For our in-house loans, we do not require title insurance, however they borrower may purchase it. We have never disclosed the fee before, should we start disclosing this on the new GFE?

David, the webinar was very helpful but I am having trouble with changes circumstance. If I understood correctly, you said that if the loan amount changes by a small amount that it is not a changed circumstance---must be a significant change in the amount. There are many times that we are ready to go to closing and the loan amount changes (usually customer request more $) by a few thousand dollars. Even this small change in loan amount affects the 1200 section of the HUD. It increases the city/county/state tax because the formula is based on loan amount. I am trying to prevent the bank from having to eat this increase; can we provide a revised GFE...hand deliver it and proceed with the closing? Is this considered a changed circumstance? Help is greatly appreciated.

First, you get a 10% tolerance. If the changed amount doesn't throw you out of the 10% tolerance, who cares? You wouldn't be eating this increased fee.

If it's going to change a fee enough that you would have to eat fees, I believe you have a changed circumstance - which allows you to reissue a GFE (even right before closing).

In Wisconsin, the seller is required to furnish and pay for owner's title insurance. It is not a charge the borrower is likely to incur. Do I have to show anything in Block 5 of the new GFE?

Amos, according to the WBA seminar I attended in April on New Mortgage Lending Laws, we have to put the owners title insurance in the same block just like all the other states do. last I heard, WBA was still contesting this with the Feds but not making any headway.

I agree. This makes no sense, but they've made a special requirement for Owner's TI. It must be listed on the GFE, even if the borrower doesn't typically pay for it. List it on the GFE and HUD-1 and then show the seller paying for it in the 200's of the HUD-1.

I would like to bring up preapprovals again. I think Dave summarized the issue well. However, what can banks do? Can we have a preapproval for Reg. B purposes (verification documentation requested from consumer and approval given) but still not have an application for RESPA (since no property address was received)?

I know RESPA says you can't require verification documentation for the GFE to be given but could you still require it in the case of a preapproval?

I have reread the thread and I don't see where this was addressed - Can anyone help me with this please? I am trying to figure out what to ask for from our attorneys. Thanks

I have a question for all- I apologize in advance if this has already been addressed:
I attended a title seminar regarding the new changes and was told the % fee is being eliminated and we can only charge a flat fee? I did not come away after reading the complaince chages with that understanding. I thought that changed circumstances were allowed if the sales price, loan amount or rate changed (we are a builder) but no other fees could be changed? I didn't recall reading anywhere about the one flat fee
Did I miss something?

Basically, any charges for the attorney to do the closing and be able to obtain title insurance get lumped together into block 4 of the GFE along with the lenders title insurance. I am (for our purposes) taking that to include the closign fee, title exam, doc prep, wire fee, copy fee, etc.

Is the doc prep fee you mention a fee for your institution to prepare the docs or your closing agent to do so? If it is yours, it would be in 801. If it is your closing agents fee, it would be included in 1101 or block 4 of GFE.

UUUURRRRGGGGHHHHH!!! How can HUD think anyone would get that this is a special requirement in the way they have written the final rule and the FAQs?

Here's the logic we were using:
First, we are looked at the definition in Regulation X of “Good Faith Estimate,” which is: “Good faith estimate or GFE means an estimate of settlement charges a borrower is likely to incur, as a dollar amount, and related loan information, based upon common practice and experience in the locality of the mortgaged property, as provided on the form prescribed in § 3500.7 and prepared in accordance with the Instructions in Appendix C to this part.” In Wisconsin, the seller is required to furnish and pay for the owner’s title insurance policy. Therefore, a borrower purchasing a property in Wisconsin is not likely to incur a charge for an owner’s title insurance policy, so it would not be disclosed on the GFE…end of discussion…no need to look further at the instructions or FAQs for Block 5.

HUD No. 09-215
Brian Sullivan
(202) 708-0685 FOR RELEASE
Friday
November 13, 2009

HUD ANNOUNCES RESTRAINT IN RESPA ENFORCEMENT FOR FIRST FOUR MONTHS OF NEW RULE
Aimed at mortgage professionals making good faith effort to comply with new requirements
WASHINGTON - The U.S. Department of Housing and Urban Development (HUD) today announced that for the first four months of 2010, the staff of the Mortgagee Review Board (MRB) will exercise restraint in enforcing new regulatory requirements under the Real Estate Settlement Procedures Act (RESPA), due to take full effect on January 1. The MRB instructed its staff to exercise such restraint in considering an action against FHA-approved lenders who have demonstrated that they are making a good faith effort to comply with RESPA's new requirements.

In addition, HUD is asking other federal and relevant state enforcement agencies to exercise the same 120-day restraint in enforcement for non-FHA originators and other settlement service providers who demonstrate the good faith effort to implement RESPA's new rules. In determining whether a mortgagee has made a good faith effort, MRB staff will consider whether the mortgagee has relied on the new RESPA rule and other written guidance issued by the Department, and the extent to which the mortgagee has made sufficient investment and commitment in technology, training, and quality control designed to comply with the new rule.

