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#1288984 - 11/18/09 06:36 PM Re: RESPA changes 1-1-10 TB 12
TB 12 Offline
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Truff-as a follow up, from the 10/22 FAQ, Page 9, Q2 under seller paid:

Q: Are seller charges listed on the GFE?
A: (I will paraphrase) "...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 would typically incur charges for title services and lenders and owners title insurance, the GFE instructions make it clear that those charges are requiresed to be listed regardless of whether, for example, the contract requires the seller to pay for the service...."

Seems to me that if the buyer is never responsible for a fee it isn't disclosed.
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#1288993 - 11/18/09 06:42 PM Re: RESPA changes 1-1-10 Sheldon Hendrix
#Just Jay Offline
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Originally Posted By: Compliance Rules
HUD is now requesting that regulators exercise restratint for the first four months after the rules become effective.

"HUD is asking other federal and relevant state enforcement agencies to exercise the same 120-day restraint in enforcement for non-FHA originators and other settlement service providers who demonstrate the good faith effort to implement RESPA's new rules. In determining whether a mortgagee has made a good faith effort, MRB staff will consider whether the mortgagee has relied on the new RESPA rule and other written guidance issued by the Department, and the extent to which the mortgagee has made sufficient investment and commitment in technology, training, and quality control designed to comply with the new rule."

http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2009/HUDNo.09-215




So that means... ??? crazy
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#1289090 - 11/18/09 07:46 PM Re: RESPA changes 1-1-10 #Just Jay
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I agree Sox...if state law prohibits it...don't show it. If it doesn't, and the buyer CAN/Could pay it...disclose it regardless. The sales contract stipulations are meaningless, based on the Q&A I posted earlier. The Q&A's specifically point out owner's coverage and say that 'even if it is known or typical for the seller to pay it, you still have to disclose it on a purchase'...my paraphrase.

Anyway, during the training today, some attorney reps were there. They stated that it is rare that a borrower decides to purchase owner's coverage. If they do, the lender's coverage price is greatly reduced. SO, we came to the conclusion that you have offset one with the other and GREATLY reduced the change of exceeding the 10% tolerance by including the owner's coverage. If it's not required, then the borrower can understand they won't incur that charge and need not consider that in their total. If they get it, it will reduce the lender's coverage, thereby reducing the "title services" box and, again, reducing any chance of an overage.

Interesting little protection built in there! wink
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#1289302 - 11/18/09 09:59 PM Re: RESPA changes 1-1-10 RR Joker
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Has anyone developed a handy reference guide for originators on "changed circumstances" that they would be willing to share?

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#1289330 - 11/18/09 10:34 PM Re: RESPA changes 1-1-10 bstritecky
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Somewhere in the middle
Originally Posted By: Becky S.
Has anyone developed a handy reference guide for originators on "changed circumstances" that they would be willing to share?


Supply them HUDs FAQ.
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#1289358 - 11/18/09 11:35 PM Re: RESPA changes 1-1-10 bstritecky
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That's something I'd like to see.
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#1289432 - 11/19/09 12:58 PM Re: RESPA changes 1-1-10 Sewanee, CRCM
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Can I have your opinion on the following topic- recommended settlement service provider list- this would be for title companies-

We are going to allow our customers to choose their settlement service provider-
We are working on our list now of who were are going to put on it. I say we provide our recommendded settlement service provider list as is. Someone piped up and said we should but either blank lines or a box with a blank line and if the borrower chooses someone not on our list then we write in their choice.

I don't agree with this. I feel you have blank lines on the list and you write in a title agency or whomever- to me it looks like WE added a name to OUR list and thus 10% tolerance .

I say keep the list typed clean and the LO can document it in pen that so and so is the settlement provider the borrower chose and we would put that in the file.

What are your thoughts please- I hope this made sense too. Thanks.

