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Sandy Gadow, a featured guest on CNN's "Open House," and a speaker on national radio as the escrow expert, has more than 25 years experience in escrow, title and real estate. A licensed mortgage broker and real estate sales associate, Sandy is a member of the American Land Title Association, the California Escrow Association, the National Association of Real Estate Editors and on the advisory council for the Escrow Career Center. She is the author of The Complete Guide to Your Real Estate Closing. If you have questions for Sandy see our Ask Sandy page.

What Are These Loan Documents Which I Received In The Mail?

You may be concerned that sometime during your property purchase, you may receive documents in the mail from your lender. These documents may be separate from your note and mortgage or deed of trust documents. You may receive these documents before your escrow closes, or in some cases you may receive them after your property purchase is complete. You may wonder what these are, as you my have already signed pages of documents at your title company and at your closing and received copies of those. These documents which you may receive in the mail are additional disclosures which you lender would be required to give you. There are generally five documents which you may receive.

The first document is an "Appraisal Notice", which will explain that you have the right to receive a copy of the appraisal report in connection with your mortgage application. If you want to receive a copy of the report, just write the lender on the address listed in the letter. It is always wise to keep a copy of the appraisal report. Be sure to let either your lender or your real estate agent know you want a copy of the appraisal report.

The next disclosure which you may receive is a "Private Mortgage Insurance Disclosure."

If you applied for a loan which required that you obtain mortgage insurance (MI), you will receive this notice. Mortgage Insurance reimburses your lender for any loss that the lender might incur in the case that you failed to make your loan payments on time. Mortgage insurance is typically required for any non-government loan where the down payment made is less than 20% of the purchase price.

There are two types of mortgage insurance: traditional mortgage insurance and lender paid mortgage insurance. Under traditional mortgage insurance, the lender will submit an application for the insurance, which must be approved by the mortgage insurance company before your loan can close. The cost for the insurance will be paid by you, the borrower. You may have the option of cancel the mortgage insurance when certain conditions have been satisfied, such as your equity reaching 78% of the original value of the property securing your loan. Often the mortgage insurance will terminate automatically when you reach the 78% equity point.

Under the lender paid mortgage insurance option, this is available only for certain types of loan programs and you do not have the right to cancel the mortgage insurance. Lender paid mortgage insurance typically carries a higher rate of interest than borrower paid mortgage insurance. Lender paid mortgage insurance terminates only when the residential mortgage loan is refinanced, paid off , or otherwise terminated.

The disclosure document you receive in connection with the mortgage insurance will contain a chart of the benefits and disadvantages of each type of insurance. You may be asked to choose which type of insurance you wish to obtain. Borrowers do not have the option to cancel lender paid MI. In the event the lender cancels the paid MI, any refund will be payable to the lender and your monthly payment will remain the same.

The next document you might receive will be the "Transfer of Servicing Disclosure Statement." This notice states that your lender may have the right to transfer you loan payments to another lender. The transfer practices and requirements will be explained in this notice, and it will tell you that you have the right to be given written notice of the transfer. It will explain the damages and costs in circumstances where services violate the requirement of that section. You will also be told off the servicing transfer estimated by the lender.

You may receive a final "Truth in Lending Statement", which will state the annual percentage rate of your loan, the finance charge, the amount financed, and the total of payments you will make. It will indicate the demand feature, if your loan carries a variable rate or if it is an assumption, the filing and recording fees, the charge for any late payments, and if a prepayment penalty applies to your loan. You will be asked to sign this form to confirm your receipt of this notice.

Lastly, you will be sent a final "Good Faith Estimate of Settlement Costs" disclosure form. This document will list your final closing expenses and settlement charges which you incurred in conjunction with your loan. It will include the appraisal fee, the credit report fee, the tax related service fee, underwriting fee, the yield spread premium to any mortgage broker involved, the courier fee, flood certification, processing fee, wiring fee, prorated interest, mortgage insurance premium, hazard insurance premium, hazard insurance held in escrow, city tax escrow, settlement or closing fee, document preparation the, title insurance, lenders title insurance fee, recording fees, any city and county tax stamps or state tax stamps. You would have received an Estimated Good Faith Estimate of Settlement Costs before your loan closed, but this final statement is your receipt of money actually paid and should be kept for income tax purposes. The title company or closing agent have given you a copy of the final closing or HUD-1 statement, but don't be surprised if you receive an additional statement from your lender.

As with any documents related to your closing or loan, don't hesitate to ask if you have any questions. Feel free to contact your lender upon receipt of these documents if you are unclear as to any of the terms or conditions stated in the documents. Now is the time to clear up any matters which may be confusing or look incorrect to you. If your lender will be selling or transferring your loan, you want to contact your loan officer or mortgage broker while your loan is fresh in their minds and not in the hands of a third party.

What Are These Loan Documents Which I Received In The Mail?

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