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#1286895 - 11/16/09 03:14 PM
Re: RESPA changes 1-1-10
David Dickinson
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Member
Joined: Jun 2006
Posts: 69
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I think all of these changes have taken any sense of logic I had....
So would it be line 801 or we include with the title services in that scenario? I apologize if it should be obvious...
Also, in Massachusetts, the seller typically pays all transfer tax (I can't find where it's a "law") so are we exempt from disclosing transfer taxes?
Thank you.
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#1286906 - 11/16/09 03:30 PM
Re: RESPA changes 1-1-10
wtsjomh
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Power Poster
Joined: Feb 2005
Posts: 6,559
Foxboro
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wts-the buyer never pays this tax-it is specific for the seller to pay so it is not disclosed. In NH, each party by law pays half of the state tax stamps, so you only disclose the borrower portion.
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#1286915 - 11/16/09 03:38 PM
Re: RESPA changes 1-1-10
wtsjomh
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10K Club
Joined: Aug 2004
Posts: 10,321
oHiO
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I think all of these changes have taken any sense of logic I had....
So would it be line 801 or we include with the title services in that scenario? I apologize if it should be obvious... Also, in Massachusetts, the seller typically pays all transfer tax (I can't find where it's a "law") so are we exempt from disclosing transfer taxes?
Thank you. After reading David's reply regarding survey- it would go in block 6 of GFE and on line 1301 of HUD-1 then we would have to put it in 1302 because we pay the bill.
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#1286916 - 11/16/09 03:39 PM
Re: RESPA changes 1-1-10
DD Regs
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Joined: Nov 2000
Posts: 18,765
Central City, NE
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Question, if at the time of application, the applicant has a signed purchase agreement that states clearly what items the seller is paying. Why would we still show them as an expense to the borrower when we have a document that shows it is not going to be due to them? Good question. Logic tells us the GFE should be as accurate as possible. If you have the purchase agreement, I think you should make the GFE match it. HUD assumes you don't have a purchase agreement yet. Therefore, they say to always list 100% of Owner's TI. I believe, if you know who's paying what, you could justify not listing the seller paid items. If there's any doubt, list it on the GFE.
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#1286921 - 11/16/09 03:44 PM
Re: RESPA changes 1-1-10
David Dickinson
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Power Poster
Joined: Feb 2005
Posts: 6,559
Foxboro
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David-I agree with you that that is how it should be done, but from the 10/23 HUD FAQ's- (page 9-first question under Seller paid items):
Q: If at the time a GFE 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 thte borrower must be disclsoed on the GFE regardless of whether the charges will be paid for by the borrower, the seller or other party.
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#1286932 - 11/16/09 03:52 PM
Re: RESPA changes 1-1-10
TB 12
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10K Club
Joined: Nov 2000
Posts: 18,765
Central City, NE
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David-I agree with you that that is how it should be done, but from the 10/23 HUD FAQ's- (page 9-first question under Seller paid items):
Q: If at the time a GFE 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. I know and it appears I'm talking out of both sides of my mouth. You can certainly list the fees as this Q&A states and you'd never have any regulatory issues. But I believe you'd have customer service issues and borrower confusion. As of now (that's a disclaimer!) I believe you could back up not listing a fee because the purchase agreement states the seller will pay for it - if you have the purchase agreement. I might be wrong, but it just seems wrong to list a fee you know they won't be paying.
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#1286938 - 11/16/09 04:00 PM
Re: RESPA changes 1-1-10
David Dickinson
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Power Poster
Joined: Feb 2005
Posts: 6,559
Foxboro
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David I completely agree. If a contract is specific with an amount or specific fee the seller is agreeing to pay, it should be noted as such. The current GFE allows a lender to list costs and take out those paid by others. If their intent was to make sure lenders were consistent with fees and terms, they should have simply "freshend up" the GFE and enforced current regulations.
I know we run the risk of having seemingly higher costs if we don't reflect the seller paids and the guy down the street does. However, if the intent of this is to allow borrowers to shop and compare apples to apples, it seems to me that they want worst case scenario disclosed by all lenders and if one does and one doesn't it defeats the purpose. JMHO
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#1286958 - 11/16/09 04:17 PM
Re: RESPA changes 1-1-10
TB 12
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100 Club
Joined: Jul 2007
Posts: 129
Tulsa, Oklahoma
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I sat in on a teleconference on Thursday. They stated that the GFE had to be provided to each borrower/applicant. I can't find this anywhere. Am I just missing it?
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#1287023 - 11/16/09 04:52 PM
Re: RESPA changes 1-1-10
azbanker
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100 Club
Joined: Jul 2007
Posts: 129
Tulsa, Oklahoma
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Carter's Mom,
Laser pro is calculating 1/2 like on the pre til. It is also saying no balloon. On a 12 month interest only construction loan, it looks like 12 payments of 1/2 interest would pay it off...very confusing for the customer. Laser Pro is looking in to whether this is compliant. AZBanker. Did you ever hear back from Laser Pro on this. Are you going to calculate your interest payments on 1/2 of the balance similar to the pre til?
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#1287148 - 11/16/09 06:41 PM
Re: RESPA changes 1-1-10
smith
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New Poster
Joined: Jan 2007
Posts: 15
Somewhere
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I would like to bring up preapprovals again. I think Dave summarized the issue well. However, what can banks do? Can we have a preapproval for Reg. B purposes (verification documentation requested from consumer and approval given) but still not have an application for RESPA (since no property address was received)?
I know RESPA says you can't require verification documentation for the GFE to be given but could you still require it in the case of a preapproval?
We are struggling with the same question. If we continue to do preapprovals based on borrower provided documentation, will we somehow violate RESPA?
