on the inter-

est rate, which includes the charge or credit for the interest rate chosen, the

adjusted origination charges, and per diem interest.”

Reg. X Section 1024.2(b) defines “business day” as a day on which the offices

of the business entity are open to the public for carrying on substantially all of

the entity’s business functions.

Accordingly, if a date less than 10 business days from the date the GFE is issued

is entered in the “Est. Available Through” fields, as shown in the example:

http://www.gpo.gov/fdsys/pkg/FR-2011-07-11/pdf/2011-17230.pdf


http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=d965f0b350c0308bda7a4a5bef9382cf&rgn=div8&view=text&node=12:8.0.2.14.17.0.1.7&idno=12








Operations

RESPA 2010 Audits

the following audit will display:

WARNING: DATE THROUGH WHICH ESTIMATE FOR SETTLEMENT CHARGES

IS AVAILABLE MUST BE A MINIMUM OF 10 BUSINESS DAYS FROM DATE

GFE WAS PROVIDED

II. Line 801 Audit

Charges characterized as “Our Origination Charge” and appearing in Block

1 of the GFE and Line 801 of the HUD-1 Statement cannot increase absent

“changed circumstances.” If “Our Origination Charge” increases in amount on

the HUD-1 as compared with what was disclosed in the Good Faith Estimate

(“GFE”),


WARNING: CHARGE IN HUD-1 (#801) EXCEEDS CHARGE IN GFE; REDUCE

CHARGE OR CREDIT BORROWER THE EXCESS AMOUNT ($__)

To the right is a screen shot of the audit based on the values shown in the

above Comparison Table:

III. Line 802 Audits

According to Appendix C of Reg. X:

The amount stated in Block 2 is subject to zero tolerance while the interest rate

is locked, i.e., any credit for the interest rate chosen cannot decrease in abso-

lute value terms and any charge for the interest rate chosen cannot increase.

(Note: An increase in the credit is allowed since this increase is a reduction

in cost to the borrower. A decrease in the credit is not allowed since it is anincrease in cost to the borrower.)

Accordingly, if the credit for the interest rate chosen decreases, as shown in the

example below:

Comparison of Good Faith Estimate (GFE) and HUD-1 Charges

Charges That Cannot Increase HUD-1 Line Number

Our Orgination charge #801

Your credit or charge (points) for the specific interest rate chosen #802

Your adjusted origination charges #803

Transfer taxes #1203

Good Faith Estimate HUD-1

$3,000.00 $3,100.00

-1,500.00 -1,000.00

1,600.00 -1,000.00






Transfer taxes #1203


$3,100.00 $3,100.00

-1,500.00 -1,000.00

1,600.00 -1,000.00

http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=d965f0b350c0308bda7a4a5bef9382cf&rgn=div9&view=text&node=12:8.0.2.14.17.0.1.24.41&idno=12






Operations

RESPA 2010 Audits


WARNING: CHARGE IN HUD-1 (#802) EXCEEDS CHARGE IN GFE; REDUCE

CHARGE OR CREDIT BORROWER THE EXCESS AMOUNT ($__)

Below is a screen shot of the audit based on the values shown in the above

Comparison Table:

IV. Transfer Taxes AuditReg. X Appendix C provides as follows regarding transfer taxes:

Block 8, “ Transfer taxes .”-In this block, the loan originator must estimate the

sum of all state and local government fees on mortgages and home sales that

can be expected to be charged at settlement, based upon the proposed loan

amount or sales price and on the property address.

A zero tolerance applies to the sum of these estimated fees.


