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#1265467 - 10/13/09 02:19 PM Re: RESPA changes 1-1-10 CompDat
CompDat Offline
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Oops forgive me, I found it on the HUD site. Thanks

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RESPA
#1265578 - 10/13/09 04:42 PM Re: RESPA changes 1-1-10 CompDat
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OK, question about using an average charge. The way I am reading this, I should not use an average charge. Here is my reasoning. If you use an average charge, and my total settlement charges subject to the 10% rule are exceeded by 10%, I will still need to reimburse. Am I right?

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#1265623 - 10/13/09 05:28 PM Re: RESPA changes 1-1-10 CompDat
David Dickinson Offline
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Yes.
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#1265681 - 10/13/09 06:37 PM Re: RESPA changes 1-1-10 David Dickinson
CompDat Offline
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Does anyone have copies of the new GFE and HUD-1 in excel or microsoft word so that we can modify them to do training?

Thanks

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#1265839 - 10/13/09 08:28 PM Re: RESPA changes 1-1-10 CompDat
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I know I am going to be asking some annoying opinions on here in the next few days. Please take a look at question 6 on page 28 of the new Q&A. It reads:

6) Q: How should payments by the seller or real estate agent that are for settlement services included on the GFE be shown on the HUD-1?
A: If a seller or real estate agent pays for a charge that was included on the GFE, the charges should be listed in the borrower's column, with an offsetting credit reported in Lines 204-209 of the HUD-1, identifying the party paying the charge. For a seller-paid charge, the charge should also be listed in Lines 506-509. For a charge paid by the real estate agent, the name of the person paying the charge must also be listed.


To me, this says something very intersting and I want to see if everyone agrees. If you notice, no adjustment is made on page two of the HUD to the borrower's fees, if it is paid by the real estate broker or seller and listed on the GFE. To me, what that is saying is if you disclose the fee on the GFE, regardless of who paid it you must compare the HUD and GFE against each other on page 3 of the HUD. Thus, a fee such as an appraisal disclosed on the GFE, and paid by someone other than the bank, would be subject to the 10% rule. The reason I say that, is because in this example no cooresponding adjustment is made to the HUD like in the example given on question 9 page 26. The difference here is, the bank is not paying the charge.

Please opine.

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#1265868 - 10/13/09 08:47 PM Re: RESPA changes 1-1-10 CompDat
David Dickinson Offline
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You're right. The GFE is supposed to list fees the borrower "typically" pays for (see several Q&As to support this). If someone else pays for it after the GFE is issued, is is not relevant. The tolerance rules still apply.
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#1265982 - 10/14/09 01:07 AM Re: RESPA changes 1-1-10 David Dickinson
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We are in the process of testing our lending software. When we enter the information for the GFE, everything looked great. We then entered the sellers information for the HUD and added the required seller paid item (such as transer fee). When we ran our comparison, the software showed we were out of tolerance by the amount of the items that the seller is required to pay. Should we have listed the seller paid items on the GFE even though the FAQ states not to? These are items that the borrower would not typically incur and the requirement for who should pay for them is not in question.

2) Q: Are charges to the seller listed on the GFE?
A: 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.

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#1265986 - 10/14/09 01:25 AM Re: RESPA changes 1-1-10 CompDat
jlroberts Offline
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Originally Posted By: CompDat
Does anyone have copies of the new GFE and HUD-1 in excel or microsoft word so that we can modify them to do training?

Thanks


We were also wondering about this. I found a site that is selling the forms in word or excel format. They are even on sale right now. We decided not to buy them. If you decide to buy them and if they work for your training purpose, let us all know.

Anyway, the site is http://www.formsinword.com/HUDhousingandurbandevelopmentHUD(page1)1-40093A.htm

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#1266102 - 10/14/09 01:45 PM Re: RESPA changes 1-1-10 RR Joker
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When a borrower chooses not to escrow their taxes and insurance, we charge a fee that affects line 802 - would that be considered a changed circumstance?

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#1266113 - 10/14/09 01:57 PM Re: RESPA changes 1-1-10 jlroberts
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Somewhere in the middle
In today's the ABA Newsbytes,

HUD
ABA, Trade Groups Ask HUD to Postpone RESPA Rule’s Implementation Date

ABA and five other trade groups yesterday asked the Department of Housing and Urban Development to postpone the Jan. 1, 2010 implementation date of its final Real Estate Settlement Procedures Act rule, and then take several additional steps to achieve the rule’s effective implementation.