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#1287155 - 11/16/09 06:49 PM
Re: RESPA changes 1-1-10
sladd
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New Poster
Joined: Oct 2009
Posts: 4
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I have a question for all- I apologize in advance if this has already been addressed: I attended a title seminar regarding the new changes and was told the % fee is being eliminated and we can only charge a flat fee? I did not come away after reading the complaince chages with that understanding. I thought that changed circumstances were allowed if the sales price, loan amount or rate changed (we are a builder) but no other fees could be changed? I didn't recall reading anywhere about the one flat fee Did I miss something?
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#1287181 - 11/16/09 07:11 PM
Re: RESPA changes 1-1-10
David Dickinson
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100 Club
Joined: Aug 2007
Posts: 128
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Would the same line of thinking apply to charges paid by lender? For example, the only fee "typically paid" by the borrower for a home equity line product is an origination fee. All other fees associated with the transaction are absorbed by the lender. The questions in the Q&A's that address fees paid by seller or other third party seem to indicate that lender-paid fees be reflected on the GFE and HUD with a credit being given. To have to disclose fees that a borrower will not have to pay for "shopping" purposes seems like it would be confusing to the borrower. The only time the borrower is required to pay third party fees is if the lender has paid the fees on behalf of the borrower within the preceding 3 years.
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#1287192 - 11/16/09 07:24 PM
Re: RESPA changes 1-1-10
Raquel
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10K Club
Joined: Nov 2000
Posts: 18,765
Central City, NE
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Would the same line of thinking apply to charges paid by lender? For example, the only fee "typically paid" by the borrower for a home equity line product is an origination fee. All other fees associated with the transaction are absorbed by the lender. The questions in the Q&A's that address fees paid by seller or other third party seem to indicate that lender-paid fees be reflected on the GFE and HUD with a credit being given. To have to disclose fees that a borrower will not have to pay for "shopping" purposes seems like it would be confusing to the borrower. The only time the borrower is required to pay third party fees is if the lender has paid the fees on behalf of the borrower within the preceding 3 years. The rules are pretty clear that you still list the fees that the lender will pay for and then put a credit in Block 2 of the GFE/802 of the HUD-1/1A. 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.Also, here's some info from the FAQs: The standardized GFE form does not allow information to be included on any part of those totals that would be paid outside of closing. Such information would not help borrowers to shop for loans and would not facilitate comparison of the charges on the GFE with the charges on the HUD-1.[/i] [RESPA FAQ – GFE General #13]
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#1287201 - 11/16/09 07:37 PM
Re: RESPA changes 1-1-10
TB 12
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10K Club
Joined: Nov 2000
Posts: 18,765
Central City, NE
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David I completely agree. If a contract is specific with an amount or specific fee the seller is agreeing to pay, it should be noted as such. The current GFE allows a lender to list costs and take out those paid by others. If their intent was to make sure lenders were consistent with fees and terms, they should have simply "freshend up" the GFE and enforced current regulations.
I know we run the risk of having seemingly higher costs if we don't reflect the seller paids and the guy down the street does. However, if the intent of this is to allow borrowers to shop and compare apples to apples, it seems to me that they want worst case scenario disclosed by all lenders and if one does and one doesn't it defeats the purpose. JMHO I'm going to reverse what I said earlier (about not listing Owner's TI because you already have the purchase agreement). HUD doesn't seem to care what the facts are. Q: If a seller typically pays for the Block 5, Owner‘s title insurance, does the charge still have to be shown on the GFE? A: 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.FAQ – GFE Block 5 #2
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#1287208 - 11/16/09 07:43 PM
Re: RESPA changes 1-1-10
GoBigRed
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10K Club
Joined: Nov 2000
Posts: 18,765
Central City, NE
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We are struggling with the same question. If we continue to do preapprovals based on borrower provided documentation, will we somehow violate RESPA? You can't ask the borrower to bring in any documentation, so how can you continue to do preapprovals "based on borrower provided documentation"? Please provide details or a scenario.
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#1287224 - 11/16/09 07:49 PM
Re: RESPA changes 1-1-10
RR Joker
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Power Poster
Joined: Feb 2005
Posts: 6,559
Foxboro
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I disagree about the subject of the sales contract when it lists seller paying up to 3% closing costs, etc. It seems clear (as mud) that HUD intends for us to list everything...regardless...that a buyer "might" pay. I wonder if this is because it's typical for the sales price to be adjusted by said "3%" to cover the seller's cost and this was intended to give the buyer an idea of the real deal?
Who knows.
I figure you show everything, then provide a means for the buyer to know how much of that the seller will actually pay. It's similar to the falacy that they didn't include a space for the total PITI to be shown. Many, many problems with the form.
One I found earlier will affect our construction loans. Often they are done at P+ and can change DAILY...The wording on the GFE doesn't really afford us a way to state that. It could have, but instead they say "The first change will be in...." well, you could say in "one" day, I suppose, buy that sounds like it WILL change and it may NEVER change...not friendly for in-house lending...period. RR-I think they are simply trying (I stress trying) to give a borrower the worst case scenario up front. I think it is short sigthed for the form not to have an area to account for seller paids. The lender can reduce their costs in box 1 with little or no explanation, nor do we need to spell out what that number covers. Makes no sense.
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#1287595 - 11/17/09 12:40 AM
Re: RESPA changes 1-1-10
Princess Romeo
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Junior Member
Joined: Aug 2005
Posts: 27
Washington State
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If I accept an application in December 2009 and use the current GFE, which GFE do I use if I need to redisclose after January 2010? Thanks for any and all replies, and I apologize if this has already been addressed and I couldn't find it.
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#1287662 - 11/17/09 02:16 PM
Re: RESPA changes 1-1-10
RR Joker
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Power Poster
Joined: Feb 2005
Posts: 6,559
Foxboro
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RR-you are correct.
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