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#1289433 - 11/19/09 01:05 PM Re: RESPA changes 1-1-10 TB 12
rlcarey Offline
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If State law requires the seller to pay the cost for the owner's title poliy then I think that is what HUD indicated by this statement:

"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."
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#1289437 - 11/19/09 01:19 PM Re: RESPA changes 1-1-10 rlcarey
Amos Offline
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Originally Posted By: rlcarey
If State law requires the seller to pay the cost for the owner's title poliy then I think that is what HUD indicated by this statement:

"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."


I agree, but others are looking specifically at the instructions for completing Block 5, and the related FAQs, and are saying you ALWAYS must show owner's title insurance for a purchase.

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#1289445 - 11/19/09 01:53 PM Re: RESPA changes 1-1-10 pjs
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Originally Posted By: pjs
Can I have your opinion on the following topic- recommended settlement service provider list- this would be for title companies-

We are going to allow our customers to choose their settlement service provider-
We are working on our list now of who were are going to put on it. I say we provide our recommendded settlement service provider list as is. Someone piped up and said we should but either blank lines or a box with a blank line and if the borrower chooses someone not on our list then we write in their choice.

I don't agree with this. I feel you have blank lines on the list and you write in a title agency or whomever- to me it looks like WE added a name to OUR list and thus 10% tolerance .

I say keep the list typed clean and the LO can document it in pen that so and so is the settlement provider the borrower chose and we would put that in the file.

What are your thoughts please- I hope this made sense too. Thanks.


FWIW I agree, PJS.
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#1289495 - 11/19/09 02:38 PM Re: RESPA changes 1-1-10 Amos
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Amos,

I believe that in the FAQ, they are relying on a literal interpretation of "good faith estimate" found in the definition to the regulations.

" Good faith estimate or GFE means an estimate of settlement charges a borrower is likely to incur, as a dollar amount, and related loan information, based upon common practice and experience in the locality of the mortgaged property, as provided on the form prescribed in § 3500.7 and prepared in accordance with the Instructions in Appendix C to this part."

If State law prohibits the borrower from paying the charge - then that definition overrides the instructions. I think HUD has been very clear on this in the FAQ. The reason for the FAQ is to provide additional guidance and I believe they have satisfactorily justified their position based on the regulation itself.
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#1289589 - 11/19/09 04:13 PM Re: RESPA changes 1-1-10 rlcarey
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I've developed a thought on optional credit life I wanted to share in order for you to punch holes in it. I honestly can't seem to find a satisfactory way to deal with it. This way seems to solve the majority of the issues.

The premium is part of the principal balance, therefore the principal balance disclosed on the GFE includes credit life in the "summary of your loan" section.

Since it is not directly disclosed as a fee on the GFE in this manner, it shouldn't show up on page 2 of the HUD-1 as an item because any fee that shows up on page 2 has to be shown on the comparison chart.
So in my previous way of dealing with it, if credit life were disclosed on page 2 as in item, it would show up on the comparison chart as a charge on the HUD-1 and there would not be a comparison charge on the GFE.

To overcome this inaccuracy to get the GFE and HUD to be in harmony, I think you could use the guidance that is in the most recent FAQ update on page 36 q#1 on the HUD-1 series.

Here's how it would work:
1. On the GFE, credit life would be part of the principal balance disclosed.
2. On the HUD-1 I'd disclose the credit life on line 104 as an additional item owed by the borrower that is not on the GFE as per the FAQ. Since it's part of the principal balance, I claim there was no disclosure on the GFE, therefore it would fit in the 100 series.

This would then take care of disclosure of credit life--but it wouldn't have to be included on page 2 HUD and have to be included on the comparison chart of settlement charges and look messed up. Waaaay back earlier in the post it was an opinion that credit life is not a settlement cost, but it is money being borrowed to purchase an optional product. I tend to think this way.

