MRG Document Technologies (MRG), a provider of mortgage technologies to banks, credit unions and other lenders, provides higher-priced mortgage loan tests that enable lenders to comply with the pending higher-priced mortgage loan rule that takes effect Oct. 1. MRG’s higher-priced mortgage loan tests provide accurate, real-time compliance testing of individual loan data to make sure they comply with the predatory lending restrictions. Higher-priced mortgage loans are closed-end loans secured by a consumer's principal dwelling with an annual percentage rate (APR) that exceeds the average prime offer rate for a comparable transaction by at least 1.5 percentage points for first mortgages or 3.5 percentage points for subordinate liens.
“Mortgage lenders need to put processes or systems in place to make sure all of the loans they originate meet the parameters set forth by the Federal Reserve Board’s higher-priced mortgage loan rule by the Oct. 1 deadline,” said Laura LaRaia, an attorney and director of customer service at MRG. “Since the average prime rate changes on a weekly basis, this is a process that needs continuous attention and maintenance to remain accurate. If lenders are unable to tackle the issue by themselves, third-party technology providers such as MRG can help them maintain compliance.”
The rule that takes effect Oct. 1 adds four protections for the category of higher-priced mortgage loans secured by consumers’ primary residences. For loans in this category, these protections prohibit lenders from extending credit without regard to a consumer's ability to repay from sources other than the collateral itself; require lenders to verify income and assets they rely upon to determine repayment ability; prohibit prepayment penalties except under certain conditions; and require lenders to establish escrow accounts for taxes and insurance, but permit lenders to allow borrowers to cancel escrows 12 months after loan consummation effective after April 1, 2010.
Additional protections included in the Federal Reserve Board’s revision of the Truth-in-Lending Act’s Regulation Z for loans secured by a consumer’s principal dwelling include a prohibition on abusive servicing practices and a mandate that advertisements must clearly and conspicuously provide accurate information about rates, monthly payments and other loan features.
MRG offers a browser-based system for the preparation and delivery of compliant document packages, electronic disclosures, loan modifications and other services for mortgage lenders, banks and credit unions nationwide. MRG guarantees that its products are in compliance with the most recent legislative and regulatory changes.
For more information, visit www.mrgdocs.com.