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April 11, 2023

PPDocs Will Release Updated FHA Instruments on May 1, Updated IRS Form 4506-C and more!

Read more below!

April 11, 2023

PPDocs Will Release Updated FHA Instruments on May 1

On January 20, 2023, HUD issued Mortgagee Letter 2023-01, announcing FHA-specific modifications to the new Fannie Mae/Freddie Mac Uniform Instruments published in 2021. Prior to Mortgagee Letter 2023-01, the most recent HUD instructions for FHA instruments were issued in 2015. With the publication of the new FNMA/FHLMC Uniform Instruments in 2021, however, the 2015 HUD instructions were no longer current. HUD has now rectified this by issuing instructions for required modifications to the new Uniform Instruments for FHA loans.

HUD also announced In Mortgagee Letter 2023-01, however, that it would accept both the old and new versions of the FHA-modified Uniform Instruments for the time being. Accordingly, since January 20, PPDocs has temporarily continued to filter the old versions of the FHA documents into FHA document packages prepared on the PPDocs system.

We have now finished creating FHA-compliant versions of the new FNMA/FHLMC Uniform Instruments which incorporate the amendments required by HUD for use with the FHA forward-mortgage program. These include FHA Multistate and state-specific notes, and both MERS and non-MERS security instruments for each state. We will begin filtering the new versions of the FHA forms into FHA document packages prepared through PPDocs starting May 1, 2023.

PPDocs encourages our clients to notify us if they or their secondary market investors have any issues with accepting the new versions of the FHA instruments starting May 1, 2023. Please email legal@ppdocs.com with any concerns prior to that date.

Updated IRS Form 4506-C

In October of 2022, the IRS published a new version of Form 4506-C. Since March 1, 2023, the IRS has only accepted previous versions if they were signed and dated by the taxpayer on or before Feb 28, 2023. Every Form 4506-C signed on or after March 1, 2023, must use the Form 4506-C revision 10-2022.

To assist our clients in complying with this IRS requirement, PPDocs has removed all previous versions of Form 4506-C from our system.

The above information was provided by the IRS in a February 8, 2023 bulletin. The bulletin provided this guidance on completing Form 4506-C:

  • The new Form 4506-C cannot be edited.
  • Form 4506-C revision 10-2022 cannot use Care Of (c/o) or Doing Business As (DBA).
  • Form 4506-C will be rejected if more than one company is present on line 5a or 5d.

Frequently Asked Question

Question: : The Closing Disclosure (the “CD”) was sent to both applicants through DocuSign. Applicant 1 did not open the file. Applicant 2 opened the file but did not sign the CD. I have two questions: Would this be considered acknowledgment of receipt of the CD by Applicant 2 or do they also need to sign the CD? When both applicants have a right of rescission, would both need to sign or would both of them opening the file be considered acknowledgement of receipt?

Answer: Under the E-Sign act, when an applicant has previously completed the E-Sign consent process through DocuSign, then future disclosures provided to them via DocuSign are considered received the earlier of:

  1. three business days from time they are sent; or
  2. the day they are delivered

When an applicant did not complete the E-Sign consent process through DocuSign prior to receiving a CD and DocuSign indicates “Delivered,” that means the applicant has now completed the consent process and the CD has been delivered to them. When DocuSign does not reflect “Delivered” for an applicant (as with Applicant 1 above), if the applicant has not previously completed the E-Sign consent process, then the CD remains undelivered to them. If Applicant 1 did previously complete the E-Sign consent process, then the CD is considered delivered the earliest of when they open the file to complete delivery or three days after the CD was sent.

There are no signature requirements in the regulations; delivery is the only requirement. Signatures as documentation of delivery are a lender and/or investor policy decision.

Click here to access our firm memo discussing the E-Sign process and the implications it has on the delivery of regulatory disclosures.