Quick question. Can block one ever change on the GFE? Example.

Loan is for $100k with 1 point = $1,000. You have $500 in fees so you quote $1,500 in Block One.

Circumstances change and now the borrower needs $105,000. So the point charge is now $1,050. Can you reissue a GFE showing block one is now $1,550 or

do you issue a refised GFE with $1,500 still in block one and $50 now in block 2?

I would say since loan amount is a changed circumstance you could change block one?

Thanks

raitchjay-would you consider what you are doing a purchase?

DD, according to the regs...you can change block 1 if the loan amount changes or the program, itself changes. HUD has contradicted themselves over and over on this. To list a portion of the origination fee in block 2 would be an accounting nightmare and, IMHO, should NOT be done.

[I'd have a strong argument for Block 1 changing with a rate lock in a non-broker transaction...but it's easy enough to fix that in Block 2, so why rock the boat!]

Yes Sage...i would.

Yes.

“Since the bank does not currently review the broker's provider of servicer, we have chosen to have a change in closing agents as a Changed Circumstance and hold that fee to the 10% tolerance. The broker can submit this a as CC within 3 days of the change and we will re-disclose to the borrower with the different amount to eliminate the GFE refund.”

This is the type of policy we are getting from a large national institution. I know that it is a direct violation of HUD policy to issue a new GFE based on the borrower's selection of a provider not listed on the settlement service provider list, and I have provided that FAQ to them, but I don't know what else I can do to convice them that this is bad policy. They even state that they were examined by HUD last week and HUD didn't say anything. I say big deal on that, but I have no ammunition to convice them otherwise. Anyone have any thoughts?

Yes, I do, Brock. The customer went off the list. It's not a CC...but it did take it out of the tolerance bucket. To me, they are incorrect on both of those counts...

Now, if a borrower changed closing agents from one on a list to another on the list...it's not a CC, but it's still subject to the 10% tolerance. This is why I encourage to use highest on the list in case this happens (which I just had a call on one that did just this, but without quoting the highest fees)

FAQ dated 1/28/10 p.19 #13
Q: If the borrower selects a service provider that was not selected or identified by the loan originator, is this considered a changed circumstance?
A: No, if the borrower selects a service provider that was not selected or identified by the loan originator it is not considered a changed circumstance.

Brock, you're just going to have to keep on going up the food chain at 'the large national institution' and challenging them. If you go ahead and do what they're telling you, you'll be in violation. Just 'cause a big boy says so doesn't make it so. I suggest email correspondence with their compliance head. Once things start being put in writing, they have a tendency to back off if they cannot support their position.

Joker, that is exactly where I am at. Thanks for the support. I now have a different lender saying it is a CC in the circumstance where we issued the GFE based on sending the loan to one instituion but for some reason it is now being delivered to a different one. Again, this is in direct conflict with a HUD FAQ. I can deal with complying with the REGs, but what I can't deal with are third party policies that contradict the regs. I want to recommned that we stop working with these institutions due to these policies, but I know that won't fly. Anyone else dealing with this?

Well, you are correct again. The only way that becomes a CC is if the entire program changes...not just a different lender. Gee Whiz!

I sometimes wonder what these people are smoking! Even though there are still quite a few "clouds" on RESPA...some of it is crystal clear...that issue is one of the sparkly things!

Brock, keep fighting and taking it up to higher levels. If I had a nickel for every time I pushed it and asked to speak to their supervisor only to have the item suddenly loose importance.... Oftentimes you're dealing with people who only think they remember hearing something and they're running with it. You need to get to someone who actually has a copy of the FAQ in front of them and who can be told, 'no, what you're asking me to do would be a violation and I'm not doing it.'

Thanks Truffle and Joker. I agree that we can't just go along with these policies. I am in the midst of attempting to get in touch with their compliance policy heads right now. Not surprisingly, it takes some doing to get this sort of contact info. If anyone else is works with these big boys and wants to join in, let me know. I could use some collective pressure.

Please Help! We thought we understood how to cure a 10% tolerance violation, but we have read conflicting information. At the time of the GFE, we quoted an appraisal fee of $400. In processing the loan, it was decided that a additional field review would be required for an extra $300. Of course, no one declared this a changed circumstance, so a revised GFE was not given. On trying to correct this at closing, we showed the $300 as field review appraisal paid outside of closing by the lender on line 809 (outside the column). We also, showed the amount over the 10% tolerance (for all items) as a Tolerance Cure of $228.10 on line 208. The title company, who is closing the loan, wants us to simply show the $300 POC by the Lender on line 809. Can someone please help??

Please don't double post your questions:

http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1365820&gonew=1#UNREAD

For loans not subject to RESPA for bank purposes (land only or commercial loans) has anyone heard whether the closing attorneys are allowed to use the old HUD-1 to disclose settlement costs?

That is a common practice and to the best of my knowledge there is no prohibition from doing so.

Thanks Dan the Man!

HELP!

Loan Officer disclosed Administrative Charges incorrectly in Block #3 (Courier Fee $25 and Escrow Waiver Fee $300) that should have been in Block #1.

Loan Officer also did not disclose the Appraisal Fee ($450) at all in Block #3.

We are at loan closing and will need to eat the fee . . . I was all prepared to do so on page 1 of the HUD . . . but our secondary market mortgage investor insists that the $300 and $25 must be shown on page 3 of the HUD in the 10% Section and used to offset the cure . . . . .

I don't feel these administrative fees that were disclosed in the wrong section of the GFE can be used to offset the fact that we did not disclose a $450.00 Appraisal Fee and will need to eat a portion of the Appraisal Fee.

Any advice? They want $300 & $25 shown on page 3 of the HUD . . . I don't think it can be there at all.

I tend to agree with you...although it's a shame, they were not disclosed properly to begin with.

RR Joker -- Thank you for responding . . . .

If anyone else has any thoughts or advice -- please respond as well. We have corrected the error made by SVP of our Mortgage Operations area with how she was listing fees within Encompass --- so going foward this will not happen again; however, we are facing this same issue on other existing applications.

Investor is leaning on the below as their sole basis for their stance: "Appendix A to RESPA states "The comparison chart must be prepared using the exact information and amounts from the GFE and the actual settlement charges shown on the HUD–1/1A Settlement Statement."

Any other advice, would be much appreciated.

Thanks!!!
Hollie

What surprises me, HTP, is that I'm surprised the investor wouldn't go with "worst case" which would be "highest reimbursement/cure"!

I just found out that one of our loan processors did not disclose home owners insurance and owners title insurance on the GFE? My understanding is that we are suppose to disclose OTI on the GFE in block 5. Is there anything we can do to reconcile this?

Is it a purchase transaction? If not, then OTI doesn't have to be on there.....i don't myself understand what violation you would have IF on a purchase, you didn't quote OTI, UNLESS the customer then purchased it....i mean...i think you could have a technical violation, but no cure....you don't quote it...it doesn't get purchased, thus doesn't show up on the HUD-1....again, seems like you could have a technical violation

It is a purchase. The loan processor stated that the customer will not by it. As for the homeowners insurance, there is no tolerance for homeowners insurance if we require and the customer chooses. What is the cure for the homeowners insurance?

It doesn't matter whether the cutomer will buy owners title insurance or not. HUD requires it to show on every purchase GFE. Period. It's a 10% cure item so you're stuck curing the fact that it was left off the original GFE.

As for the homeowners insurance, you lucked out. This is a 'Charge that can Change' so you will show zero in the GFE column and the cost in the HUD-1 column but you won't have to cure it.

We're in the last month of the four month 'get used to it' perioid. Hopefully your processor has these things nailed down by the end of April.