Absolutely it looks like a contradictory. You'll find the same with the loan amount (they tell it can be a changed circumstance, but tell it isn't later).

I believe the point is these need to be "materially different" to be a changed circumstance. IOW, if the borrower tells you their house is worth $150,000 and the appraisal comes in at $151,000, that's probably not a changed circumstance. Also, if they say they want to borrow $100,000 and then they need $101,000, that's not a changed circumstance.

However, each of the examples I gave could be if it takes them to a different program. For instance, if you were lending exactly 80 LTV and the appraisal comes in $1,000 less then the estimate, this could bump them to a different program or at least they may not qualify for the 80% LTV program you were looking at.

There's lot so things like this in the RESPA rules.

So we are left to interpret it however we interpret it? Or rather, however our examiners interpret it?

Good point.

I think they even basically state this...you have to decide and keep your ammo for proof of why you did what you did! LOL

Thanks for your help on this.

Ok, so apparently HUD has never read the TILA. The only way for the borrower to know what affects their APR is to review the Itemization of Amount Financed, which BTW is not even required when a GFE is prepared. Ok, so the borrower does not receive any document at application (and possible at closing that shows how the APR is calculated, since this information is no longer displayed on the HUD). It also seems that the only purpose for the GFE and HUD is for the 5% of borrowers that actually compare lenders. It provides no information to the borrower as who is collecting the fee, if the lender or broker are retained the fee, what is included in the APR, etc. IT seems that HUD is accomodiating for 5% rather than the other 95%. STUPID!

It also seems that HUD has not reviewed the state laws either. Most state laws don't allow non-lenders, i.e. originators or borkers to charge an origination charge. Ok, so where do they put their fees? Does RESPA trump state law? It's interesting that HUD has made no effort to try and intergrate their forms to any other regulations.

David in your analysis of the OTS examples you said: It appears this is a purchase therefore there would be a deed and a mortgage to be filed. I think you're confusing a Deed of Trust which is another name for a Mortgage in some but not all states, with a Deed to the property.

By the way, Heather, I totally agree this is stupid and confusing and totally a knee-jerk reactionary move with no thought to the ramifications a/k/a typical government and your tax dollars at work.

On the new GFE we are suppose to list all fees regardless which party pays the fee and then "plug" the total seller paid on the front page of the HUD-1. Ok, so how do we assign the seller payment? i.e. which fees will be paid by the seller, because this will affect their TIL. The point of the TIL was to compare lenders as well. But two lenders could allocate the seller paid costs differently and come up with two very different TIL, so how does the borrower came these TIL? THe old GFE would have said which fees are PFC and which fees are indicated as seller paid so the borrower could see. However, the form makes no such designation. So three days from application,the borrower receives a TIL and a useless GFE will not explanation of how the TIL was derived. Ok, so do we need to start supplying an Itemization of Amount Financed at application? And then do we customize our Itemization to show which fees are paid by the seller, because now it does not that was the job of the GFE.

Is the federal reserve doing anything?

The ATL FRB suggested we supply an itemization even though you "don't have to" if providing a HUD.

Our local FDIC examiner suggested the same thing. We discussed how it was going to be difficult to determine what fees were included as a finance charge and which weren't when everything was lumped together. We also have state laws which are going to require a break-out of the fees so I think a separate itemization is what we are going to have to do somewhere in the file.

We are preparing a spreadsheet for the attorneys to fill out for FC determination purposes.

We will also breakdown OUR fees for the same purpose on our early and final input sheets.

The GFE and ETIL are two different laws. Although related, you will need to get your ETIL correct regardless of how the GFE is listed. On the GFE, you MUST list the seller paid costs as if the applicant will pay them. On the ETIL, you can allocate who will be the payor.

Just thought I would mention the FAQ's were updated again as of 10/22/09.

We currently do not require a certain attorney to be used. We only idicated that teh be licensed in the state. Since we don't have a list of attorney's and it is an item they can shop for, would that be included in the 10% tolerance?

this post should be required reading for the examiners. better yet, ask them what to do in these specific circumstances. if they can't answer them, i'm guessing they will be willing to "work" with you as they will be just as confused. i'm actually sending this to some of my former colleagues at the fdic to let them know they had better brush up on the reg.

Gotwood...the examiner's are charged with enforcing another agencies law. They will cripple along to begin with and will look to us for help (how much you wanna bet, I'm pretty darn sure of it)

I believe they will go easy (unless blatant)until time has gone by enough to sort through some questionable issues.

ahk..if you require an attorney to be used...you will have to provide a list...how many you put on the list is up to you. If they choose one from your list, you have a 10% tolerance...if they go outside the list, you are safe!

