I've been thinking a lot about preapprovals and RESPA. Here's my thoughts so you can "think" along with me.
1. Preapproval means I've verified the customer fully. The new RESPA rules say I can't ask for any verification from the customer until I issue a GFE.

2. The RESPA FAQs state if I issue a GFE without an identified dwelling and later a dwelling is found, this is NOT a changed circumstance. Therefore, I wouldn't want to issue a GFE until a house is found.

3. #1 & #2 seem to have me caught between a rock and hard place. I can't ask for verification documents until I issue a GFE, but I don't want to issue a GFE until a house is found.

The only option I can come up with is to issue a GFE, so you can request verification documents so you can issue a preapproval. However, you can't reissue a GFE when a house is found unless there is another changed circumstance.

What do you all think?


Correct.

That is what I don't get about this thing. The intent is to "help the customer make an informed decission" but how can they make an infored decission without a GFE? And what bank wants to issue a GFE w/o the identified dwelling if ading that later is not a changed condition?

Do pre approvals go Bye Bye?

Do banks provide an "Typical cost information " sheet (not a gfe) to help the custome know of your banks "typical cost".

In our branches the customer is not typically involved in the choice of attorney/title co. On a purchase, we typically get a title insurance policy, and just work with the title co lined up by the realtor/seller/broker. On a refi where we just need an atty opinion, we typically just order it from one of the approved attorneys that we have provided us good service.

Can we still do that? But then there is zero tolerance, right?

I have been asking that myself, DD, about most of the new changes...

I have what should be a simple ? but I am reading conflicting infromation.

Scenario: LO is charging one point for a rate. The point is included in Block 1 of GFE, and as I understand it, Block 2, box 1 is optional as to whether to disclose that point in block one above. Say we do check it off. With the same deal, the LO is paying all or some of the closing costs. Do we net it out of Block 1, since the instructions say we can't check off more than one box in Block 2?

That's what I'm wondering too.


I think we're going to start seeing these. As you know the GFE doesn't state the actual closing costs (how much they need to bring to the closing table) nor does it tell them their PITI payment. I assume banks will begin issuing a "Here's what you really need to know" sheet.

You can pick the provider. These would all be 10% tolerance (not 0%).

As you noted, the instructions state you can only choose one box in Block 2. If the point is in Block 1 and you paying some of the closing costs, you would add up all of the fees the bank is "eating" and put this as a negative number in Block 2 - and mark the second box. You still list the fees in Blocks 3-11 but some/all are offset with the credit in Block 2.

We have an example of just this scenario in our webinar on 11/10. You can find more info here:
http://calendar.bollearningconnect.com/main.php?view=event&eventid=1253206816535

I have a question about GFE page 1, if at the time the GFE is issued you don't require escrow for the loan, but during the udnerwriting process circustances dictate that you owould now require Escrow. Is this a changed circumstance that woul dpermit you to issue a revised GFE?

It depends on why you now require the escrow. If you just decide to, that would not be a changed circumstance. If the loan is a HPML and you are required to escrow, that would be a changed circumstance. There could be other reasons - like the appraisal comes in lower, a change in programs, etc. - that could constitute a changed circumstance. You can't just change your mind from not escrowing to now wanting one.

Dave,

I am asking this cause this will help determine if I am allowed to order your webinar. What type of compliance guarentee does your presentation come with?

I don't know how to answer that. There is no "guaranty" but I'm sure you'll come away with a lot of information and a better understanding of the requirements. If I was to present this training to you in person, I could "guarantee" you'd get all of your questions answered. Since it is a webinar, there are limitations (no personal contact, etc.) so I'm limited on how I can "guarantee" the training for you.

I understand what you are saying. It is a typical management type question. "Will this training guarentee to bring the bank into compliance with the reg" is like asking to guarentee that myr training for tellers will guarentee they will never violate a reg cc or whatever the reg may be...

Good point. What's also frustrating is HUD has not answered every question we have (I've been talking to HUD attorney's almost daily) and have contradictions between the regulation and Q&As. Guaranty? Maybe guaranteed to let you understand how messed up this regulation is!

And how do you guarantee that employees will follow the training 100% of the time?

