Welcome to Today’s Webinar · Welcome to Today’s Webinar Presented by Independent Bankers Association of Texas and Texas Land Title Association February 12, 2010. RESPA ... Yield

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Welcome to Today’s WebinarPresented by

Independent Bankers Association of Texas and

Texas Land Title AssociationFebruary 12, 2010

RESPAReal Estate Settlement Procedures Act Introduced in 1974

1996 Reform

Additional Reform Process began in 2002

Proposed New Rule released March 14, 2008

Final New Rule published November 17, 2008

Portions Final New Rule effective January 1, 2009

Final New Rule effective January 1, 2010

RESPARESPA Reform impacts all parties in a real

estate transaction

Lenders

Title Providers

Settlement Agents

Mortgage Brokers

Realtors

Builders

Buyers – Borrowers

Sellers

New RESPA Final Rule Consumer Protection Act

Greater Disclosure of Loan Terms and Settlement Fees

New standardized forms

Encourages consumer to shop for loan and service providers

Fees disclosed upfront must be closer to the actual fees collected at closing

Lender bound to settlement charges and terms disclosed in GFE, subject to certain tolerances

Goal was clarity, transparency and accuracy

New RESPA Final RuleNew Good Faith Estimate

New HUD-1 Settlement Statement

Service Provider List

Good Faith EstimateGood Faith Estimate (GFE) lists the settlement charges that

Consumer is likely to incur with a federally related mortgage loan.

Originator must estimate charges based upon whatConsumer would normally pay or incur at or before settlement.

New Standardized GFE form – 3 pages

Ten (10) business day shopping period

Tolerance Restrictions 0% Bucket 10% Bucket Unlimited Bucket

Changed Circumstances

GFE – Page OneSummary of Loan Terms

“Red Flag” Items Adjustments in rate and payment Negative Amortization Prepayment Penalties Balloon Payments

B0ttom Line Shopping Numbers Total Adjusted Origination Charges Total Charges for other Settlement Services Total Estimate Settlement Charges

GFE – Page One

GFE – Page Two Simplifies fees by categorizing and combining

Lender’s Origination Charges

Required Services

Lender Selects

Borrower Shops

Title Services

All normal Borrower costs must be reflected on GFE

No matter who ultimately pays the fee at closing

Will be reflected in Borrower column on HUD1 Page 2

If paid by Seller, Lender or Third Party will be offset by credit on HUD1 Page 1

GFE – Page Two

GFE – Page Three Instructions and Information

Tolerance Descriptions

Zero Percent Tolerance

Ten Percent Tolerance

Unlimited Tolerance

Trade-off Table

Summary of Rate and Charges for loan disclosed in GFE

Summary of Rate and Charges for a higher rate/lower costs

Summary of Rate and Charges for a lower rate/higher costs

Shopping Chart

GFE – Page Three

Good Faith Estimate Disclosure Must be disclosed within 3 business days from Application (GFE-

General FAQ 25)

Application is defined as submission of Borrower’s financial information in anticipation of a credit decision (RESPA Final Rule Title 24, Section 3500.2(b)

Borrower Name

Monthly Income

Social Security Number/Tax Identification Number (GFE-General FAQ 14)

Property Address

Estimated Value of Property

Loan Amount

“Any other information deemed necessary by the Loan Originator”

If GFE is issued, it is presumed that Loan Originator received an “application” and all information deemed necessary to issue GFE (GFE-General FAQ 23 & 24)

GFE – Page One Originator Identifying Information

GFE – Page One Originator Identifying Information

Originating Company Name, whomever is issuing the GFE (GFE-

Page 1, GFE- Name of originator, FAQ 2)

Individual Originator/Loan Officer Name (optional)

(GFE-Page 1, GFE- Name of originator, FAQ 1)

Originating Company Address

Originating Company Phone Number

Individual Originator/Loan Officer Email

GFE – Page One Borrower and Property Information

Date of GFE

GFE – Page One

Borrower and Property Information

All Borrower’s Names

Subject Property Address

Date of GFE

Date GFE is issued

If GFE is re-disclosed, this date should reflect the date the Revised GFE was issued

