Q3 New Product Enhancements Spotlight
Enhanced Deposit and Certificate of Deposit Account Documentation
Our C&I product now empowers you to streamline the documentation process for Deposit and Certificate of Deposit Account collateral types. With a simple click, you can automatically generate a Security Agreement as well as a Deposit Account and Control Agreement.
Improved Repair Holdback and Security Agreement for Fix and Flip Loans
In our CRE product, we have refined the Repair Holdback and Security Agreement to include a loan balancing provision. This ensures that borrowers contribute their own funds to complete necessary repairs, mitigating risks and protecting the lender’s interests. This update provides added security for lenders involved in fix and flip transactions.
Single Sign-on and Integrated Ordering – Seeking Beta Integration Partners
Enhancements that allow seamless access to the GoDocs platform using integrations with third party identity providers and automated user provisioning. Integrated ordering allows lenders to embed the GoDocs document ordering process directly in your LOS, creating a fully integrated experience.
We are currently looking for partners to engage in a beta pilot project for this functionality. If you’re interested, please reach out to support@godocs.com.
Q3 Compliance Update Spotlight
CRE – Fix and Flip Update
Enhancements to the Repair Holdback and Security Agreement. This update adds a loan balancing provision that will require the Borrower to contribute its own funds to complete the repairs.
CRE/C&I – Depository Requirement Financial Covenant
Enhancements to the Depository Requirements feature when a 0 (zero) value is entered into the “# of days used to calculate the average daily balance” field.
GoDocs News
2024 Commercial Lender’s Guide to Automating the Complex Loan
Discover the full potential of your commercial lending operations with our comprehensive guide. The 2024 Commercial Lender’s Guide to Automating the Complex Loan provides key insights on how to automate documentation for small-balance, mid-market, and large-cap loans using advanced technology.
Upcoming Product Enhancements
Standard Support for Non-Traditional Collateral Ownership Structures
Expanding the platform to document complex, non-traditional collateral ownership structures under Standard Support, including third-party fee owners, non-owner co-borrowers/non-borrower co-owners, and multiple collateral with various ownership structures.
C&I Updates to Provide Standard Support for All Primary Collateral Types for Deposit Accounts, Money Market Accounts, CDs
Enhancing the C&I platform to offer Standard Support for a wide variety of business asset-secured loans and lines of credit—including the ability to document all types of equipment and vehicle secured loans/lines of credit; deposit and other accounts secured loans; receivables secured revolving and non-revolving lines of credit; secured instruments secured loans; leasehold improvements secured loans, etc.
Launch of Full Suite of Cash Management Agreements
Introducing a full menu of cash management agreement options, including non-lockbox arrangements and a full complement of lockbox arrangements (i.e., soft and/or hard lockbox, springing lockbox, sliding lockbox, etc.).
GoDocs Leadership Insights
Fannie Mae, Freddie Mac to Toughen Rules for Commercial-Property Lenders, Brokers
In a recent Wall Street Journal article, it addressed how Fannie Mae and Freddie Mac are drafting new rules for lenders of commercial property loans and brokers to fight fraud in the commercial real estate industry. The proposed rules would augment the level of due diligence for multifamily mortgage loans. The main points are as follows:
- Enhanced due diligence requirements for lenders prior to origination
- Response to alleged fraudulent borrower and property financial information submissions by brokers
- Freddie Mac already requires borrowers to provide rent receipts for multifamily mortgage loans
Impact on Lenders
The new rules mark a significant shift in the CRE industry, emphasizing the importance of lender due diligence. Lenders must now not only review financials during underwriting but also monitor and enforce financial performance throughout the loan’s life. This increased scrutiny may divert lenders’ focus from origination.
GoDocs Weighs In
Government agencies and regulators have been cracking down on commercial real estate (CRE) fraud. In response, Fannie Mae and Freddie Mac are in the process of creating new rules in connection with their purchase and securitization of CRE mortgage loans, specifically multifamily mortgage loans, requiring lenders to be more diligent before origination.
The proposed rules aim to prevent lenders’ reliance on fraudulent financial information submitted by brokers. Even if these rules aren’t finalized and enacted, lenders will likely need to verify borrower and collateral property financial information more thoroughly, whether or not a broker is involved. Freddie Mac, for example, already requires rent receipts from borrowers.
