loan document terms
You can not get a loan that you have not applied for. This is why a borrower will sign a loan application. And since the lender needs the borrower to apply for the loan it should make sense that lender would get the original. This would definitely classify this as vital document to the transaction, hence why escrow gets a copy. Acknowledgment of Receipt of Appraisal ReportIf there was an appraisal completed the borrower has the right to a copy. By the borrower signing this form they are confirming they have a copy. Borrower Certification and AuthorizationThis form gives permission to lender to confirm employment, have their assets, credit report and financial records in their possession. California Domestic Partnership Addendum to Uniform Residential Loan Application Some states recognize domestic partnerships as if two people are married. This form tells the lender if they do or do not have a domestic partner. California Impound Disclosure/WaiverThis form says whether the borrower has to have an impound/escrow account or if they request to have one or decline to have one. California per Diem Interest DisclosureThe Borrower has to pay interest the day the loan funds. This page tells the borrower how much interest they per day (aka per diem). Under stand the day the new loan funds the borrower is responsible to pay interest.
You may notice two boxes that one needs to be checked. It's because sometime there is overlapping interest. Let me explain,
The problem that arises in refinance is if the new loan funds on a Friday the borrower starts paying interest on the new loan. However, if the old loan will not be paid off until Monday the borrower has to pay interest on two loans. In this case, the borrower may want to check the box that states please they do not want the new loan to fund until after a weekend is holiday so this situation never arises.
In a purchase the problem arises is if the loans funds on a Friday but they house doesn't record (meaning they don't get the keys) until Monday. They would be paying interest on house they don't even own. Once again they may want to check the box that says they don't want to fund the loan until after a weekend or holiday to prevent this.
The other box states that they don't care when the loan funds and understands they will start paying interest immediately. Closing DisclosureAlso known as the CD, the Closing Disclosure replaces what they used to call the truth in lending form. And just like the old form implies this is what informs the borrower about everything pertinent about the loan. Total interest over 30 years. All cost associated with the transaction, just like the closing statement. The lender has to disclosed everything about the loan so the borrower has a concise look at what they are getting into. This form is a little redundant as it has information found on different forms throughout the loan documents. Compliance AgreementJust because the borrower has signed loan docs does not mean the loan will fund. This form informs the borrower if anything else need to be signed before the loan funds, the borrower will comply with any requests. Consumer Credit DisclosureThe borrower has the right to know their credit score. This form gives the borrower their credit scores. Consumer Credit Score DisclosureThe borrower has the right to their credit scores. This page tells them what their scores were. This is not the full report. Just the scores. Contact Verification FormThe borrower confirms all contact information the lender has for them is correct. Mailing address, phone #’s, etc. Counseling Checklist for Military Home BuyersOn VA loans the VA is letting the veteran know if they miss any payments, home counseling may be required. Essentially the counseling is letting them know how bad foreclosure is and they should not miss more payments. Federal Collection Policy NoticeThis lets the borrower know how the lender will or will not share their information. Federal Equal Credit Opportunity Act NoticeThis lets the borrower know that credit score was a determining factor on their approval. Also, that they can discriminate based on credit score. Bad credit equals a higher interest rate. Flood Insurance Coverage Subject to Change DisclosureFlood zones are constantly being updated all over the country. The lender is letting them know that if they are ever to be rezoned as a flood zone they will be required to have flood insurance at that time. Hazard Insurance Authorization and Requirements Homes that have mortgages have to have hazard insurance. This form also allows the lender to be the loss payee recorded on the hazard insurance. Hazard Insurance DisclosureThe max amount of insurance coverage the lender can force to borrower to have is replacement cost of the house. Not the appraised value. Initial Escrow Account Disclosure StatementThis form shows how the impound account will look in the next 12 months. It shows the balance every month for the next 12 months and when they make the tax and insurance payment and for how much. Lender’s InstructionsThe Lender’s instructions (sometimes called Closing Instructions) are literally typed out instructions to the escrow and title companies from the lender on exactly how the lender wants their loan closed. The borrower and the escrow officer usually sign the instructions acknowledging them.
Since it is the LENDER’S instructions it should make sense that the lender would get the original instructions back. And since the instructions are for the escrow and title company, it should make sense that they both would get a copy of the lender instructions. Mailing Address CertificationNot all borrowers want the mortgage statement (the bill) sent to the property address. This form lets the lender know exactly where the borrower prefers the bill. Notice Concerning the Furnishing of Negative Information to the Consumer Reporting AgencyThis form states if the borrower misses a mortgage payment, it will be reported and negatively affect their credit score Notice of Right to CancelIn a refinance transaction on a primary residence, the borrower gets three business days (not including Sunday's and some holidays) from the day they sign loan documents to cancel the loan if they want. This is a law and cannot be waived.
The lender cannot fund the loan until this time period has past. Notice to VA Loan BorrowersVA loans are assumable (see mortgage definitions above if you don't know what this is). This is the form that lets the veteran know this. Occupancy AffidavitThis tells the lender whether the property being bought or refinanced is a primary residence, second home or investment property.
Remember interest rates are tied to perceived risk. If you live in the house. The chances of defaulting on your loan is less since you live in it. Therefore, you get a lower interest rate. If it is an investment property, there is higher chance of default so the bank will give a higher interest. Payment Letter to BorrowerThis form is two different forms in one form for most lenders. First and foremost it tells the borrower what their full payment is including their impound account, if they have one (the note only shows you what the principal and interest is).
This form also dubs as their first payment coupon in the rare case the lender forgets to the bill the borrower. There is an an address on where to send the first payment to. Payoff Schedule/Amortization TableThis shows every payment for the duration of the loan. Breaking down every payment into what goes to principal and what goes to interest. Quality Control Release and Authorization to Re-verifyThis lets the borrower know there may be a survey asking how the loan officer did. This is how the lender does quality control. Signature Affidavit and AKA StatementThe borrower signs this confirming their signature is their signature. This is why their signature needs to be consistent. The lender uses this page to cross reference all signatures on the other docs to make sure no one forged the borrower’s signatures.
All names found on the borrower’s credit report will go on the AKA section of this form. The lender is letting them know the names that came up on their credit report. The borrower signs the aka line exactly as their name appears to confirm that they have gone by this name before. If the an AKA is not them, instead of signing the wrong name they print “not known as.” The Housing Financial Discrimination Act of 1977 Fair Lending NoticeThis says the borrower was not discriminated against. USA Patriot ActThis is where the notary signing agent records for the lender the ID information used to identify the borrower. W-9Interest paid on loans is tax deductible. This allows the borrower to write off the interest on their taxes.