GFE – Page One Explanation of Purpose and Shopping for Loan

GFE – Page One Important Dates – Item 1

Expiration Date for interest rate and items affected by rate


Expiration Date for interest rate and items affected by rate No restriction on amount of time interest rate must remain

available (GFE-Important Dates FAQ 1)

Interest rate can be available for any period of time Originator chooses, including for example, a period of time within one day or

for several days (GFE-Important Dates FAQ 1)

When interest rate is locked, date disclosed should be interest rate

lock expiration date (GFE-Important Dates FAQ 4)

If rate lock not offered at all, Originator should reflect N/A or Not

Available (GFE-Important Dates FAQ 5)


Expiration date of shopping period


Expiration date of shopping period (GFE-Expiration FAQ 1)

Must be available for at least ten (10) business days (GFE – Important

Dates FAQ 2)

If revised GFE is provided due to changed circumstances or borrower requested changes, shopping period of previous GFE has ended and borrower has already expressed an intent to proceed, complete this date with the same date reflected in the previous

GFE (GFE – Important Dates FAQ 12)

Line 1 and Line 2 are independent of each of other (GFE – Important

Dates FAQ 14)


Rate Lock Period – this does not mean rate is locked


Rate Lock Period – this does not mean rate is locked

Number of days the interest rate lock period is good through (GFE –

Important Dates FAQ 4)

If rate lock not offered at all, Originator should reflect N/A or Not

Available (GFE-Important Dates FAQ 6)

If revised GFE is provided due to changed circumstances or borrower requested changes, Line 3 must be completed with information that was on the preceding GFE, unless rate lock was basis of issuance of revised GFE (GFE-Important Dates FAQ 7)

May not enter range of rate lock options (GFE-Important Dates FAQ 11)


Lock required prior to settlement


Lock required prior to settlement

Originator must state how many calendar days prior to settlement

the interest rate would have to be locked, if applicable (RESPA Final

Rule Appendix C)

If interest rate is locked, then Originator should complete this item

with “Not applicable” or “N/A” (GFE-General FAQ 30)

GFE – Page One Summary of Your Loan


Initial Loan Terms


Red Flag Items

GFE – Page One Escrow Account Information

GFE – Page One Escrow Account Information

If escrows are waived, mark box labeled “NO” (GFE-Escrow account

information FAQ 1)

If escrows are not required or held by Lender, mark box labeled “NO” (GFE-Escrow account information FAQ 1)

If escrows are required and will be collected, mark box labeled “YES” (GFE-Escrow account information FAQ 1)

Payment reflected should match amount shown in Summary of Loan for initial monthly payment with mortgage insurance – does not include tax and homeowner’s insurance (GFE-Escrow account

information FAQ 1 & 2)

GFE – Page One Summary of Your Settlement Charges

Totals for Block A & B are brought forward from GFE Page 2

GFE – Page Two Your Adjusted Origination Charges

GFE – Page Two Block 1 – Our Origination Charge

All Charges that Originator will receive for compensation(GFE-Block 1 FAQ 2, 4, 7 & 9)

Administrative Fee Application Fee Broker Fee Commitment Fee Courier/Delivery Fee Document Preparation Fee (even if paid to third party) (GFE-Block 1 FAQ 5 & 6)

In-house Appraisal Lender Inspection Fee MERS Fee Origination Fee Processing Fee Underwriting Fee Verification Fee Wire Fee Service Fees paid directly to Originator Miscellaneous Fees Yield Spread Premium (for mortgage brokers)

GFE – Page Two Block 1 – Our Origination Charge

Originator is defined to include: Loan Officer/Loan Originator

Mortgage Banker

Mortgage Broker

Warehouse Correspondent

Wholesale Investor

Any creditor involved in the new loan transaction

(GFE-General FAQ 5 & GFE-Block 1 FAQ 1)

GFE – Page Two

Block 1 – Our Origination Charge

Equals Line 801 on HUD-1

Zero Tolerance Bucket

Amount cannot increase absent changed circumstances (GFE-Block 1 FAQ 3 & 8)

GFE Block 1 = HUD Line 801 = 0% Tolerance Bucket

GFE – Page Two

Block 2 – Your credit or charge (points) for the specific interest rate chosen

GFE – Page Two Block 2 – Your credit or charge (points) for the specific

interest rate chosen

Three Box Options Box 1 – No Credit and No Charge

Box 2 – Credit

Box 3 – Charge

Must complete interest rate

Must complete dollar figure, if applicable

Only One Box Option can be marked at a time

A credit and charge cannot occur together in same transaction

(GFE-Block 2 FAQ 2)