I disagree you list seller paid costs on the GFE. When I read the regulation I came that conclusion, but several Q&As (which seem to be caring more weight than the regulation) state to list fees the borrower "typically" pays for. For instance, I don't believe transfer taxes should be listed on the GFE as they are always paid by the seller. I also think you should only list 50% of the owner's title insurance as this is what is paid by the borrower 99.9% of the time. When you get the purchase agreement and it identifies something different, you have a changed circumstance and amend the GFE, if necessary.

Question 1 Page 9 (Seller Paid Items):

Q: If at the time a GFE is issued it is known that the seller will pay settlement charges typically paid by the borrower, how are the charges disclosed on the GFE?
A: All charges typically paid by the borrower must be disclosed on the GFE regardless of whether the charges will be paid for by the borrower, the seller, or other party.

Question 2 clarifies even more. I really think you need to list seller paid fees on the GFE. The reason I say this is because under what is "typical" is not contingent on who will pay them this loan. Thus even if you KNOW the seller will pay the fees, you should still list them. Notice in the answer it says, you MUST disclose the fees, regardless if the charges will be paid by the seller.

I want to clarify above. The definition of typical is not listed, but IMO typically was intended to mean, does the borrower pay for this fee, typically. I cannot think of any fee or charge in a secondary market transaction that would not be typically paid by the borrower. I can find countless evidence where charges have been paid by other parties, but that does not make it typical. I asked the OCC to opine once regarding the old rule. I had a very seasoned regulator (which I am sure you have dealt with since you're in my area - GO BIG RED) that told me, you should list fees on the GFE, if you do not know they will be charged, but they occur on >10% of loans. This to me, suggests that typical has little to do with the intent of a single loan, but of all the loans conducted in your geographic area. Thus, IMO seller paid fees must be listed regardless.

I gave them a quick view: 2 Q&As on broker issued GFE and a ton on reverse mortgages.

We have the following under Transfer taxes:

Intagibles, GRMA, GA Transfer (purchase) and FL Doc Stamps.

I can't say that these are all typically paid by the seller. I think everyone has to see what is typically paid by the seller in a state-by-state situation, maybe?

All I can say is I disagree. If the seller doesn't typically pay transfer taxes or 100% of owner's title insurance (which is true in our are), then I recommend you not list them on the GFE. That's what the Q&As states, as you quoted. It doesn't say list all fee associated with the loan, no matter who typically pays for them.

I agree this is what the regulation implied, but the Q&As have clarified this not to be true.

For sure, there are a lot of questions like this still unanswered. Hopefully, we can get more guidance on this and other issues. You wouldn't wrong to list seller paid fees, but I don't think you need to. It also might put you at a competitive disadvantage when the applicant sees these large amounts to settle.

I hope so because I honestly believe that the term "typical" has little to nothing to do with "this loan" (hypathetical loan).

I once audited a mortgage place and came across a lender who never made more than a total of $10 in mistakes on the GFE. I asked her why and she said, that you can get a GFE exactly right if you just do your homework (and no she was not completing the GFE at close - I checked). So one day I was auditing her area and heard her making several calls. She was finding out exact charges for every fee before she completed the GFE.

When I spoke with the OCC examiner regarding fees that a borrower would normally pay (old rule: the lender shall provide all applicants for a federally related mortgage loan with a good faith estimate of the amount of or range of charges for the specific settlement services the borrower is likely to incur in connection with the settlement. )

We were discussing the fees for brokerage fees, title insurance, and a few other fees. She told me, the term likely does not mean 50%. It is more of a "could" statement. I did some statistical analysis of all loans and fees and we came to the conclusion, that to avoid RESPA violations, if your unsure about a fee, list it on the GFE (and that rhymes - perhaps I will use that in my training).

Cute, very cute. I may have to use that too. Of course, I give you all the credit.

Good discussion.

You know the more I read the question from page 9 I am starting to come to your side of the fence. However I think that the original poster was stating other fees, like in the case of seller paid fees for a VA loan. In a VA loan it is "typical" that a seller would pay the fees. However not exclusive.

I was not thinking of it in the case of owners title insurance or transfer taxes.

I guess here is where I see the line that is drawn by question 1. If you do a loan and a borrower will not be paying the fees, you know they will not be paying the fees, the borrower knows they will not be payin the fee and the seller will be paying the fee, I would list it on the GFE, if it is for fees that a borrower typically pays, origination fees, escrow amounts, title insurance and most other fees.

But in your two examples you may be right.