The document discusses new regulations under RESPA and the Good Faith Estimate (GFE) that aim to help borrowers shop for loans and protect them from unexpected fees. Key points include:
1) Lenders must provide a GFE within 3 days of receiving a loan application that gives fixed estimates for settlement costs.
2) The new GFE and HUD-1 form have improved tolerances to hold lenders accountable, with most fees unable to increase at closing.
3) Additional protections for borrowers were added through the Housing and Economic Recovery Act (HERA) around loan disclosures and timing of closings.
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Inmotion Respa0109 2010
1. New RESPA Regulations: What Every Agent Should Know InMotion Real Estate Institute Prepared by Juanita McDowell/Lead Trainer , IM RE I
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4. “ Millions of families go to the settlement table each year without clearly understanding what they are paying for. In many respects, it’s clear that the current way people buy and refinance their homes isn’t serving us very well at all and has contributed to the current housing crisis.” Former HUD Secretary Steve Preston
9. HUD’s Settlement Cost Booklet Highlights It is your responsibility to search for an agent who will represent your interests … If you want someone to represent only your interests, consider hiring an “exclusive buyer’s agent”, who will be working for you.
10. HUD’s Settlement Cost Booklet Highlights … agent may also recommend that you deal with a particular lender…attorney. You are not required to follow the recommendation, and you should compare the costs and services offered by other providers before making a decision.
69. You’re now up to date…continue to keep your eyes and ears open.
70. InMotion Real Estate Institute For more training opportunities, please visit: www.inmotionrei.com
Notas del editor
It should be noted that HUD is continuously updating this. I encourage you to stay alert. Be aware—as one atty pointed out to us, the rules and the answers to the questions don’t always match…some of the changes don’t necessarily make sense. There are several inconsistencies that I will point out. And for that reason I encouarge you to write HUD (as I have) at the Washington DC address. I often feel that people on the street like you and me – our ideas and opinions are not represented. So let’s jump in…
Help borrowers shop for a loan more with ease by simplifying and improving the disclosure requirements for mortgage settlement services Remove factors in lending that increase costs to consumers, such as kickbacks and unearned referral fees
Disclaimer—best we have available to us now. If there is a change, HUD is your only source, they are the regulating body for RESPA
Very well done. Puts the power in the consumer’s hands. This is the RESPA’s committee’s way of saying, “If nobody tells you, we have you covered. Just read it. It contains everything you need to know.” I read it cover to cover and I have to tell you,…it’s not missing much.
# 1 determine what you can afford…not your LO, not your agent, in fact you haven’t found an agent yet. Some subtle messaging done here. You can actually get a chuckle out of it if you read it closely.
# 1 determine what you can afford…not your LO, not your agent, in fact you haven’t found an agent yet. Some subtle messaging done here. You can actually get a chuckle out of it if you read it closely.
# 1 determine what you can afford…not your LO, not your agent, in fact you haven’t found an agent yet. Some subtle messaging done here. You can actually get a chuckle out of it if you read it closely.
# 1 determine what you can afford…not your LO, not your agent, in fact you haven’t found an agent yet. Some subtle messaging done here. You can actually get a chuckle out of it if you read it closely.
Information particular to the borrower – this may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property or any other information that was used in providing the GFE New information particular to the borower or transaction that was not relied on in providing the GFE Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance or enviromental problems. HUD’s FAQs contain many examples of what may be deemed a “changed circumstance” If there is a changed circumstance and the LO intends to issue a new GFE, they must do so within 3 biz days of receiving the information sufficient to establish the CC Must retain docs for 3 years
Centerpiece of the reform. Goal was greater clarity and transparency. Only HUD could simplify a GFE from 1 page to 3.
Centerpiece of the reform. Goal was greater clarity and transparency. Only HUD could simplify a GFE from 1 page to 3.
Centerpiece of the reform. Goal was greater clarity and transparency. Only HUD could simplify a GFE from 1 page to 3.
Centerpiece of the reform. Goal was greater clarity and transparency. Only HUD could simplify a GFE from 1 page to 3.
