My question is regarding the payment amount shown on the front page of the GFE.

yes...there are many attorney's etc that have no business doing RE loans!

We plan to send a letter to our approved attorney's in all markets having them detail out their charges and ways for us to determine the insurance fees, etc. I don't believe we will give a "short list" to avoid dealing with tolerance because it's not a good PR deal! However, it will mean you will disclose your highest charges and then let the borrower choose whomever they wish, so long as they are on your list.

See Q&A GFE-Summmary of your Loan #2. It appears you wil show the first month's estimated interest.

That is my concern - it is not a borrower choice. So, to provide a list seems disingenuous at best. But, if we don't provide a list, then we are stuck with a 10% tolerance that we have no hope of meeting (it is likely we won't know who the title company is or what the charge is at GFE time). Plus, it is still wrong - it is not a required settlement service that we select.

Compliance Geek, if you will go back in this thread, there is discussion about certain fees that the seller "typically" pays in a closing. this appears to be driven by area/state, etc. This may fall under that category if it's typical for your area.

It's also somewhere in the Q&A's if memory serves me!

In fact, look at page 23 #7 at top of page.

never mind...next section cancelled that thought entirely!

I saw the first month's interest. Since it is an advancing line, do you think the first month's interest should be calculated on the full loan amount even though you don't know if the full amount will be advanced at origination? Or do you think it should be based on 1/2 the loan amount like a pre til?

Carter's Mom,

Laser pro is calculating 1/2 like on the pre til. It is also saying no balloon. On a 12 month interest only construction loan, it looks like 12 payments of 1/2 interest would pay it off...very confusing for the customer. Laser Pro is looking in to whether this is compliant.

If you close the loan with a tolerance violation, you will give them a HUD-1/1A at closing. Then you'll give them another one showing the violation being cured and a check for the difference.

We have a question about Non-RESPA loans as they relate to the new GFE and HUD. An investment/rental property is a Non REPSA loan. We use the GFE and HUD for RESPA and Non RESPA loans. On 01/01/10 we don’t want to be bound to RESPA requirements on a Non RESPA loan but if we use the new documents, it makes the loan look like it is a RESPA loan.

Any ideas/thoughts/suggestions?

RR joker- can you explain your last lines- you say you are not going to provide a list to avoid dealing with tolerances but then you say let the borrower choose whomever they wish so long as they are on your list-
I thought we had to have a list of approved providers- if the borrower picks off the list we have 10% tolerance but if they get someone off the list then it's zero tolerance- thanks

By a "short list" I mean...we won't give them just 2 of our approved attorney's hoping they'll choose another attorney (still approved by us) to avoid tolerance.

If we have 15 approved closing attorneys, I'm guessing we will give them a list of all of them. We'll use the highest estimate for application purposes, but if they choose one that's less (and most are pretty standard with fees), then that's to their favor and it won't matter.

ok thanks alot.

Our markets, for the most part, are in fairly small areas...to "discriminate" and give the appearance of "referring" only a couple of our more than capable attorneys, would not be a very good PR move, I wouldn't think!

Some larger banks/markets, I can see where they may limit or flat out require a specific closer because they are not going to care from a PR standpoint.

If we do the construction loan only and not the permanent financing, we have an interest only payment for 12 months. Do we give the good faith and if so where do I put the int only payment? The Good Faith is calling for the P & I payment. I am getting confused.

If you are doing a construction loan subject to RESPA, you would show the interest payment in the "monthly amount" section (on the first page and the Tradeoff Table on page 3). Then you would show the principal in the "Does your loan have a balloon payment" box (all on the first page).

So,if we don't allow the customer to shop for a title company (off our list), but provide a list of those they are permitted to use, we are still held to a 10% tolerance?

So would we list them in block 3 as a required service that we select?

Title companies always go in Block 4 (lender's) and Block 5 (owner's) - whether they can shop or you choose. If you allow them to shop, you must provide a list of providers. If you don't allow them to shop, no list is triggered.

When a loan closes in Nov, the pmt due date would be Jan 1st. Thus, we collect the current years tax liability (due in Dec) from both the seller and the borrower. Where would we record the borrower's portion on the HUD? Could we put it on line 104?

I'd put the entire year's tax bill on 904. Then I'd adjust for the seller's portion on 210 & 510.

I agree the proration of taxes is to be shown on 211/511. If there are taxes due, I'd also list them in the 900's.

Thanks Truffle & David. Makes sense to me.

DDRegs...although David already answered your question, I wanted to elaborate just a bit.

If you allow them to choose from your "select" list of approved attorneys, they can still "shop" any or all of those attorneys. To me, that is still shopping and would be subject to the 10% tolerance.

If you choose the attorney, say on a rotational basis, and truly don't give the client a choice...that would be where you wouldn't provide a list. You would still be subject to the 10% tolerance and it would still go in the title services section.

Thanks Dave and RR,
I have another question.

In regards to a Pre Approval. I am kind of thinking this out loud, Would you give a GFE based on what you know at the time of the pre approval application? Technically you do not have enough to be considered an App per RESPA definition "no property".

If the borrower does not find a property within 10 days, you would reissue a GFE anyway.

I can't imagine a potential borrower going with you until they see a GFE for cost comparison.

Thanks. That would be a point I need to make to management.

We have the same issue. We have used consumer loan docs for non-owner occupied rental property for a long time. I'm currently lobbying that we issue documents from our commercial loan system instead. The only drawback we have with this choice is that our commercial system does a lousy job with escrows and we escrow most non-owner occupied rental property loans. In the past, our loan officers have screamed when we tried to not produce an initial escrow statement for these loans. So, we may have to figure out another way to produce them.

Another alternative is that you could simply not issue the GFE, TIL, and HUD. However, most borrowers are going to want a schedule of fees anyway. I personally don't like this option.

The last option I have considered is just to continue to use the consumer docs. If we get sued by the borrower, we would have to argue that the docs didn't really apply to the loan because the loan was commercial. This is the option I like the least.