“Despite the best motivations of HUD, and the sincerest efforts of the industry, we are headed for a mortgage market train wreck on the tracks of RESPA compliance,” the trade groups said in a letter to HUD Secretary Shaun Donovan and Assistant Secretary David Stevens. “Unfortunately, the gap between the rule, which was unclear, and practical implementation is not being successfully bridged by the [frequently asked questions guidance].”

After postponing the rule’s implementation date, they said, HUD should finish resolving the issues described in the letter, many of which will require revised FAQs; provide a reasonable implementation period before compliance becomes mandatory; and notify the public that beginning Jan. 1 -- and through the implementation period -- that using the new or old forms in transactions subject to the rule will not constitute a RESPA violation. Read the letter. For more information, contact ABA’s Rod Alba.
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#1266127 - 10/14/09 02:07 PM Re: RESPA changes 1-1-10 jlroberts
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Originally Posted By: jlroberts
We are in the process of testing our lending software. When we enter the information for the GFE, everything looked great. We then entered the sellers information for the HUD and added the required seller paid item (such as transer fee). When we ran our comparison, the software showed we were out of tolerance by the amount of the items that the seller is required to pay. Should we have listed the seller paid items on the GFE even though the FAQ states not to? These are items that the borrower would not typically incur and the requirement for who should pay for them is not in question.

2) Q: Are charges to the seller listed on the GFE?
A: 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.


Charges to the seller are listed on the GFE. Remember the GFE is a disclosure of fees that the borrower would be likely to pay. If the seller pays them, great, if not your borrower would have to pay them. This is precisely the reason the rules have changed. Because some lenders were claiming the borrower would pay nothing, to get the sale, then at close they would pay everything. It sounds like your software is working correctly.

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#1266130 - 10/14/09 02:09 PM Re: RESPA changes 1-1-10 CO Officer
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Originally Posted By: CO Officer
When a borrower chooses not to escrow their taxes and insurance, we charge a fee that affects line 802 - would that be considered a changed circumstance?


I guess this one becomes a tought question and you should develop an internal rule to keep this consistent. IMO this would not constitute a change in circumstance if most of your applicants waived escrow and were charged the fee, and you did not ask the applicant what they would do. If this was the case, I would argue that your GFE was issued incorrectly and then would be subject to the tolerence.

However, if you did ask the borrower and they wanted to escrow, then changed their mind. IMO this could constitute a change in circumstance.
Last edited by CompDat; 10/14/09 02:10 PM.
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#1266223 - 10/14/09 03:33 PM Re: RESPA changes 1-1-10 CompDat
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One of the bullets in the ABA letter yesterday stated that one of the new requirements requiring more implementation time as "Prohibited used of HUD-1A on non-sale transactions when lenders cover borrower costs". Where is that in the reg? What would you use on home improvement and home equity "no cost" loans if not the HUD1A?

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#1266451 - 10/14/09 06:17 PM Re: RESPA changes 1-1-10 Ninky
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On page 68243 of the Federal Register under the Appendix A for instructions for copleting the HUD-1 and HUD-1A:

Charges paid outside of settlement by the
borrower, seller, loan originator, real estate
agent, or any other person, must be included
on the HUD–1 but marked ‘‘P.O.C.’’ for ‘‘Paid
Outside of Closing’’ (settlement) and must
not be included in computing totals.

If you notice that since it does not say HUD-1A I am assuming they mean you must disclose this on the HUD-1. If you look at the new form HUD-1a there is no first page it would be hard to disclose that.

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#1266462 - 10/14/09 06:23 PM Re: RESPA changes 1-1-10 CompDat
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Also if you notice how the cure provision works or lender paid item on the Q&A page 26 number 9, it says you must make a HUD-1. I believe because you need to show the offsetting entry on page 1 lite item 204-209 as well as the POC item on page 2 in the appropriate area.
Last edited by CompDat; 10/14/09 06:24 PM.
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#1266543 - 10/14/09 07:20 PM Re: RESPA changes 1-1-10 CompDat
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But that same page 68243 also says in the next paragraph:

In the case of "no cost" loans where "no cost" encompasses third party fees as well as the upfront payment to the loan originator, the third party services covered by the "no cost" provisions must be itemized and listed in the borrower's column on the HUD-1/1A with the charge for the third party service. These itemized charges must be offset with a negative adjusted origination charge on Line 803 and recorded in the columns.