"We will work with those who are making an honest effort to work with us as we implement these important new consumer protections," said HUD Secretary Shaun Donovan. "While we will not delay implementation of RESPA's new requirements, we are sensitive to the concerns of the industry as it integrates these new rules into their day-to-day business practices."

On January 1, 2010, HUD will require that lenders and mortgage brokers provide consumers with a standard Good Faith Estimate (GFE) that clearly discloses key loan terms and closing costs. Closing agents will also be required to provide borrowers a new HUD-1 Settlement Statement that clearly compares consumers' final and estimated costs. The new RESPA rule became effective on January 16, 2009, but provided a one-year transition period for the mortgage industry to incorporate these changes. HUD will continue to work with the mortgage industry during this period, including providing a comprehensive set of frequently asked questions (FAQs) on its website.

By improving the disclosures borrowers receive when applying for a mortgage, and by promoting comparison shopping, HUD believes its new RESPA regulation will save consumers an average of nearly $700 in mortgage costs.

I would appreciate some feedback on this scenario:

An applicant states that they wish to use Attorney A, who is on our list of providers with an estimated fee of $500. So we disclose $500 on the GFE.

The applicant comes back later and says they changed their mind and want to use Attorney B, who is ALSO on our list of providers with an estimated fee of $700. Is that considered a changed circumstance, allowing us to re-disclose with the higher fee?

Thank you!

At a recent training session on the new rules, the degree of understanding by the speaker and of those in attendance was without question daunting. Nearly one year from the final rule and there still abounds numerous questions regarding the proper completion of the GFE. I would prefer if it was renamed to what it properly has become and that is an "early disclosure". Just don't quite understand the urqency and why HUD can't see fit to slow down and let the industry try to absorb these new rules (News flash: Mortgage Apps at an all time low, lowest since 2000) and worse 48 pages of Q&A trying to explain how a multi-page form with charts and tables is easier for the consumer to understand (The same consumer who did not understand a plain language overdraft fee disclosure). At the same time, the professionals are at a loss to simply understand what goes where. Yea, we'll need that 120 days for sure.

ponder, I would say yes, but would suggest you document their request for the change as a CYA

Almost forgot,the statement below would not be so bad, if in fact the disclosures were "improved." Not sure who said they would cut costs to save the consumer any money, but am sure it will put a lot of brokers out of business and fewer title cos. maybe that's where it is.

By improving the disclosures borrowers receive when applying for a mortgage, and by promoting comparison shopping, HUD believes its new RESPA regulation will save consumers an average of nearly $700 in mortgage costs.

Agreed. If the applicant makes the change, document it.

I think it will cost more-lenders, IMHO will increase some of these lump sum fees as a CYA.

We typically make the first mortgage payment due 30 days from origination date, therefore there are no odd days. If we don't collect odd days interest at closing, can we leave block 10 blank?

Yes.

I have a question- secondary market loans require a survey- the title company chooses the survey company- the bank does not- would we include an estimate of the survey in with the title fee on the GFE? How would we disclose on the HUD-1 because we get a bill for the survey from the survey company and not the title company. Thanks.

pjs- we are in the same boat and I have recieved differing opinions on where this would be reflected. In our case, since the closing atty orders the survey and pays it (we don't get billed), my thought was to include in 1101/box 4 of gfe which one source agreed with, but another felt it would be on line 801/box 1. In our situation I am leaning towards box 4/1101 since the atty orders it and pays for it-no different than paying for a title search, etc.

I agree with you Sox - I don't see it going into 801- I agree that it should be shown in box 4 on the GFE- and agree with you how you will show it on the HUD-1.

Just not sure how we would show the survey since we get the bill on the HUD-1. Thanks

Question, if at the time of application, the applicant has a signed purchase agreement that states clearly what items the seller is paying. Why would we still show them as an expense to the borrower when we have a document that shows it is not going to be due to them?

This is specifically addressed in the RESPA FAQs (HUD-1 General section). It depends on who requires the fee.

9) Q: Where should the survey fee be disclosed on the HUD-1?
A: The location of the survey fee on the HUD-1 is determined as follows:
(a) if the loan originator required a survey as a condition of the loan and selected the settlement service provider, the charge for the survey must be listed on a blank line in the 800 series in the borrower's column;
(b) if the loan originator required a survey as a condition of the loan and the borrower selected the settlement service provider, the charge for the survey must be listed as part of the total in Line 1301 of the HUD-1 and itemized as applicable;
(c) if a survey was required to issue a lender‘s or owner‘s title insurance policy, the charge for the survey is part of the charge in Line 1101 and must be further itemized if performed by a third party;
(d) if the borrower elected to obtain a survey that was neither required by the loan originator nor required to issue a lender‘s or owner‘s title insurance policy, then the charge is listed in the borrower‘s column on a blank line in the 1300 series.

Although this Q&A discusses the HUD-1, we can use the "logic" to determine the corresponding GFE Block from the answer.