GFE – Page Two


Box 1 – No credit and no charge Par for Mortgage Bankers, Warehouse Correspondents

No credit and no charge for Mortgage Bankers, Warehouse Correspondents

Mortgage Brokers not allowed to mark this box

GFE – Page Two Block 2 – Your credit or charge (points) for the specific

interest rate chosen Box 2 – Credit

Yield Spread Premium for Mortgage Brokers (GFE-Block 2 FAQ 6 & 7)

Par for Mortgage Brokers

May check either credit or charge

Must enter zero (0)

“No cost” Loan (GFE-Block 2 FAQ 1)

Fees being paid through interest rate

Credit given by Originator used to offset all fees

May result in a negative number in Block A to cover third party fees listed in GFE Blocks 3–11 as appropriate

GFE – Page Two


Box 3 – Charge Discount

Par for Mortgage Brokers

May check either credit or charge

Must enter zero (0)

Buydown (GFE-Block 2 FAQ 3)

Escrow Waiver Fee (GFE-Block 2 FAQ 8 & 9)

GFE – Page Two Block 2 – Your credit or charge (points) for the specific interest

rate chosen



Amount cannot change absent changed circumstances while interest rate is locked Any credit for rate chosen cannot decrease (GFE-Block 2 FAQ 4)

Credit can increase since it would benefit borrower

Any charge for rate chosen cannot increase

Charge can decrease since it would benefit borrower


GFE – Page Two Block A – Your Adjusted Origination Charges

Block 1 +/- Block 2 = Block A

May be a negative number if Credit in Block 2 that exceeds Charge in Block 1




Amount cannot change absent changed circumstances while interest rate is locked

Amount is carried forward to Block A on GFE Page 1

GFE Block A = HUD Line 803 = 0% Tolerance Bucket


Block 1 +/- Block 2 = Block A

May be a negative number if Credit in Block 2 that exceeds Charge in Block 1

Par Example – Block 2, Box 1

Credit Example – Block 2, Box 2

Charge Example – Block 2, Box 3

GFE – Page Two Your Charges for All Other Settlement Services

GFE – Page Two Block 3 – Required Services that We Select

GFE – Page TwoBlock 3 – Required Services that We Select

All Charges for services that Originator requires use of a particular provider (GFE-Block 3 FAQ 1, 2, 3 & 4)

Appraisal Fee

Conventional Upfront PMI

Credit Report Fee

Final Inspection Fee

Flood Certification Fee

FHA Upfront MIP

MCC Fee

Tax Service Fee

USDA Guarantee Fee

VA Funding Fee (GFE-Block 3 FAQ 1)

GFE – Page Two Block 3 – Required Services that We Select

Equals Line 804, 805, 806, 807, 800s on HUD-1

10% Tolerance Bucket – aggregate total

Amount cannot increase absent changed circumstances

Fees payable to third party other than Originator Does not include Title Service Fees

If individual service listed Must have dollar amount of fee disclosed or

Must have zero (0) or N/A disclosed

GFE Block 3 = HUD Line 804, 805, 806, 807, 800s = 10% Tolerance Bucket

GFE – Page Two Block 4 – Title Services and Lender’s Title Insurance

All Charges for services that Title/Settlement Agent requires and Title Insurance Costs to protect the Lender

Attorney Fee Closing Fee Courier Fee (GFE-Block 4 FAQ 2)

E-Doc Fee Escrow Fee Handling Fee Lender’s Title Insurance Premium (GFE-Block 4 FAQ 1)

Lender’s Title Endorsement Premium Notary Fee (GFE-Block 4 FAQ 3)

Settlement Fee (GFE-Block 4 FAQ 4, 5 & 7)

Tax Certificate Fee Texas Guaranty Fee Title Binder/Commitment Fee (GFE Block 4 FAQ 6)

Title Examination/Search Fee Wire Fee

GFE – Page Two Block 4 – Title Services and Lender’s Title Insurance

Equals Line 1101, 1102, 1104, 1100s* on HUD-1 10% Tolerance Bucket – aggregate total Unlimited Tolerance Bucket – if Borrower chooses a title/settlement

agent not on the list

Amount cannot increase absent changed circumstances Fees payable to third party other than Originator Should reflect one title/settlement agent on service provider list if

