I agree. In fact, I foresee a lot of GFEs issued at closing because of a change requested by the borrower on that day.

Yes. Only the fees affected by the change can be modified on the revised GFE>


I don't think so. I believe the GFE should be your BEST estimate - not an overkill. If there's any doubt, include it, but otherwise, don't say there's a fee you don't think you'll have. To conservatively price up fees will also make your GFE less competitive if they are shopping.

Wait, can we back up the train just a bit here? You're saying that if the borrower requests a change at the closing table (say they decide not to escrow in a case where they do not have to) you HAVE to reissue the GFE? How did I miss that?

yeah...

wow...

I don't think the industry will allow preapprovals to go away, but it's going to be a challenge for those bankers that do try to provide them.

SERIOUSLY?????!!! But you're not estimating anymore. You're at the closing table. Your estimate was for escrow but at the closing table they're not escrowing. So I have to stop the closing and give them a new ESTIMATE and then go on with the reality of the closing?

omg, this just gets dumber and dumber. I'm so overwhelmed with the stupidity of some of this. Tell me again how this is better for the borrowers?

My point is lots of times borrowers request changes on the day of closing or at the closing table. For instance, "I need $5,000 more. Can we do that?" I would reissue a new GFE with the adjusted fees because of the increased loan amount (higher origination fee, etc.) and then issue a Settlement Statement.

My point is this WILL happen and there is no waiting time between the GFE and the closing.


That's not what I'm saying. I'm saying if you don't require an escrow and they don't want it now, I wouldn't issue a new GFE. That's not a tolerance issue and it doesn't affect the GFE from a closing fee issue.

NO NO NO!!!! I wasn't like yeah, yes, it was meant as a :questioning: yeah, what she said.

whew. ok, got it. Thanks, JJ and David.

Oh, and FlamingoGal, thanks for the follow-up. We were facing a mutated version of your question so I'm extremely grateful that you shared HUD's answer.

TGIF...that's all I can say as I continue to muddle through this.

Sorry to beat a dead horse, but say we would not require escrow based on what the borrower told us at applicaition.

Then in the underwriting process we discover they are deliquent on their property taxes, so we now say we want them to escrow. Would that be permissible and we issue a revised GFE based on a changed circumstance we did not know at the time we issued the original GFE?

We have in house appraisers and outside appraisers. AM I right we include the fee in the origination charge if the appraisal is done by the "in house" appraiser but we do not if it is done outside? But neither fee goes in the APR?

We are thinking the same way, and don't plan to issue TILs or GFEs on loans "for business purposes" after the first of the year. Not sure about the HUD1s yet.

That is correct. 3rd party appraisal fees go in blk 3.

This would not work with our regulators-- we have already been told that if a disclosure is given it has to be right--regardless of whether we were required to give it at all.

1. If the applicant expresses intent to proceed before the GFE expires and the closing does not take place until after the GFE expires, do you have to issue a new GFE? If you are no longer bound by the settlement charges, does that mean that you can change the actual costs because by then you probably would have received the invoice for the appriasal and title work to know the actual costs.
2. Would you have to issue a new GFE within 3 business days after it expires or could you issue it at closing.

The only changed circumstance is that the GFE expired and you now know the actual cost for settlement services.

Same question asked a little differently: If the applicant expresses desire to proceed within the 10 business days, are you bound by those cost unless there is a changed circumstance even if the GFE expires before loan closing.

1. The borrower has 10 days to decide to proceed after they recieve the GFE. If they express intent to proceed within those 10 days, the fees on the GFE must be honored within the applicable tolerances. If they do not express intent to proceed within the 10 days, you are no longer bound by those terms, and you would issue a new one if they came back to you.

2. If a redisclose is required, you would have 3 days to do it.

Please note that in (2)(i) of the definition of “changed circumstances” in the final rule, which lists the things that changed circumstances do not include, the last phrase is “…unless the information changes or is found to be in accurate after the GFE has been provided.” So….a change in the loan amount or the estimate of the value of the property looks like it could be a changed circumstance if: a) they were relied upon in providing the GFE; and b) they change, or are found to be inaccurate, after the GFE has been provided.

