If, during the course of the loan process, the borrower decides he wants a balloon loan, but this will not change the amount of his costs/fees, does the lender need to reissue the GFE changing the answer to the question in the Summary section regarding whether or not the loan has a balloon payment? In other words, if the borrower's fees are not changing, does a new GFE have to be issued just to change the answer to the balloon question?

3500.7(f)(3) Borrower-requested changes. If a borrower requests changes to the mortgage loan identified in the GFE that change the settlement charges or the terms of the loan, the loan originator may provide a revised GFE to the borrower. If a revised GFE is to be provided, the loan originator must do so within 3 business days of the borrower’s request.

In typical HUD fashion they used the word "may" in a regulation. IMHO - why bother writting regulations that indicate that the a creditor "may" do something.

However, I would bet dollars for donuts that the regulators will read that as "must".

Thanks so much for the reply. That was very helpful. I too have been wondering what the whole "may" thing was about, so I really appreciate your thoughts.

I am desperate for help because I have to provide directions to our Systems people now about how to program for these changes, and I can't figure some of this out. I have put out several questions on here, but haven't received any responses, and I watched the Lending Compliance Triage video, but still didn't get all the answers I need.

I really need help with another aspect of the GFE. We charge an loan fee (origination fee) with our home equity loans but we pay all the third-party costs (appraiser, flood determination, etc.) Because of the loan fee, it's not truly a no-cost loan, so I'm not sure that the instructions for "no-cost" loans apply.

I can find no instructions to use P.O.C. on the GFE, even though you are to use them on the HUD. So I'm thinking that I need to disclose all the third-party fees in the Borrower's column on the GFE and then show a credit for the total of these third-party fees in line 2 at the top of page 2, resulting in a negative number for Adjusted Origination Charges (A). This amount would then be set off against the total fees shown in B. For example, $250 loan fee (line 1), $400 as a credit or negative number (line 2), would leave line A with a negative $150. The total of fees in line B would be $400, which when set off against A (negative $150) would leave Total Estimated Settlement Charges as $250.00. Of course, when you have to disclose insurance premiums in Line 11, it's not going to be this clean, but am I on the right track?

The only other option I can see is simply not to disclose fees on the GFE at all if we are paying them. That would make the form very simple and clean (just show the $250 origination fee in Line 1 and Line A and for Total Estimated Settlement Charges, except for insurance). But if I do that, how do I match it up with the HUD? Do I just put the third party fees on the HUD as P.O.C. Lender, even though they didn't appear on the GFE at all?

Please let me know your thoughts. Thank you.