Originator allows borrower to shop for service

GFE Block 4 = HUD Line 1101, 1102, 1104, 1100s= 10% Tolerance Bucket

*1100s – any third party fees that are a part of GFE Block 4 may be itemized “outside the columns” in the 1100series of HUD1 Page 2

GFE – Page Two Block 5 – Owner’s Title Insurance

All Charges for Title Insurance Costs to protect the Borrower (GFE-

Block 5 FAQ 3 & 4)

Owner’s Title Insurance Premium

Owner’s Title Endorsement Premium

Texas Policy Guaranty Fee for Owner’s Policy

Required on all Purchase transactions (GFE-Block 5 FAQ 1)

No matter what is common and customary for your area

No matter who ultimately pays for the policy at closing (GFE-

Block 5 FAQ 2)

If non-purchase transaction, Originator should reflect N/A

GFE – Page Two Block 5 – Owner’s Title Insurance

Equals Line 1103 on HUD-1 10% Tolerance Bucket – aggregate total Unlimited Tolerance Bucket – if Borrower chooses a title/settlement

agent not on the list

Amount cannot increase absent changed circumstances Fees payable to third party other than Originator Should reflect one title/settlement agent on service provider list if

Originator allows borrower to shop for service


GFE – Page Two Block 6 – Required Services that You Can Shop For


All Charges for services that Originator requires but that Borrower can chose the service provider (GFE-Block 6

FAQ 1)

Pest Inspection

Survey


Equals Line 1301, 1300s on HUD-1



Fees payable to third party other than Originator

Does not include Title Service Fees

If individual service listed

Must have dollar amount of fee disclosed or

Must have zero (0) or N/A disclosed Should reflect one provider on service provider list if Originator allows

borrower to shop for service

GFE Block 6 = HUD Line 1301, 1300s = 10% Tolerance Bucket

GFE – Page Two Block 7 – Government Recording Charges

All Charges for recording loan and title documents upon settlement that are normal borrower costs

Assignment Recording Fee

County Recording Fee

Deed Recording Fee

Government Recording

Deed of Trust/Mortgage/Security Instrument Recording Fee

Power of Attorney Recording Fee

Release Recording Fee

State Recording Fee

GFE – Page Two Block 7 – Government Recording Charges

Equals Line 1201, 1202, 1200s on HUD-1




GFE Block 7 = HUD Line 1201, 1202, 1200s = 10% Tolerance Bucket

GFE – Page Two Block 8 – Transfer Taxes

All Charges for state and local fees on mortgages and home sales that are normal borrower costs

City/County Deed Tax

City/County Mortgage Tax

State Deed Tax

State Mortgage Tax

State required fee paid to Government or Governmental Agency

GFE – Page Two Block 8 – Transfer Taxes

Equals Line 1203, 1204, 1205, 1200s on HUD-1

0% Tolerance Bucket



GFE Block 8 = HUD Line 1203, 1204, 1205, 1200s = 0% Tolerance Bucket

GFE – Page Two Block 9 – Initial Deposit for Your Escrow Account


All Charges that lender requires borrower to place into a reserve or escrow

account at settlement to be applied to recurring charges that lender pays on behalf of borrower

Earthquake Insurance

Homeowner’s Insurance

Flood Insurance

Mortgage Insurance

Property Taxes

“Walls-in” Insurance

Windstorm/Hail Insurance



Unlimited Tolerance Bucket

Check appropriate boxes in Block 9 to indicate what items are included in the initial deposit for the escrow account

Does not include amount to bring property taxes current at closing

GFE Block 9 = HUD Line 1001 = Unlimited Tolerance Bucket

GFE – Page Two Block 10 – Daily Interest Charges


The charge for the amount of interest on new loan due from date of settlement until first day of next month or first day of normal payment cycle

Total amount estimated due at closing*

Must reflect Daily Per Diem Amount

Must reflect Number of Days to be collected*

Must reflect Estimated Date of Settlement

*If loan will be a short pay/interest credit then amount may be reflected as a credit