Does that seem like it eliminates the contradiction?

FlamingoGal...thanks for the report back from HUD. To clarify, we use a different term for any premiums paid "post-closing". Obviously, if you close a loan and then lock it to sell...you wouldn't knowo that information. Rather than term it a YSP, we call back-in payments Service Release Premiums (SRP).

I'm not convinced if you lock an above-par rate with an investor prior to closing and KNOW you are going to receive an additional 3% based on the RATE...how you get away with not disclosing it. That puts alot of community banks and broker's out of competition in so many ways.

I know we have to fill in the "TradeOff Table" but do we have to fill in the first column of the "Shopping Cart" too?

Sage-you are only required to fill in the first column of the trade off table-the other 2 are optional. I don't think you are required to fill out the shopping cart.

That is correct. You don't have to fill out the shopping chart.

Please don't burst my little happy Friday bubble, RR! LOL!

Seriously...PLEASE do help me through thinking this out. I agree that part of the problem is what we call things. I have to dig and dig to find out what we really do regardless of what we call it.

We actually, on some of these relationships, get both a service release premium as well as yield spread premium. Here's what I was told, "We are paid a service release premium for selling the servicing rights. Then, we also receive the difference in the pricing of the rate Freddie is quoting the day we purchase the commitment on the loan and the price we are getting on the note.. For instance, when we price a loan we look at Freddie's pricing sheet and determine how much we think we can make, based on the loan size and the competition. On a $50,000 loan, we may want to get 102% which would be 2% over what we are going to be paid by Freddie. That would be $1,000, plus we would get .25% servicing fee. But on a $300,000 loan we would make almost the same thing if we priced the loan at 100.50%. So, yes we do get a yield spread with Freddie plus a service release premium."

We used to always lock the rate early on in the process with the investor, but then we had a problem with "fall out" which was costing the bank money, so we stopped locking the rate with the investor (we still will sometimes lock with the customer but not the investor). I believe with our FHA, we lock before it goes to underwriting. But, then there are those others that either lock right before or after loan closing.

RESPA doesn't talk, though, about rate locks, etc. for determining whether or not you have to disclose this. It's all about whether or not it's table-funding (this is what the attorney said, and what HUD confirmed to me this morning - HUD said they are getting a lot of questions and this, so it may end up in the FAQ). The new definition of mortgage broker is (emphasis added) "a person (not an employee of a lender) or entity that renders origination services and serves as an intermediary between a borrower and a lender in a transaction involving a federally related mortgage loan, including such a person or entity that closes the loan in its own name in a table funded transaction. "

§3500.2 explains that table funding "means a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds. A table-funded loan is not a secondary market transaction (see 3500.5(b)(7)."

In an earlier post, on page 9, David said, ""table funding" (see the definition in §3500.2) is when the funds aren't yours. If you use your own funds, you are not table funding and you're not a broker." We are closing the loan in our name and using our own funds, therefore, we aren't table funding and don't need to include this in block 1. (Right?)

The gentleman from HUD this morning confirmed this. I can see where, yes, this is going to be a problem for those smaller banks who don't have the funds to structure this the way we do.

I will be so very happy when all of this makes better sense to me, and I don't feel like I'm walking in a constant fog! Please let it be that I can stay in my Friday happy place.

Budge over, Flamingo, I'm sitting right here with you in the Friday Happy Place. (That'll teach Happy not to open the bar. ) Had a meeting with my boss today on YSP/SRP to which I took a printout of your question and answer from HUD. I really don't want to get this all muddled up again.

Now if I could just convince my software provider to let us play with these forms before 1/1. They claim they can't let us because they're not done playing with them yet. How the he** can I figure all this out if I can't do it in my system??!!