Agreed.

My issue is with a previous post that said once you have collected the six items that you have an application for GFE purposes.

I don't disagree with these items. I think it is OK to ask for a completed 1003 but you must ask for it EVERY TIME. If you're going to say you must have a 1003 completed, then make sure LO's aren't EVER taking an oral application or starting the application process without one.

Am I correct that if we allow the borrower to choose the attorney that they would like to handle the loan closing, we must provide the borrower with a written list of settlement service providers (attorneys in this case) at the time of the GFE? This is the only settlement service that our bank doesn't require a specific provider.

Also, am I correct that this would go in Block 4, not Block 6 on the GFE "Your Charges for All Other Settlement Services"?

Yes. Anytime you allow the borrower to shop for a servicer provider, you must provide them with a list of "recommended providers".

You are correct, loan closing fees go in block 4.

Jerod Moyer & I will be conducting a webinar on the new (and constantly changing!) RESPA FAQs on 9/24 for BOL. You can find more info here:
http://calendar.bollearningconnect.com/main.php?view=event&eventid=1250610623605

Just clarifying.......Isn't it still permissible not to provide a list of "recommended providers" and let the borrower determine for themselves which attorney (in the example above) they want to deal with?

Thanks

Beginning 1/1/10, if you allow the applicant to shop for their own provider, you MUST give them a list.

Given that it's nearly impossible to guarantee that a few hundred mortgage loan originators will collect the same information on every single consumer, are you recommending that we just collect the six items, issue a GFE, then collect the rest of the 1003 information once the consumer receives the GFE and agrees to go forward with the application?

You don't have a choice really. Once you have the 6 items, RESPA says you have an application. Like I said above "I think it is OK to ask for a completed 1003 but you must ask for it EVERY TIME. If you're going to say you must have a 1003 completed, then make sure LO's aren't EVER taking an oral application or starting the application process without one."

What else do you need to issue a meaningful GFE?

I agree that we typically wouldn't collect the property address for a prequalification, but if the prequalification is for a refinance we'll know the property because it's the same as their current address. We currently pull a credit report when we do a prequalification. But under the new RESPA rule there doesn't seem to be a way to do it without collecting the six items, so we'd have to provide a GFE unless we stop pulling a credit report. Does anyone have a different conclusion?

I don't think you can simply avoid pulling a credit report and say "I don't have an application". If you read the section by section analysis of the RESPA rules, it clearly states they want GFE's out early so people can shop. Avoidance on your part is not the solution.

I'm not trying to avoid a GFE for a regular application, but I'm concerned that we'd be generating a GFE for every prequalification. I think that would trigger an initial TIL too.

What else do you need to issue a meaningful GFE? [/quote]

I think it's reasonable to add product type as the seventh item. (3/1 ARM, 30 Fixed, Fixed Rate FHA, etc.) Since that same definition is going to drive the requirement to give an initial TIL you'd need to know the product type so your TIL will be accurate. Even if we don't need anything more than the 6 or 7 items to generate an accurate GFE, I'm not sure why we shouldn't collect more 1003 information at that time. Most banks probably have variations in the degree of completeness of 1003 information from one customer to the next. I don't understand why anything changes around that point based on the new RESPA rule.

I am having a hard time understanding why you have an application once you have the six items. The definition of application in Regulation X doesn't say that. The final rule does say "Once the applicant submits to the loan originator all the mortgage application information deemed necessary by the loan originator to process the GFE, the originator will be required to deliver or mail a GFE to the applicant within 3 business days."

This to me says if the lender determines additional information is needed to produce the GFE, such as loan purpose, product, property type and occupancy, then if the applicant only gives me the six items, I don't have an application.

Can you point me to somewhere in the final rule that would help me understand why you have an application if you have the six items?