Unlimited Tolerance Bucket

GFE Block 10 = HUD Line 901 = Unlimited Tolerance Bucket

GFE – Page Two Block 11 – Homeowner’s Insurance


All Charges for insurance borrower must purchase to protect the property from

loss or damage (GFE-Block 11 FAQ 1)

Earthquake Insurance Premium

Homeowner’s Insurance Premium

Flood Insurance Premium (GFE Block 11 FAQ 2)

“Walls-In” Insurance Premium

Windstorm/Hail Insurance Premium


Equals Line 903, 900s on HUD-1 Unlimited Tolerance Bucket Fees payable to insurance agent/company List each type of insurance required

Does not include title insurance Each type of insurance listed

Must have dollar amount of fee disclosed or Must have zero (0) or N/A disclosed

Purchase transactions – amount indicated is typically one year’s premium for each insurance type

Refinance transactions – may not be required unless policy does not have enough premium paid in advance to meet investor guidelines

GFE Block 11 = HUD Line 903, 900s = Unlimited Tolerance Bucket

GFE – Page Two Block B – Your Charges for All Other Settlement Services

Block 3 + Block 4 + Block 5 + Block 6 + Block 7 + Block 8 + Block 9 +/- Block 10 + Block 11 = Block B

Amount is carried forward to Block B on GFE Page 1

GFE – Page Two Block A+B – Total Estimated Settlement Charges

Equals Line Block A + B on GFE Page 2

Amount is carried forward to Block A+B on GFE Page 1

GFE – Page Three Understanding which Charges can Change at

Settlement

GFE – Page ThreeUnderstanding which Charges can Change at Settlement

O% Tolerance

Fees cannot increase at settlement

GFE Block 1, 2, A and 8

Individual Block tolerance, not an aggregate total

Cure required if tolerance violation

Must be done within 30 calendar days of closing

Must be reflected on HUD1 as cure


1O% Tolerance

Total of fees can increase up to 10%

GFE Block 3, 4, 5, 6, and 7

Aggregate Total tolerance

Cure for amount over 10% required if tolerance violation

Must be done within 30 calendar days of closing

Must be reflected on HUD1 as cure


Unlimited Tolerance

Fees can increase at settlement

GFE Block 9, 10 and 11

GFE Block 4, 5, and 6 – if Borrower chose service provider NOT on the list

No cure required

GFE – Tolerance Buckets Understanding which Charges can Change at Settlement

Estimated Feesdisclosed at application on GFE

vs.

Actual Feescollected at closing on HUD1


HUD1 Lines on Page 2 have a cross reference to GFE Block Number


HUD1 Page 3 contains a side-by-side comparison chart of Estimated Fees disclosed on GFE to Actual Fees collected at closing on HUD1 Page 2

The Bucket ListGFE BLOCK NUMBER HUD LINE NUMBER

or HUD SERIESTOLERANCE BUCKET

Block 1 801 0%

Block 2 802 0%

Block A 803 0%

Block 3 804, 805, 806, 807, 800s902, 900s

10%

Block 4* 1101, 1102, 1104, 1100s 10%

Block 5* 1103 10%

Block 6* 1301, 1300s 10%

Block 7 1201, 1202, 1200s 10%

Block 8 1203, 1204, 1205, 1200s 10%

Block 9 1001 Unlimited

Block 10 901 Unlimited

Block 11 903, 900s Unlimited

*If provider not on the List *Unlimited


If Amount exceeds tolerance limitation, it is the responsibility of Originator to cure.(Section 4 & 5 – Right to cure and tolerance violations, FAQ 1- 15)

Cure can be made by:

Offsetting any increase with a credit/reimbursement

Reducing Fee

Cure Timeframe

At closing and notated on HUD1

Within 30 calendar days of closing and revised HUD1 issued

GFE – Page Three Using the Tradeoff Table

GFE – Page Three Using the Tradeoff Table

Trade-off Table was designed to help Borrower understand relationship between interest rate and settlement charges.