WARNING: CREDIT IN HUD-1 (#802) IS LESS THAN CREDIT IN GFE; IN-

CREASE CREDIT AMOUNT OR CREDIT BORROWER THE AMOUNT OF THE

DIFFERENCE ($-__)


Comparison Table:

On the other hand, if the charge for the interest rate chosen increases, as

shown in the example below:






Transfer taxes


$3,100.00 $3,100.00

2,000.00 2,100.00

5,100.00 5,200.00

150.00 150.00






Operations

RESPA 2010 Audits

Accordingly, if there is an increase in transfer taxes on the HUD-1 as compared

with the amount disclosed in the GFE, as shown in the example below:


WARNING: CHARGE AMOUNT (#1203) EXCEEDS GFE AMOUNT; REDUCE

CHARGE AMOUNT OR CREDIT BORROWER THE EXCESS AMOUNT ($__)


Comparison Table:

V. 10% Tolerance Audit

According to Reg. X Appendix C: There is a 10 percent tolerance applied to the

sum of the prices of each service listed in Block 3, Block 4, Block 5, Block 6, and

Block 7, where the loan originator requires the use of a particular provider or

the borrower uses a provider selected or identified by the loan originator.

As shown in the “Charges That in Total Cannot Increase More Than 10%”

Comparison Table below, there is a 12.579% increase in the sum of the charges

listed in the HUD-1 column as compared with the sum of the charges in the

GFE column.

Accordingly, the following audit displays:

WARNING: CHARGES THAT IN TOTAL CANNOT INCREASE MORE THAN 10%

EXCEED THE PERMISSIBLE 10% THRESHOLD BY ($__); REDUCE CHARGES

OR CREDIT BORROWER FOR THIS AMOUNT






Transfer taxes


$3,100.00 $3,100.00

-1,000.00 -1,000.00

2,100.00 2,100.00

150.00 200.00

Charges That in Total Cannot Increase More Than 10%

Government recording charges #1201

Appraisal Fees #804

Credit Report #805

Title services and lender’s title insurance #1101

Owner’s title insurance #1103

� TOTAL

Increase between GFE and HUD-1 Charges


$250.00 $250.00

50.00 50.00

1435.00 1735.00

650.00 650.00

$2,385.00 $2,685.00

300.00 or 12.579%






Operations

RESPA 2010 Audits

Note that the audit will return the actual amount by which the 10% threshold

is exceeded. Below is a screen shot of the audit based on the values shown in

the above Comparison Table:

VI. RESPA Impound Audit: GFE Initial Deposit/Lender Required

Note that if a DocMagic user enters impounds and fails to enter a value in the

“GFE Initial Deposit” field shown below and fails to indicate whether or not the

lender requires impounds:

The following audits will display:

WARNING: NO GFE INITIAL DEPOSIT AMOUNT DETECTED

WARNING: ARE THE IMPOUND ACCOUNT(S) LENDER REQUIRED?

Note that the above audits will display individually depending on whether or

not both “GFE Initial Deposit” and “Lender Required” fields are completed.

VII. Title Charges - Policy Details Audit

To assist with completing Lines 1105-1108 on page 2 of the HUD-1, the fol-

lowing link has been added at the bottom of the screen in the HUD-1 tab of

DocMagic (see next page):




Operations

RESPA 2010 Audits

When the link is clicked, the following pop-up screen appears:

If the values in Lines 1107 and 1108 do not total the value of the “Total title

insurance premium” field in the above screen, the following audit will display:

WARNING: AGENT’S PORTION PLUS UNDERWRITER’S PORTION OF THE

TITLE INSURANCE PREMIUM MUST EQUAL THE TOTAL TITLE INSURANCEPREMIUM AMOUNT

Note that there may be circumstances where a portion of the total title insur-

ance premium is paid to a third party other than the title underwriter or title

insurance agent, and therefore the sum of Lines 1107 and 1108 will not equal

the total title insurance premium amount.

DocMagic Complies with New RESPA Rule

(Published August 2011)

HUD’s new rule makes technical corrections and adds clarifying amendments to

GFE and HUD-1 requirements. Now that the new RESPA regulations have been in

use for more than a year and we all have some experience with the new disclo-

sures, HUD has identified a need for certain technical corrections. HUD has also

identified certain regulatory provisions which require additional clarification.

To address these issues, HUD issued a final rule with an effective date of August

10, 2011. To facilitate compliance, the DocMagic Compliance Department has

revised the programming of the HUD-1. The RESPA 2010 Audits, described here,

have also been updated.

