California Publishes Bulletin Clarifying Per Diem Statute Documentation Requirements
Effective immediately, the California Department of Business Oversight (Department) issued a brief bulletin for licensees to be able to identify which documents may be used to comply with both the per diem statute and the Financial Code §50204 (o) (hereinafter referred to as §50204 (o)). The per diem statute prohibits a borrower from being required to pay interest for more than one day prior to the disbursement of loan proceeds from an escrow; §50204 (o) works in tandem with the per diem statute by prohibiting violation of the statute and provides guidance on licensee required documentation.
Though the Commissioner of the Department reserves the right to request more information, the following are documents outlined in the bulletin for licensees to meet compliance standards:
- Written/electronic records which: (a) show communications between the licensee and settlement agent (agent); (b) verify disbursement date of loan; and (c) provide name and physical or electronic address of agent.
- Written/electronic records memorializing: (a) oral communications between licensee and agent verifying disbursement date of loan proceeds; and (b) identify name and telephone number of agent.
The bulletin also answered frequently asked questions. In specific, clarification is given regarding ALTA Settlement Statement forms (ALTA forms), Closing Disclosures (CD) and alternative ALTA documentation. The Department clarified that ALTA forms are acceptable as satisfactory documentation if: (1) the agent prepares the statement and is identified; (2) the preparation date is provided; and (3) the latter date is not before the disbursement date. Unlike ALTA forms, CDs are acceptable only if additional documentation is provided since their disbursement date is only an estimation. Alternative ALTA documentation is acceptable so long as the form: (1) identifies the settlement as the preparer; (2) identifies the date the statement was prepared; and (3) identifies the actual date of disbursement.
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