3 Columns

This Loan

Same Loan with Lower Settlement Charges

Same Loan with Lower Interest Rate

GFE – Page Three Using the Tradeoff Table– Column 1

This loan in this GFE

Must be completed by Originator (GFE-Tradeoff table, FAQ 1)


This same loan with lower settlement charges

Does not have to be completed


This same loan with a lower interest rate

Does not have to be completed

GFE – Page Three Using the Tradeoff Table – Columns 2 and 3

Not required to be completed (GFE-Tradeoff table FAQ 1)

Consumer testing suggested consumers were suspicious of Originators if these columns were not filled in

If completed by Originator

Must have alternate loans reflected available

Must be able to issue GFE on alternate loans if requested by consumer

Must use same loan amount

Must be identical to loan terms disclosed in GFE except for interest rate and interest rate dependent charges (GFE-Tradeoff table FAQ 2)

GFE – Page Three Using the Shopping Chart


Shopping tool for consumer to use to compare GFEs from various mortgage loan providers

Originator not required to complete any of the columns

Some loan origination software may complete the “This loan” column automatically for the consumer


GFE – Page Three If Your Loan is sold in the future

Final statement on GFE

No signature lines

No date of receipt


Service Provider List Must be provided by Originator if they allow Borrower to shop for services

(GFE-Written list of providers FAQ 1 & 6)

Must be provided simultaneously with GFE (GFE-Written list of providers FAQ 1)

On separate sheet of paper Must contain enough identifying information for Borrower to contact service

provider – name, address, phone number May add disclosure stating that Originator is not endorsing service providers

(GFE-Written list of providers FAQ 11)

Must contain at least one provider for any service for which Borrower can shop Title/settlement agent in Blocks 4 and 5, if Originator allows Borrower to

choose (GFE-Written list of providers FAQ 10)

Any third-party services listed in Block 6

May list an affiliate as service provider Must distribute AfBA disclosure along with list (GFE-Written list of providers

FAQ 9)

NOT considered a violation of RESPA Section 8 per HUD

Service Provider List If Borrower chooses a Service Provider

On the List - 10% Tolerance Bucket – aggregate total NOT on the List – Unlimited Bucket (GFE-Written list of providers FAQ 3)

If List not provided or no provider listed for services in Block 4, 5 or 6 Subject to 10% Tolerance Bucket – aggregate total Originator does not get benefit of Unlimited Bucket if they

have not allowed Borrower to shop for services

Provider must be Qualified service provider or Originator can reject Able to provide service in Borrower’s area (GFE-Written list of providers

FAQ 7)

GFE – Items Not Disclosed Cash to Close

Credits from Seller or Third Parties

Down Payment

Loan Payoffs

Loan Type – FHA/VA/Conventional

Lien Position – First or Second

Purchase/Sales Price

Total PITI Monthly Mortgage Payment

GFE – Fees Not Disclosed Home Warranty Fee (HUD-1 – 1300 series FAQ 1)

HOA Transfer Fee (HUD-1 – 1300 series FAQ 5)

Current HOA Fees Due

Current Property Taxes Due

POC Designation

Real Estate Agency Administrative Fee

Real Estate Agent’s Commission

Real Estate Agency Transaction Fee

No longer refers to terms such as YSP or Discount

GFE – Items that cannot be Added to Form Date or Signature lines (GFE General – FAQ 28)

Intent to Proceed Acknowledgment

Additional Pages (General – FAQ 14, GFE-General FAQ 27)

Cannot change any text in the GFE form (General – FAQ 6)

No other form can be called Good Faith Estimate

No other form can be called Addendum to GFE

Note: Additional forms can be used but cannot be referred to as addendum to GFE or labelled GFE

GFE – Changed CircumstancesOnce GFE is issued, there are Circumstances

under which Loan Terms or Charges can change

which may result in Re-disclosure of GFE(GFE-”Changed Circumstances” FAQ 1 -14)

Refer to RESPA Final Rule

Refer to RESPA Frequent Asked Questions (FAQs)

www.HUD.gov/RESPA

http://www.hud.gov/RESPA

GFE – Changed Circumstances Acts of God, war, disaster or other emergency

Information particular to Borrower or Transaction that was relied on in providing the GFE that changes or is found to be inaccurate after GFE was issued

Credit Quality

Loan Amount

Property Value

Other information relied upon in providing the GFE

New Information particular to Borrower or Transaction that was not relied on in providing the GFE

