California Clarifies Per Diem Interest Compliance for CRMLA Licensees

On May 3, 2017, the Commissioner of the California Department of Business Oversight (“Commissioner”) released a revised bulletin clarifying for California Residential Mortgage Lending Act licensees the types of loan file documents the Commissioner considers evidence of per diem statute compliance. The bulletin was revised to include updated information in light of the adoption of the federal TRID rule.

The per diem statute generally prohibits licensees from requiring borrowers to pay interest for more than one day prior to the disbursement of loan proceeds from an escrow account on a principal obligation under a promissory note secured by a mortgage or deed of trust on real property with up to four residential dwelling units. The per diem statute provides that compliance may be evidenced by a certification executed by the licensee or by evidence in the loan file that is acceptable to the Commissioner.

The bulletin clarifies that acceptable evidence includes: (1) written electronic records reflecting communications between the licensee and settlement agent verifying the loan proceeds disbursement date and the settlement agent’s identity and electronic or business address; or (2) contemporaneous written or electronic records memorializing oral communications of the same.

The bulletin also responds to a number of FAQs. Specifically, the bulletin provides that: (1) ALTA Settlement Statements are acceptable evidence of per diem statute compliance so long as such statements contain certain requisite information outlined in the bulletin; (2) because the disbursement date contained in TRID Closing Disclosures is an estimate and may be inaccurate, corroborating evidence, such as a settlement agent’s disbursement ledger or wire transfer confirmation is also necessary; and (3) settlement statements prepared by a settlement agent, even if such statements are not on ALTA Settlement Statement forms, are acceptable so long as such statements contain certain requisite information outlined in the bulletin.

The bulletin, in regard to the above, clarifies that the Commissioner may, in its discretion, request additional information if the information provided to evidence compliance is uncertain or unclear.