The instructions for the HUD-1 indicate that” If a service that was listed on the

GFE was not obtained in connection with the transaction, pages 1 and 2 of the

HUD-1 should not include any amount for that service, and the estimate on the

GFE of the charge for that service should not be included in any amounts shown

on the comparison chart on Page 3 of the HUD-1.”

Accordingly, if a charge has a GFE Amount greater than $0 and a Charge Amount

of $0, that charge will not appear on Page 2 of the HUD-1, and the GFE Amount

will not appear in the Good Faith Estimate column of the Comparison Chart on

Page 3 of the HUD-1. The Comparison of Good Faith Estimate that can be

accessed from the HUD-1 tab of DocMagic Online has also been updated to

reflect this change. If the charge is subject to a 0% or 10% tolerance,

DocMagic’s auditing system will not use the GFE Amount when

calculating those tolerances.

https://www.federalregister.gov/articles/2011/07/11/2011-17230/real-estate-settlement-procedures-act-respa-technical-corrections-and-clarifying-amendments

https://www.docmagic.com/compliance/wizard/2010/february-2010/respa-audits

https://www.docmagic.com/compliance/wizard/2010/february-2010/respa-audits

https://www.federalregister.gov/articles/2011/07/11/2011-17230/real-estate-settlement-procedures-act-respa-technical-corrections-and-clarifying-amendments




Operations

RESPA 2010 Audits

HUD-1 with Alternate Programming Available Upon

Request (Published October 2011)

Feedback from our customers has made the DocMagic Compliance Department

realize that there are at least two ways to interpret the RESPA Technical Correc-

tions and Clarifying Amendments.

To accommodate these two interpretations, DocMagic has created a version of

the HUD-1 with alternate programming that can be implemented at the custom-

er’s request. The instructions for the HUD-1 indicate that:

“If a service that was listed on the GFE was not obtained in connection with the trans-

action, pages 1 and 2 of the HUD-1 should not include any amount for that service,

and the estimate on the GFE of the charge for that ser vice should not be included in

any amounts shown on the comparison chart on Page 3 of the HUD-1.”

As described in a recent Compliance Wizard article, DocMagic’s standard version

of the HUD-1 (HUD1.MSC) is programmed so that if a charge has a GFE Amount

greater than $0 and a Charge Amount of $0, that charge will not appear on Page

2 of the HUD-1, and the GFE Amount will not appear in the Good Faith Estimate

column of the Comparison Chart on Page 3 of the HUD-1.

However, we have learned that some customers and investors interpret this provi-

sion to apply only to charges that are literally “listed” on the GFE. As an example,

an appraisal fee would be “listed” on the GFE, as would a credit report fee. By con-

trast, a settlement fee isn’t “listed” on the GFE; neither is a lender title insurance

fee, as these fees are rolled up into the Title Services and Lender’s Title Insurance

category, which is the “listed” fee. To accommodate this interpretation, DocMagic’s

Compliance Department has created a version of the HUD-1 (HUD1.MSC-C) with

alternate programming, which is programmed as described below.

■ If an individual charge in one of the following GFE categories has a GFE

Amount greater than $0 and a Charge Amount of $0, the charge description will

appear on Page 2 of the HUD-1 with no corresponding charge amount. The

amount disclosed on the GFE will compute into the GFE column of the Comparison

Table on Page 3 of the HUD-1, and the corresponding charge of $0 will be com-

puted into the HUD-1 column:

• Origination

• Rate Credit or Charge

• Title Services

• Title Services Borrower Chosen

• Government Recording

■ If all charges with a category of Title Services or Title Services Borrower

Chosen have an aggregate GFE Amount greater than $0 but an aggregate

Charge Amount of $0, then a Charge Amount of $0 will appear on Page 2, and a

line for Title Services and Lender’s Title Insurance will not appear on the Com-

parison Table on Page 3.