Information particular to the borrower – this may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property or any other information that was used in providing the GFE New information particular to the borrower or transaction that was not relied on in providing the GFE Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance or environmental problems. HUD’s FAQs contain many examples of what may be deemed a “changed circumstance” If there is a changed circumstance and the LO intends to issue a new GFE, they must do so within 3 biz days of receiving the information sufficient to establish the CC Must retain docs for 3 years
Information particular to the borrower – this may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property or any other information that was used in providing the GFE New information particular to the borrower or transaction that was not relied on in providing the GFE Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance or environmental problems. HUD’s FAQs contain many examples of what may be deemed a “changed circumstance” If there is a changed circumstance and the LO intends to issue a new GFE, they must do so within 3 biz days of receiving the information sufficient to establish the CC Must retain docs for 3 years
Information particular to the borrower – this may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property or any other information that was used in providing the GFE New information particular to the borower or transaction that was not relied on in providing the GFE Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance or enviromental problems. HUD’s FAQs contain many examples of what may be deemed a “changed circumstance” If there is a changed circumstance and the LO intends to issue a new GFE, they must do so within 3 biz days of receiving the information sufficient to establish the CC Must retain docs for 3 years
Important dates: This section sets out the deadliines after which the loan terms set forth in the GFE may not be available to the borrower. Box 1: There are no restrictions on the amount of time the interest rate may be availabe; it is up to the LO; if the interst rate is not available for any period of time, this line should read “Not Available, N/A”. Box 2 MOST Important. The estimate for “all other settlement charges is available for at least 10 business days from when the GFE is provided to the borrower (i.e. if mailed, it would be from the date the GFE is placed in the mail to the borrower); if revisaed GFE is issued, the 10 business days runs from the time the revised GFE is provided to the borrower. If a change in circumstance – reissue—then add 10 days. It canNOT change. Box 3: this box must be completed with the number of calendar days in which the borrower must go to settlement after the rate is locked; A range of days is not permitted; if the Lender does not offer a rate lock, then NA should be stated.
Your initial Loan amount is the amount of the principal loan balance on the date of closing Loan term is the # of years (15, 20, 30) Initial interest rate – day of closing Even if you make payments on time, can your loan rise? Negative amortization. Repayment of any assistance from federal or state housing programs should be excluded from consideration. Prepayment. FHA loans do not have pre-payment penalty but some conv loans are out there and still have this.
The first box is for the monthly pamount of the principal, interest and mortgage insurance (if applicable); this should be the same number entered above under “Your initial monthly amount owed” This amount does NOT include what the monthly amount will be with escrows; Escrow account amounts will be entered on Page 2 of the GFE, Block 9. BTW, we’re still on PAGE 1 of the GFE. Do we require you to have an escrow account for you loan? Y or N? Summary of your settlement charges. This section cannot be filled in until Page 2 on the GFE is completed
One bundled fee. All orig charges for lenders and mortgage brokers, including fees for admin and processing, underwriting, doc prep, application fee, wire, lender inspection, loan handling, other LO miscellaneous -- are included in the charge in Block 1 of GFE, “our orig charge” and should not be itemized separately. Block 2. For transactions without a mortgage broker, check the first box if the credit or charge for the interest rate is included in “our origination charge.” You Receive a credit. For transactions with a mortgage broker, check the second box if there is a credit to the borrower for the interest rate chosen You Pay a charge. W/ a mortgage broker. If there is a charge for the interest rate chosen (discount points). Charges cannot increase, Credits can increase. Block A. In this section, add block 1 and block 2 and enter total in block A. This number could be a negative # if the credit in Block 2 is larger than the charge in Block 1. This # could also be 0. YOUR CHARGES FOR ALL OTHER SETTLEMENT SERVICES. This includes charges for Block 3 through Block 11. We’ll dig into those blocks in just a moment. First let’s get a feel for these blocks using a real time scenario.
Block 3. Required services that we select. This block contains the total charge for all 3 rd party settlement services (except title services) for which the loan orginator requires and selects the provider of the service. Borrower cannot select. Services include Appraisal, credit report, tax service, flood certification, up-front MI, VA funding fee Each required service provider and their charge must be listed on a separate line The total charges for all services must be entered in the far right hand column in Block 3 These fees can change by 10%. Bucket Matching HUD line Block 4 ALL lumped together. Title Insurance Fees (Title Exam, Title Search, Binder Fee, post-closing fees….) Plus Lender’s Title. Attys are concerned about this line because it’s hard to estimate title insurance. Not cut and dry. Block 5. Owner’s Title Insurance. Los will definitely need a fee sheet here. This block must be completed on all purchase transactions regardless of whether or not the borrower intends to purchase an Owner’s Policy and regardless of whether the seller is paying for it. Refi na BLOCK 6 Required services that you can shop for (HUD Line 1301). Service provided by the loan originator where the borrower is permitted to shop. Survey, Pest inspection, etc. Each provider and their charge must be listed on a separate line. Remember the goal here. No changes.
