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#1228585 - 08/06/09 07:04 PM Overstating fees on new GFE = violation?
Pinkie CRCM Offline
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Joined: Aug 2003
Posts: 399
KY
Would it be a violation if fees on the GFE were overstated? My mortgage dept is "considering" overstating all our fees so that we do not have to get into the "reimbursement" scenarios at settlement. Is it in stone that what you say on the GFE is EXACTLY what you charge? What about if the fee is lower and benefits the customer? Would we be in violation?

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Lending Compliance
#1228669 - 08/06/09 07:35 PM Re: Overstating fees on new GFE = violation? Pinkie CRCM
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
1. Knowling overstating fees all the time is not going to fly with the regulators. It never has in the past.

2. It will put you at a distinct competitive disadvantage.

3. Since your Early TIL will have to match the GFE - you may initially turn these loans into HPMLs and require redisclosure 3 days prior to closing anyway.
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#1228682 - 08/06/09 07:41 PM Re: Overstating fees on new GFE = violation? rlcarey
RR Joker Offline
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The Swamp
Pink, I can give you a similar example which was told to me by my contact at the FRB...way back, some bank noticed that the APR almost always was 1/2% higher than the rate, so they just started using that figure...it didn't fly even on overstatement. Everyone is better off doing their best to use good estimates. YOu'd have to be WAY off for it to bring you out of tolerance one way or the other.

My beef is when you can give the borrower a better rate...seems they shouldn't have to wait for that!
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#1229235 - 08/07/09 03:24 PM Re: Overstating fees on new GFE = violation? RR Joker
Burgess Offline
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Joined: Jan 2004
Posts: 1,621
??? Is this GFE stuff part of the January 1 2010 HUD rule changes?
Its not in effect now is it?
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#1229273 - 08/07/09 03:48 PM Re: Overstating fees on new GFE = violation? Burgess
VRV Offline
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Joined: Jun 2007
Posts: 173
Clearly, the question of what numbers to use on a GFE applies today as well as under the 1/1/10 rules. But I imagine Pink's question was focused on the rules after 1/1/10, since then if the fees go up after initial disclosure, a new GFE must be issued. (And, of course, there must be a legitimate reason for the increase in fees, i.e., "changed circumstances.")

At our bank, we pay almost all of the third-party fees for the borrower. Most of the time, the borrower's only cost is the loan/origination fee. (Only exceptions would be for the occasional situation where we require title insurance or if the collateral is in a state with doc stamps and/or intangible taxes--the borrower pays these fees.)

We start out ordering a low-level evaluation for the property, and work our way up from there as needed. There are about 5 different levels (and charges, of course) of appraisal and we don't necessarily know until we get an appraisal back whether or not we need to advance to the next level. (For example, we might go from an AVM to a Desktop to a walk-through, depending on what value comes back on each and how that relates to the requested loan amount.) It's all irrelevant to the borrower because we're paying the costs. But it appears under the new rules that we would need to provide a new GFE each time we order another appraisal because the fees increased, even though it doesn't impact the borrower's bottom line. So I'm wondering if we can just use perhaps a middle level appraisal charge on each GFE so we don't have to keep issuing a new GFE everytime we order a more advanced appraisal. Again, none of this has any impact on the borrower.

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#1229313 - 08/07/09 04:06 PM Re: Overstating fees on new GFE = violation? Burgess
TattChica Offline
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TattChica
Joined: Oct 2007
Posts: 151
Va Beach, VA
didnt this start with any loan apps dated AFTER 7-29?
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#1229433 - 08/07/09 05:31 PM Re: Overstating fees on new GFE = violation? TattChica
VRV Offline
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Joined: Jun 2007
Posts: 173
The new RESPA rules regarding GFE and HUD are effective as of 1/1/10.

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