The actions of Fannie Mae and Freddie Mac marks a new era of heightened due diligence in CRE. Lenders must review financials carefully during underwriting and efficiently and effectively monitor loan performance throughout its life.
In re Moon Update; Forthcoming Changes to California Civil Code § 1916.1
by Tucker Wade
On August 28, 2024, following its passage in the California Senate, the legislature sent Senate Bill 1146 (“SB 1146”) to Governor Gavin Newsom for his signature. If signed into law, SB 1146 will amend Civil Code § 1916.1 to clarify the existing exemptions to California’s usury restrictions. Specifically, Civil Code § 1916.1 would now explicitly exempt loan extensions and modifications arranged by a California-licensed real estate broker.
What does this mean for commercial lenders?
In simple terms, if SB 1146 becomes law, there is no ambiguity that a lender will be able to modify or extend a mortgage loan in its portfolio without worrying about the transaction being deemed usurious if a California-licensed broker is involved in arranging the modification or extension.
This legislative change is a response to the U.S. Court of Appeals for the Ninth Circuit’s ruling in the In re Moon case. SB 1146 not only offers a clarification on safe harbors from state usury laws for lenders seeking to work with their borrowers to modify or extend a mortgage loan but also, hopefully, peace of mind for lenders when they navigate that process.
If SB 1146 becomes law, lenders should consult their legal counsel to determine how these usury exemptions afforded by the law can be utilized for their existing loan portfolios.
Q3 Additional Product Enhancements
- Flexible Payment Options with ACH Cancellation Fees
- Option to add ACH cancellation fee when ordering loan documents
- Streamlined Third-Party Authorization
- Option to include a Third-Party Authorization Form for sharing borrower information with borrower consent
- Greater Flexibility with Financial Covenants Testing
- “At Lender’s discretion” option added to “Financial Covenants Testing Requirement” dropdown
- C&I – Deposit and Certificate of Deposit Accounts
- Allows for automatic ordering of Security Agreement and Deposit Account/Control Agreement for deposit and certificate of deposit accounts
- CRE – Global County UI Update
- The County field has moved to its own row on the Property page
- CRE – Payment Frequency“
- “Maturity“ option added to the payment frequency dropdown
- CRE – Global Lender Rebate Fee
- Option to order loan documents with a rebate fee
- CRE – Financial Reporting Penalty Update
- Option to include a fixed dollar amount for late charge fee
Q3 All Compliance Updates
All States
- Global ACH Cancellation Fee
- Language refinements for when the lender chooses to include an ACH cancellation fee in a specific transaction
- Depository Requirement
- UI enhancements which now allows the Depository Requirement data entry to be visible on the summary tab
CRE
- Lender Signature
- Enhancements to our High-Quality Lender Image Insertion functionality specifically for Pennsylvania Mortgages
- Flex Construction
- Global refinements to the construction disbursement requirements paragraphs in the construction Loan Agreement for Flex Construction loans
- Global ACH Update
- Global enhancements to the ACH Form to account for successors and assigns to the Lender
- Fix and Flip Update
- Enhancements to the Repair Holdback and Security Agreement. The update adds a loan balancing provision that will require the Borrower to contribute its own funds to complete the Repairs
State Specific
- Tennessee UCC Forms
- Updates to the UCC’s and Affidavits when (a) the Borrower Formation State = Tennessee (if an entity) or (b) Borrower Address State = Tennessee (if an individual)
CRE
- South Carolina Trust Borrower Scenario
- Compliance enhancements to the Certification of Trust when Property State/ Jurisdiction (Governing Law) = “South Carolina” and the borrower is a Trust (either “Revocable” or “Irrevocable”)
- Pennsylvania Spousal Guaranty Scenario
- Enhancements to Pennsylvania governing law scenarios when the Spouse is signing the guaranty and material asset location must be accounted for
- Pennsylvania Lender Signature
- Enhancements to our High-Quality Lender Image Insertion functionality specifically for Pennsylvania Mortgages
- Tennessee
- Enhancements to (i) the Deed of Trust and UCC1 for loans with a property state of Tennessee and (ii) compliance enhancements to the UCC1 If the Borrower is an individual whose address state = Tennessee or an entity whose formation state = TN