I am confused. It doesn't really say, at least I don't understand it to say, that the HUD 1 must be used for "no cost" loans.

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#1266551 - 10/14/09 07:25 PM Re: RESPA changes 1-1-10 Ninky
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Perhaps one area that might be causing some confusion is the HUD letters term "lender covers". In my example the lender is covering a cost and "making a cure" for all intents and purposes.

You are referring to "no cost" loans which would be treated differently because there would be no need to show costs on the 200 series titled "Amounts paid by, or on behalf of the borrower". IMO in those cases you could use the HUD-1A. But if the lender is paying part, then you need the HUD-1.

Does anyone else agree with me, or am I getting confused? IMO these fees, even though they would be no cost, would still need to be on the GFE.
Last edited by CompDat; 10/14/09 07:27 PM.
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#1267046 - 10/15/09 02:43 PM Re: RESPA changes 1-1-10 CompDat
David Dickinson Offline
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The POC issue is very confusing. It depends on when fees (paid by the lender or seller) or determined.

If you issue the GFE and then decide to eat a fee or the seller is going to pay for it, you'll need to show the offset in the 200 series. Hence, a HUD-1 is needed.

If you know the borrower is not going to pay a fee at the time the GFE is issued (like the bank will eat the flood determination) - a "no cost" or "partial no-cost loan" - then you can use a HUD-1A.

This is something we are going to cover in-depth at our upcoming webinar. Go here for more info:
http://calendar.bollearningconnect.com/main.php?view=event&eventid=1253206816535
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#1267050 - 10/15/09 02:49 PM Re: RESPA changes 1-1-10 David Dickinson
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I agree Dave. Correct me if I am wrong, but in your second scenario where the bank knows it will eat the flood determination, you offset that fee with a negative adjustment to origination charges in box 2.

Sorry if my questions seem like old hat. This banter and research is really helping me understand the regulation. FWIW I thought your training last week was excellent.

The reason I keep opining on thise questions is because I have not heard anyone expressly state that you can cure preclose. But the way I read the Q&As you can.
Last edited by CompDat; 10/15/09 03:03 PM.
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#1267138 - 10/15/09 03:51 PM Re: RESPA changes 1-1-10 CompDat
David Dickinson Offline
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That's correct. Then you could use a HUD-1A and it will match the GFE.
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#1267214 - 10/15/09 04:33 PM Re: RESPA changes 1-1-10 David Dickinson
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Anyone else reading the 49 page ABA letter to HUD asking for a postponement of implementation? Page 2 has my favorite line so far....
Quote:
Without taking the steps recommended above, widespread consumer confusion, crippling market dysfunction and a strong possibility of imminent litigation morass are on the horizon.
I'm all for sacrificial offerings, bribes, whatever it will take to get this thing clarified adequately to not feel like I'm shooting kraps when it comes to interpretation and compliance.

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#1267220 - 10/15/09 04:40 PM Re: RESPA changes 1-1-10 Truffle Royale
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I'm all for delaying the rules, but it's a little late. This would have been 6 months ago, before we all starting training, designing procedures, etc. Lots of wasted time on this one. Thanks HUD - NOT!
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#1267267 - 10/15/09 05:19 PM Re: RESPA changes 1-1-10 David Dickinson
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David, look at this thread. We've all started training and changing but there are too many questions out there as to exactly what we're supposed to be doing not to mention all the contradictions created and I'm only on page 10 of the letter now!

Going forward with this on 1/1/10 IS a time bomb waiting to explode. I don't want my FI to be where the brown matter hits the fan of interpretations. I want this all spelled out clearly. Whatever training I've done up to now won't be wasted.

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#1267286 - 10/15/09 05:35 PM Re: RESPA changes 1-1-10 Truffle Royale
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Can someone provide a link to the ABA letter?

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#1267299 - 10/15/09 05:50 PM Re: RESPA changes 1-1-10 BFaith
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Nevermind, I found it!

Here is a link if anyone else is looking

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