NMP - April 2017 - 24

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Industry Updates:
April 2017
New York Defines Consummation
of a Mortgage Loan, Supports eClosing
By Gavin T. Ales

T

APRIL 2017 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

24

he State of New York recently updated their
Banking Law to provide for a definition of
"consummation of a mortgage loan."

Consummation is used in various laws and regulations, most
notably the Real Estate Settlement Procedures Act (RESPA) and
the Truth-in-Lending Act (TILA). For example, under the TILARESPA Integrated Disclosure (TRID) rule, consummation is used
for determining certain timing requirements a lender must meet
during the loan origination process.
The TRID rule requires that the Loan Estimate be provided to
the consumer no later than the seventh business day before
consummation. The rule also requires a lender to provide a
consumer the Closing Disclosure at least three business days
before consummation.
Despite these specific timing requirements related to
"consummation" of the loan transaction, the TRID rule did not
define what is meant by consummation. TILA does provide that
any defined terms not defined within TILA, such as
consummation, have the meaning given to them under state law
or by contract. See provision 12 CFR 1026.2(b)(3), which states,
"Unless defined in this part, the words used have the meanings
given to them by state law or contract."
Until recently, there was no standard definition of
consummation provided under New York statutes. It was
previously interpreted to have various meanings by New York
State courts, such as when the mortgagor and mortgagee
executed a loan commitment agreement, which would trigger the
TRID timing requirements much earlier in New York as compared
to many other states. Thus, to ensure a consistent definition, the
New York legislature through Senate Bills 7183 (Assembly Bill
9746) and 982 added a definition for "consummation of a
mortgage loan" to New York Banking Law § 2.
The new definition provides that when a borrower executes
the promissory note and mortgage is consummation of a
mortgage loan.
While the definition was originally passed under Senate Bill
7183 and effective with approval on Nov. 28, 2016, the definition
was again amended by Senate Bill 982, which was approved on
March 15, 2017. Despite the later, more recent addition to the
definition, the full definition was retroactively effective as of Nov.
28, 2016.
Senate Bill 982 added the phrase, "including by electronic
signature, in accordance with applicable federal and state laws,
rules, and regulations," to the end of the consummation
definition. This additional phrase recognizes not only widespread
adoption of electronic signatures, but also reflects the increased
interest of the mortgage lending industry in performing electronic
closings.

Gavin T. Ales is chief compliance officer with
Torrance, Calif.-based DocMagic Inc. He may be
reached by phone at (800) 649-1362, ext. 6446 or
e-mail Gavin@DocMagic.com.

SPONSORED EDITORIAL

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continued from page 18

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Your turn
National Mortgage Professional
Magazine invites you to submit
any information promoting new
"niche" loan programs, new
products or any other
announcement related to the
introduction of a new program,
to the attention of:
New to Market column
Phone #: (516) 409-5555
E-mail:
newsroom@nmpmediacorp.com
Note: Submissions sent via e-mail
are preferred. The deadline for
submissions is the 1st of the
month prior to the target issue.


http://www.NationalMortgageProfessional.com

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