The League is in the process of releasing the updated versions of nine WCUL forms to facilitate compliance with the new mortgage regulations that take effect in January. Credit unions that are licensed for laser-printed reusable .pdfs should receive their files within one business day.
These forms must replace the old for loans applied for on or after January 10, 2014, due to the Dodd-Frank mortgage reform regulations. Other compliance issues are also addressed, such as removal of the demand clause from the Consumer Note and language addressing when a loan is secured by real estate or a dwelling. The latter helps ensure that a transaction does not inadvertently trigger the new mortgage rules or other compliance complications. Due to these and other improvements, the League encourages credit unions to use the new forms at their earliest convenience.
All the forms designed for use with Wisconsin Consumer Act transactions have been reviewed and approved as compliant with that law by the Bureau of Consumer Affairs at the Wisconsin Department of Financial Institutions (DFI).
The forms
The newly updated forms are listed below and bear an 11/13 revision date. Links to final “proof” copies of the new forms are provided; just click on the form titles.
Applications
Credit Union Loan Application for Wisconsin Residents (2 pp.) – #82083
Mini-Loan Application (1 p.) – #82053
Credit Union Loan Application (Non-Resident) (2 pp.) -#81042
Notes
Consumer Note (2 pp.) -#82073
Mortgage Note (Non-Consumer) (2 pp.) – #82042
Collateral
Consumer Chattel Security Agreement (2 pp.) – #82005
Consumer Mortgage (3 pp.) – #82020
Mortgage (Non-Consumer) (3 pp.) – #82043
Truth in Lending
Federal Truth In Lending Disclosures (Personal) (1 p.) – #82057
Discontinued Form
Consumer Note and Federal TIL Disclosures with Variable Rate #82069
Please note some important changes as indicated in the list above:
- The two mortgages have expanded from two sides to three: Consumer Mortgage (#82020) and Mortgage (Non-Consumer) (#82043). This necessitates that those two forms only be available in laser-printed format, not pre-printed paper.
- The old “Consumer Note and Federal TIL Disclosures with Variable Rate” (#82069) is discontinued. Instead, please use the Consumer Note (#82073), which now includes a variable rate clause, and the proper Truth in Lending disclosure. The appropriate TIL will vary depending upon the collateral and the rate features.
Availability of the forms
The League’s On-Line Store at www.theleague.coop > Products & Services offers the forms in several formats. Each is described below.
- Preprinted paper forms. These forms are being printed; they may be back-ordered through the online store within several business days. Look for the 11/13 revision date in the On-Line Store listing to confirm that the new form may be ordered. Delivery of the paper product may take several weeks.
This pre-printed paper format is no longer available for two forms which have expanded to a three-page format: Consumer Mortgage (#82020) and Non-Consumer Mortgage (#82043). Please switch to the single-use or licensed reusable laser format.
Single-use fillable laser format. These forms are being uploaded to the On-Line Store and will be operational within several business days. Look for the 11/13 revision date in the On-Line Store listing to confirm that the new form is available.
- Licensed reusable .pdf format. The League will send the .pdf files to the credit unions currently licensed for this format within one business day. Credit unions may then forward the file to their data processor if they choose for installation and mapping for use on the credit union system. Credit unions may also share this Compliance Courier and its links with its data processor if it will aid in mapping fields.
If a licensed credit union does not have time to complete mapping the form fields before the Jan. 10, 2014 deadline, keep in mind that the license permits use of the same .pdf files for manual completion on a desktop.
Laser forms should be printed and reviewed for proper display. Compare to the Final Proofs linked to this Compliance Courier. Credit unions are responsible for proper mapping and associated costs for the fields on licensed laser forms.
Please address your form delivery questions to Cathy, at ext. 6003.
Text changes in the forms
Yellow highlighting on the Final Proofs shows the locations of new or revised text; pink shows new or revised fields in laser forms. There may be some additional changes not highlighted (deleted text or fields, change in number of characters in fields, etc.).
Very few changes have been made to the text of the forms from what was shown in the preliminary proofs made available in Compliance Couriers in recent weeks. See the WCUL Closed-End Loan Form Selection Chart (provided here in 11×17 format) to help clarify which of the nine forms to use in different situations. The chart also lists the most significant changes to each form in side-by-side columns. Examples include the addition of name and NMLSR identification numbers for loan originators and their organizations, removal of the demand payment clause from the consumer note, simplified captions, note renewal clauses, and the addition of variable rate and note renewal clauses. See the chart for more complete listings for each form.
A word about cross-collateral clauses
Changes have been made to the Chattel Security Agreement (#82005), Consumer Mortgage (#82020) and Mortgage (Non-Consumer) (#82043) as to what loans they secure. They each have cross-collateral clauses, which have been modified to avoid compliance complications. Please read the language carefully when you seek to rely on cross-collateral as security. Either the mortgage or the “unsecured” note may have language that disclaims cross-collateral rights in a given type of situation. This is necessary to help avoid violations by inadvertently triggering rules relating to right of rescission, TIL disclosures, restrictions on non-purchase security interests in household goods, flood insurance regulations, and other issues.
On the other hand, when you intend to cross-collateralize and are certain you can deal with the compliance issues raised, you may generally complete the mortgage and note with specific cross-references to each other to ensure cross-collateralization.
As a general matter, if you want cross-collateral for security on a loan:
- Review the mortgage/security agreement for appropriate cross-collateral language,
- Write the note to cross-reference the desired security agreement/mortgage, and
- Comply with the regulations that may be triggered, such as:
- Right of rescission,
- TIL disclosure issues (disclosures of security interests, payment schedules vs. interest & payment summaries, application disclosures, etc.),
- Restrictions of liens on household goods, and
- Flood insurance regulations.
Never attempt to enforce cross-collateral rights without a careful review of all the documentation to be sure the cross-collateral clause applied in the particular case and all compliance issues were properly addressed.
On the technical side
The laser-printed forms have been reduced from multiple copy to single copy sets. The credit union may specify the proper number of copies it will need when printing a form. Preprinted labels identifying original versus copy have been eliminated and replaced by fillable fields, to be used at the credit union’s discretion.
A long field has been added to the footer at the bottom of many forms, allowing the credit union to display other information at its option. One possibility is the names of the parties and the date of the document on each page of a multi-sided form.
WCUL loan notes, mortgages, security agreements, and Truth in Lending disclosures are designed to be printed on 8½ x 14 inch (legal-size) paper. Printing on a smaller size may result in improper margin sizes for recording purposes or compliance violations for non-compliant font sizes. Multi-page forms must be laser-printed.
Important reminders
Please keep in mind that WCUL forms are designed for use in transactions subject to Wisconsin law and applicable federal law.
Please remember that the forms you use are important legal documents. Credit unions are responsible for reviewing forms to determine that they are appropriate for the transaction. Users should read and become familiar with the terms of each form they use and how they must be completed in compliance.
Data processing must conform to the terms spelled out in the agreement, as they set the terms of the legal obligation agreed to by the parties.