|
Recently, RESPA was modified with the goal of simplifying the loan
processes. At the core of the reform is a new Good Faith Estimate that
HUD believes will allow homebuyers to shop and better compare mortgage
loan and other settlement service providers costs. In addition a new
HUD-1 Settlement Statement was created to better "mirror" the GFE to
allow the consumer the ability to better compare the GFE with the actual
costs at the closing table. A new third page of the HUD-1 includes a
chart comparing the amounts on the GFE against the actual costs on the
HUD-1. In addition, there is a section that clearly provides the terms
of the loan in "plain language".
The new RESPA rules apply to all 1-4 family residential closings with
traditional lender financing. All lenders and title agencies are required
to follow the new RESPA regulations beginning January 1, 2010, however,
lenders may begin using the new GFE before that time. If a new GFE is
provided to the consumer, the title agency must issue the new HUD-1 at
closing.
To further protect homebuyers RESPA reform provides tolerance limits on
changes to costs from the time the GFE was issued to the actual closing.
Three separate categories or "buckets" of tolerance levels were created.
The first bucket - "Charges that Cannot Change From the
GFE to the HUD-1", typically include the lenders origination charge,
credit or charge for interest rate selected, the adjusted origination
charge and transfer taxes.
The second bucket - "Charges That Can Increase in Total No
More Than 10%", typically include all Title Administrative Services,
lender's title insurance, appraisals, credit reports, tax service and flood
certification where the lender selects or identifies the vendor for these
services, as well as mortgage insurance premium and recording charges.
The third bucket - "Charges that can change", typically
include:
- Initial deposits for escrow reserves
- Daily interest charges
- Homeowners insurance
- Lender-required services where the borrower shops for and selects
their own 3rd party provider
- Services the borrower requests that are not required by the lender
The GFE charges must be good for 10 business days to allow the consumer
to compare the program with other lenders. The GFE may be revised and
reissued (in which event there could be increases in the charges) prior
to closing only under certain "changed circumstances".
HUD defines these circumstances as acts of God, war, disaster or other
emergency; information about the borrower or closing that changes or is
found to be inaccurate after the issuance of the GFE (e.g., credit
quality, loan amount, property value or other information); newly found
information that was not previously relied upon as well as other possible
circumstances.
NEW--HUD issued a revised Settlement Cost Booklet on Dec. 16 2009
that lenders and brokers are required to give to consumers within three
days of applying for a mortgage loan. The now 49-page booklet — which
HUD has revised to reflect the new RESPA rules — contains 13 sections,
including detailed explanations to the borrower as to what each line
item on the new forms represents.
To view or download a .pdf copy, click here.
For All Real Estate Professionals
Click here to watch a video Overview of the
new Good Faith Estimate (GFE) and HUD-1 Settlement Statement
For Information on the New RESPA Rules, including the RESPA Final Rule,
"Fillable" New Good Faith Estimate and HUD-1 Forms, the new HUD1-A, and
the most current New RESPA Rule FAQs, visit:
http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm.
THE VA has issued guidance on how to disclose origination fees on the new
GFE and HUD-1 Settlement Statement forms for VA home loans. The 1% cap on
origination charges is still in effect, and VA must see “allowable” charges
itemized in the disclosures in the 800s. To view the new VA Home Allowable
Fees Circular 26_03_11, visit
http://www.homeloans.va.gov/circulars/26_10_1.pdf.
RESPA Making sense of the new GFE and HUD-1 Forms from the
NAR Government Policy News Brief Website (January 12, 2010).
Click here for the video
For Loan Originators (Lenders and Mortgage Brokers)
To order Karen Koogler's "Building the Bridge Between the GFE and HUD-1"
Online Program visit:
http://secure.wh1.net/kooglergroup/store/item.asp?ItmID=34817.
All Title Administrative Services
When your lender provides you with your Good Faith Estimate (GFE),
Page 2, Item 4 will have a lump fee for "Title Services and Lender's
Title Insurance". We feel it's important for you to understand some of
the many title processing and administrative services that may be
included in this fee:
- Settlement Closing Fee
- The Lender's Title Insurance Premium
- Lender's Endorsement Fees
- Courier/FedEx/UPS costs
- Wire Transfer and Banking Fees
- Payoff transmittals
- Release Services
- Copy and Scanning Charges
- Warehousing and Post-closing
- Loan Package transmittal
- Downloading charges
- Mileage/Travel – outside closings
- Notary/Witness Signings
- Storage and Retrieval Fees
- Policy transmittal
| 