Okay - I've read this thread from beginning to end - again, and concentrated on all the YSP related items. I just want to see if I am understanding this correctly. This has been a HUGE topic of discussion for us after an ICBA audio conference yesterday. We are scheduled, David, for your conference next week, too. I apologize for the length of this, but the detail is required in order to come to the right answer, I think.

We sell loans to several investors, do FHA, Freddie, etc. We do everything, and we book the loan in our name, and we send a check or wire funds to the title company. The money for funding is the bank's money. We book the loan, then pay if off once we sell, ship the loan to the investor and are funded. This process can take a couple of weeks or more.

We used to lock the rate with the investor early in the process, but had to stop that due to issues of "fall out" and increased costs to the bank from the investor because of "fall out" percentages. Either we lock the rate with the investor before closing or after we've closed the loan, it just depends on the rate at the time. On FHA loans, we usually lock the rate with the investor right before we send it to them to underwrite.

The way I've understood everything for the new rules in this discussion (and in reading current and new RESPA) is that the money we get from the investor is a YSP (above Par). However, we don't have to disclose this on the GFE because it's not "true" table funding (everyone here calls it table funding) under the definition on the GFE since the bank funds the loan.

Is this an accurate statement? If it is, YIPPPEEEE! This would solve a lot of the stress we've all had the last couple of days.

What we were thinking after the conference yesterday is that 1) this is a YSP, 2) we are a broker, 3) we must disclose this YSP in block 1 with a credit in block 2. Well, easy as pie if you know what that is at the time of the GFE, but we never know it that early in the process, and sometimes don't even know it until after we've funded. So, how the heck would you ever be able to accurately disclose in that no tolerance box. You can see why this was a source of some stress.

THANK YOU in advance for walking through this question with me.

Agree with you David - this is the same stance we are taking at this point. Mostly because our customers requesting preapproval also generally request information on approximate cost of the loan (or in some cases - several various loan types). They are shopping during the preapproval process.

This would of course require a new GFE with only the Escrow related charges changed?

Would it be better to train staff to check the escrow required and then later if the customer doesn't need to give them the option to not escrow?

In answer to my VERY long post above in case anyone else is looking for an answer to the same question

I left a message at HUD yesterday afternoon, and I actually got a call back this morning!! Yippee! The representative was VERY nice and VERY helpful! Anyway...his answer...because of how we fund in our name with our own funds, no need to worry about disclosing what we make as a YSP on the GFE! And a sigh of relief fell across the bank!

HUD's number: 202-708-3137 You will get a list of extensions for people who handle the RESPA questions. Anthony handles the callers from TX.

I think preapprovals do go away. As I've explained it, if you can't prove, I can't approve.

And I can already hear the realtors complaining that none of their customers can get preapprovals. It could be interesting to see how that shakes out.

I am already hearing it from my Mortgage Team. Saying we have to do preapprovals or we will be out of the market.

I don't agree that this is automatically correct. If they don't find a property within 10 days but theyexpress an intent to continue within 10 days, then you can't change the GFE based on the identification of property.

So, if the customer looks at the GFE and says, "Yep, I like what you have to offer, I'll let you know when I find a house", then you're stuck with that GFE regardless of how long it takes them to find one. Correct?

Right, because we personally make the rules up ourselves, or we personally decided to go along with this program, and no other bank in town will do this.

::sarcasm font::

I was at a seminar (I thought) yesterday where the speaker noted that if you reissue a revised GFE, you do not have to wait another 10 business days for the borrower to review the GFE and "shop around".

However in FAQ #12 on page 18, it states that "if a revised GFE is provided due to changed circumstances or a borrower reqquested change, is it necesary to complete Line 2 of the "Important Dates" section on the revised GFE if the shopping period has ended and the borrower has already expressed intent to continue with the application?
Answer: Yes, the loan originator must complete Line 2 in the "Important Dates" section. The date entereed must be at least 10 business days from teh date the revised GFE is provided to the borrower.

Doesn't this mean you have to wait another 10 bus. days when a revised GFE is issued? Therefore, you can never close earlier than 10 business days from a revised GFE issuance?

This doesn't make sense to me.

Thanks David.

You don't have to wait another 10 bus. days if the customer intends to proceed with the terms on the revised GFE. You just have to put the date 10 bus days out from the date you gave them the revised GFE.