Block 3. Required services that we select. This block contains the total charge for all 3 rd party settlement services (except title services) for which the loan orginator requires and selects the provider of the service. Borrower cannot select. Services include Appraisal, credit report, tax service, flood certification, up-front MI, VA funding fee Each required service provider and their charge must be listed on a separate line The total charges for all services must be entered in the far right hand column in Block 3 These fees can change by 10%. Bucket Matching HUD line Block 4 ALL lumped together. Title Insurance Fees (Title Exam, Title Search, Binder Fee, post-closing fees….) Plus Lender’s Title. Attys are concerned about this line because it’s hard to estimate title insurance. Not cut and dry. Block 5. Owner’s Title Insurance. Los will definitely need a fee sheet here. This block must be completed on all purchase transactions regardless of whether or not the borrower intends to purchase an Owner’s Policy and regardless of whether the seller is paying for it. Refi na BLOCK 6 Required services that you can shop for (HUD Line 1301). Service provided by the loan originator where the borrower is permitted to shop. Survey, Pest inspection, etc. Each provider and their charge must be listed on a separate line. Remember the goal here. No changes.
Block 3. Required services that we select. This block contains the total charge for all 3 rd party settlement services (except title services) for which the loan orginator requires and selects the provider of the service. Borrower cannot select. Services include Appraisal, credit report, tax service, flood certification, up-front MI, VA funding fee Each required service provider and their charge must be listed on a separate line The total charges for all services must be entered in the far right hand column in Block 3 These fees can change by 10%. Bucket Matching HUD line Block 4 ALL lumped together. Title Insurance Fees (Title Exam, Title Search, Binder Fee, post-closing fees….) Plus Lender’s Title. Attys are concerned about this line because it’s hard to estimate title insurance. Not cut and dry. Block 5. Owner’s Title Insurance. Los will definitely need a fee sheet here. This block must be completed on all purchase transactions regardless of whether or not the borrower intends to purchase an Owner’s Policy and regardless of whether the seller is paying for it. Refi na BLOCK 6 Required services that you can shop for (HUD Line 1301). Service provided by the loan originator where the borrower is permitted to shop. Survey, Pest inspection, etc. Each provider and their charge must be listed on a separate line. Remember the goal here. No changes.
The meat. Truly the epicenter of the rule. Way HUD holds lender’s feet to the fire Guts of the whole shindig Goal:simplicity, accuracy, clarity, and most of all, to encourage shopping
The meat. Truly the epicenter of the rule. Way HUD holds lender’s feet to the fire Guts of the whole shindig Goal:simplicity, accuracy, clarity, and most of all, to encourage shopping
We are on page 7 in your handout. You may want to refer to it as the writing is very hard to read on this slide. At the bottom of this chart I have written out the three categories
They are listed under each category. As an example. The charges which cannot increase—Our origination charge..etc. On the top of page 8 I have written out the corresponding blocks for you that cannot increase. You also have a copy of the new GFE in your handout which you can read later.
Purpose of this section is to show borrower how much their montly payment and settlement charges could adjust if a higher or lower rate was chosen. LO must complete the left column, not required to complete the middle and right hand column
HUD envisions the borrower will shop lender to lender, then compare cost. This is strictly for the borrower.
Today I want us to look at these changes with an open mind, however, as we review these changes, I want to identify the most complicated and troubling aspects of this rule…all of which will enable you to respond to your client’s questions and concerns. One of the concerns is actually buried on page 68,227…a decision to dump limits on loan origination fees.
Purpose of this section is to show borrower how much their monthly payment and settlement charges could adjust if a higher or lower rate was chosen. LO must complete the left column, not required to complete the middle and right hand column
Everyone will pick up their HUD-1 blank copy. Notice that on certain HUD-1 lines, the corresponding GFE Block # (i.e 31, #2, Block A is displayed off to the right on that line.
It should be noted that HUD is continuously updating this. I encourage you to stay alert. Be aware—as one atty pointed out to us, the rules and the answers to the questions don’t always match…some of the changes don’t necessarily make sense. There are several inconsistencies that I will point out. And for that reason I encouarge you to write HUD (as I have) at the Washington DC address. I often feel that people on the street like you and me – our ideas and opinions are not represented. So let’s jump in…
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