■ For charges in the following categories, if a charge has a GFE Amount greater

than $0 and a Charge Amount of $0, that charge will not appear on Page 2 of the

HUD-1, and the GFE Amount will not appear in the Good Faith Estimate column

of the Comparison Chart on Page 3 of the HUD-1:

• Lender Required

• Owner’s Title

• Owner’s Title Borrower Chosen

To implement HUD1.MSC-C in your account, please contact DocMagic’s Customer

Service Department. Please note that DocMagic’s RESPA audits and the HUD-1

Comparison Table in DocMagic Online have been programmed to reflect the

logic on the standard form; as a result, customers who use HUD-1.MSC-C

will be required to review the HUD-1 directly for compliance with the

RESPA tolerances. ■

• Transfer Taxes

• Borrower Chosen

• Homeowner’s Insurance

• Escrow Account Deposit

• Per Diem Interest

http://www.docmagic.com/compliance/wizard/2011/august-2011/new-respa-rule


https://www.docmagic.com/about/contact/customerservice









Technology

Business Continuity and Disaster Recovery

at a Glance

Issue Mitigation Plan

Power Failure • The DocMagic Data Center is equipped with APC 30 KW N+1 UPS with up to 20

min. battery backup

• The DocMagic headquarters are protected with a 180 KW Kohler standby power

generator, equipped with ATS with automatic failover to standby power

• Power switching is automatic and takes less than 10 seconds

• Generator is fueled by diesel, with re-fueling contracts in place with multiple

vendors, and can provide emergency power for over 7 days at 20% load

Server Malfunction • Servers and Networking standardized on HP and Cisco

• Data storage standardized on NetApp and Compellent

• Each mission-critical server has redundant internal components

• Hot swappable RAID disk arrays with multiple controllers, eliminating single-point

of disk failure

• High-end servers with load balancing for additional redundancy

Network Failure • Fully meshed, multi-tier switching architecture

• Fully redundant Cisco core switching systems

• Backup (secondary) core switching capable of handling full network load• Mission-critical servers have multiple paths to the network core to eliminate

network failure from switch, NIC, or cable failure

Data Protection & Recovery • Data backed-up nightly to LTO tape and Online Disk array

• DocMagic stores twelve (12) months of data on backup tapes

• Tapes are removed and stored in Iron Mountain

Continued ‹

http://www.ironmountain.com/

http://www.ironmountain.com/




Issue Mitigation Plan

Loss of Internet Connectivity • Dual independent 100Mb Ethernet circuits feed the Data Center with combined

total bandwidth of 200Mbps

• Additional high-speed Wireless WAN link providing 20Mbps

• Three separate Tier 1 ISPs supply each internet connectivity

• Dynamic and redundant internet routing using BGP4 protocol

• Automatic bandwidth utilization monitoring to increase capacity when needed

Fire • Comprehensive fire detection system that protects entire building

• Data Center protected by sophisticated fire detection system, including high -sensitivity smoke detectors (2,000 times more sensitive than traditional sensors),

traditional sensors and heat detectors, triggering alarm, with FM200 fire

suppression agent

• 24X7 monitoring service with 10-minute response time dispatch to Fire

Department for physical inspection of building

• Entire building equipped with automatic sprinkler system

Earthquake • Data Center building is designed to withstand strong seismic activity

• Servers are housed in seismically-certified cabinets anchored for maximum stability

• Texas-based warm mirror site can be activated to take over all data operations if

the primary Data Center is unable to operate

• Data replicated to this mirror site in real-time

• Disaster threshold for switching over to mirror site is 4 hours of continuous

downtime, and mirror site can be fully operational within 15 minutes

Testing of BC and DR Plan • DocMagic tests the Business Continuity and Disaster Recovery Plan each year

from end to end

• DocMagic periodically simulates loss of Internet connectivity to test fail-overs to

redundant connectivity providers ■

Technology

Business Continuity and Disaster Recovery

at a Glance




Partner with DocMagic

To Manage Your Compliance

Thank you for selecting DocMagic’s eBook, “Navigating the Regulatory Landscape”.

We think it offers a representative sample of what DocMagic’s Compliance Team

can do for you now and in the future.

We hope that you consider asking us to join you as your partner in mortgage

compliance. If you would like more information and/or a demo on our compliance

services, please don’t hesitate to:

■ Visit our website at www.docmagic.com .

■ Contact us at 800-649-1362 or by email at

[email protected] start using DocMagic’s

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