What you are missing Amos is if you designate that you need 8 items (which the Reg allows you to do) then you better collect 8 items every single time and you have better have these 8 items identified and documented in your application policy/procedures. If you do not have them identified then auditors and examiners are going consider you having an application when the 6 items are identified, and your verbal confirmation that it's your "policy" is to require 8 items will not fly. And you have better hope none of your loan officers issues the GFE with only 7 of the 8 items you name in your policy/procedure.



Will B...if I understand your earlier post you currently do pre-qualification requests for refinancings. That's fine for customer service, but under RESPA (currently) you have an identified property therefore the "pre-qualification" request is subject to the disclosure requirements for RESPA.

I agree Dan. I want to put my spin on this. I believe what you are referencing is the diligence requirement in the commentary to Reg. B. It basically says, if you have an applicant come into apply...YOU (Lender) need to obtain everything required to process the application. Not just expect them to provide everything and if they dont you get away without having an application.

For example, would you pull credit on this? If the answer is yes, then I find it very difficult to argue that you do not have an application.

Let me ask this another way. How can you provide a meaningful GFE if you only have the six items? How do you know what rate (fixed vs. ARM) and points to quote? How do you determine the cost of title insurance (purchase vs. refi vs. additional endorsements based on product and property occupancy)? How do you determine the appraisal charge (single family vs. four family)? How do you determine addtional secondary market fees that may be assessed?

I agree. You need the 6 items. I don't think anyone is arguing with that. We're just simply stating you must apply this consistently.

If I came in and said "I would like to refinance my house" the LO is going to ask me about programs, fixed vs. variable, etc. If the LO also collects the other 5 things, you have an application.

Any suggestions on how to create such a list? Use a phone book? I mean really, how are we supposed to know?

I plan on simply providing them a list of our "approved" providers. If they shop outside that list I have no control over that.

Thanks Dan.

Also, your bank can have a benefit by keeping the list short.
If they select someone on your list the 10% Tolerance applies
If they select someone not on your list - Then it falls outside any tolerance requirement, because they shopped and they chose so "its all on them"

So don't try to list every Title Company in the phone book, just list 3.

Thanks, I just think the whole idea is idiotic...

I am looking for some clarification on how to handle the cost of the owner’s title insurance policy on the new GFE in those cases where the seller typically pays for the owner’s title policy, such as in Wisconsin.

Question #2 in the section of the HUD FAQs labeled “GFE – Seller paid items” reads, “Are charges to the seller listed on the GFE?” HUD’s answer is, “RESPA requires that only the borrower receive a GFE. The GFE is defined as an estimate of settlement charges a borrower is likely to incur in connection with the settlement. Charges that typically would not be charged to the borrower, but would be charged to another party—such as the seller—do not have to be included on the GFE. If the borrower typically would incur charges for title services and lender's and owner's title insurance, the GFE instructions make it clear that those charges are required to be listed regardless of whether, for example, the contract requires the seller to pay for the service. If there is a question about whether the borrower or seller is to pay for a particular settlement service, the charge for that service should be disclosed on the GFE.”

Question #5 in the section labeled “GFE – Block 5” reads: “If a seller typically pays for the Block 5, ―Owner‘s title insurance, does the charge still have to be shown on the GFE?” HUD’s answer is, “Yes, an estimate of the cost must be shown in Block 5, ―Owner‘s title insurance for all purchase transactions regardless of who is selecting or paying for it.”

These two Q&As seem to be contradictory. Thoughts anyone?

I have a question regarding the average charge. HUD's Q&A says that some states prohibit the use of an average charge. Does anyone know where I would look to see if PA allows the use of an average charge? I was going to post this in the PA forum, but I don't think it gets much traffic and I thought I might have better luck (hopefully) here.

Looks like HUD is still fine tuning their FAQ. There is a new one dated 9/9/09

http://www.hud.gov/offices/hsg/ramh/res/resparulefaqs.pdf

I could not find where anyone else had posted this so I thought I would do so.

Enjoy the aggrevation!