Boundary Disputes

Environmental Problems

Flood Zone Determination shows in Flood Zone

GFE – Changed CircumstancesIf GFE was issued, there is a presumption that Originator relied upon

the following information: Borrower’s name

Borrower’s monthly income

Property Address

Property Value

Loan Amount desired by consumer

Credit Report Information obtained by Originator

Cannot use any information collected or presumed to have used (see

above) prior to issuing GFE as basis for a “changed circumstance” to

justify re-disclosure of GFE Unless Originator can demonstrate that:

There was a change in that particular information

The particular information provided was inaccurate

They did not rely on that particular information when issuing GFE

GFE – Changed Circumstances

May only re-disclose changes directly related to the changed circumstance

Originator cannot increase charges unless directly related to changed circumstance, all other charges must remain the same

A changed circumstance does not justify changing the entire GFE

GFE – Changed CircumstancesRule of Three (3)

3 Business Days to Redisclose

If Originator chooses to re-disclose, must do so within 3 business

days of receiving information sufficient to establish changed circumstance

3 Years to Retain

If Originator chooses to re-disclose, must retain documentation

and justification proving changed circumstance for at least 3 years after settlement


Floating GFE issued – Rate is not locked

When rate is locked, revised GFE must be issued

Any “interest-rate dependent” charges or loan terms may be changed

Borrower Requested Changes

Even if rate is locked, revised GFE may be issued

Only terms or fees affected by requested changes may be changed


Loan Level Price Adjustment (LLPA) may constitute a changed circumstance (GFE-Block 2 FAQ 5)

Risk-based adjustment derived from specific attributes to individual loan – LTV, FICO, Occupancy

Disclosed in Block 2 on Page 2 of GFE as credit (Box 2) or charge (Box 3) for specific interest rate chosen

Changed Circumstance may permit re-disclosure of GFE changing fees affected by LLPA

GFE – Important Things to Know Cannot charge any fee except Credit Report Fee before providing

GFE

Cannot require verification of information before providing GFE

Two loans – Two GFEs

May use separate form to evidence consumer’s intent to proceed

May use separate form to evidence consumer’s acknowledgment of receipt of GFE

Average Charges Option

GFE – Important Things to Know

New Construction

New Home Purchase (GFE-New construction FAQ 2)

To Be Constructed

Under Construction

Use and occupancy permit has not been issued

If closing will not occur for more than 60 calendar days from time GFE is provided

Originator may provide disclosure to Borrower stating that at any time up until 60 calendar days prior to closing, the Originator is allowed to re-disclose the GFE in the absence of changed circumstance (GFE-New construction FAQ 1)

GFE – Important Things to Know Revised GFE must be re-issued when rate is locked

within 3 days of locking in interest rate (GFE-General FAQ 19)

“Broker Lock” or “Pocket Lock” is when a Mortgage Broker permits borrower to lock rate BUT does not lock rate with Investor/Lender (GFE-General FAQ 17)

If Investor/Lender accepts GFE issued by Broker, then Investor/Lender is subject to Broker’s disclosed GFE (GFE-

General FAQ 17 & 29)

Loan Terms, including rate

All Settlement Service charges disclosed on GFE, including Block 1, 2 and A


GFE – Important Things to Know “Seller Responsible Fees” (GFE-Seller paid items FAQ 1, 2)

Fees that are typically Seller Costs or normally paid by Seller

Do not have to be disclosed on GFE

Will be reflected in Seller Column on HUD1 Page 2

Exception to above rule:

Owner’s Title Policy must always be disclosed on GFE no matter

if seller responsible fee

GFE – Important Things to Know “Borrower Responsible Fees” (GFE-Seller paid items FAQ 1, 2)

Fees that are typically Borrower Costs or normally paid by Borrower*

Must be disclosed on GFE, no matter who ultimately pays for the fees at closing

Will be reflected in Borrower Column on HUD1 Page 2, no matter who ultimately pays for the fees at closing

If fee is being paid by seller, lender or third party, shown in Borrower Column on HUD1 Page 2 and a credit is shown on Page 1 of HUD

*Exception – Owner’s Title Policy must always be disclosed on Purchase transactions

9-10:30 a.m. CST

Wednesday, February 17

Documents

Welcome to Today’s Webinar · Welcome to Today’s Webinar Presented by Independent Bankers Association of Texas and Texas Land Title Association February 12, 2010. RESPA ... Yield