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#1290157 - 11/20/09 02:44 AM Re: RESPA changes 1-1-10 Sewanee, CRCM
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Originally Posted By: sewanee
Last week I e-mailed HUD concerning the issue of whether the GFE and/or HUD could/should have an additional form which the borrower (and seller on the HUD-1 in the event of a sale) would sign, since the new forms don't have signature lines. This is what I received today:

"The GFE and HUD-1 are prescribed forms. The new RESPA Rule does not require signatures on the GFE or HUD-1." How helpful!

How will others handle this? Will you get signatures concerning either of these documents? Will sellers run into problems proving they sold their property if they can't produce a "signed settlement statement"? I'm curious.



We have decided that we will have a signature addendum with the new documents.

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#1290205 - 11/20/09 01:03 PM Re: RESPA changes 1-1-10 jlroberts
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Another chapter in the "does this make sense" book. Most of our investors require signatures on the HUD anyway, so we will continue that practice.
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#1290256 - 11/20/09 02:11 PM Re: RESPA changes 1-1-10 jlroberts
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Originally Posted By: jlroberts
Originally Posted By: sewanee
Last week I e-mailed HUD concerning the issue of whether the GFE and/or HUD could/should have an additional form which the borrower (and seller on the HUD-1 in the event of a sale) would sign, since the new forms don't have signature lines. This is what I received today:

"The GFE and HUD-1 are prescribed forms. The new RESPA Rule does not require signatures on the GFE or HUD-1." How helpful!

How will others handle this? Will you get signatures concerning either of these documents? Will sellers run into problems proving they sold their property if they can't produce a "signed settlement statement"? I'm curious.



We have decided that we will have a signature addendum with the new documents.



I'd be careful calling it an "addendum" From the FAQs updated on 11/17:

27) Q: May additional pages be added to the GFE to allow for all charges to be shown? If so, is it an addendum or an extension of page 2?
A: No. Additional pages or addendums may not be added to the GFE. The standardized GFE form set forth in Appendix C to the Rule is the required GFE form and must be provided exactly as specified, except that Blocks 3, 6, and 11 on page 2 may be adapted to use in particular loan situations, so that additional lines may be inserted there, and unused lines may be deleted. Lines may be added to Blocks 3, 6 and 11 vertically and horizontally as shown in the examples below.

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#1290420 - 11/20/09 03:46 PM Re: RESPA changes 1-1-10 BFaith
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Another question please on Seller Paid Items. If the purchase agreement simple states that the seller is going to pay $XXX toward closing cost, would we simply list all cost in the borrowers column of the HUD and show a credit on page 1 to borrower and a debit to seller for the amount the seller is paying? If so would the amount of credit and debit have to be itemized or could it be a lump sum?
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#1290500 - 11/20/09 04:15 PM Re: RESPA changes 1-1-10 Still Smiling
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Lump sum as I understand it.
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#1290526 - 11/20/09 04:31 PM Re: RESPA changes 1-1-10 TB 12
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Thanks...that was my thought as well.
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#1290529 - 11/20/09 04:33 PM Re: RESPA changes 1-1-10 TB 12
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I'm trying to understand when I use a credit in Block 2 and when I have to use Block 204 on the HUD-1 form for a junior lien.

We collect a fee of $141.50 to cover all closing costs on the junior lien. This is the exact amount it costs us provided there is only one tax parcel included on the mortgage.

Our loan involves a property that has two tax parcels. This will cost us an additional $5.00 in government recording fees. We know when we issue the GFE that we will not be collecting the $5.00 from the customer, the bank will pay it.

Since we are "splitting" the fee, do I show a credit in Line 2 of the GFE and can I close using a HUD-1A? Or do I leave Line 2 of the GFE N/A and use the HUD-1 to close with a credit in Line 204?

Thanks to anyone brave enough to attemp an answer!
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#1290560 - 11/20/09 04:42 PM Re: RESPA changes 1-1-10 dottiec
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If we let the applicant shop for homeowners insurance do we still have to provide them a list?

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#1290566 - 11/20/09 04:44 PM Re: RESPA changes 1-1-10 Sage
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Insurance does not require lists.
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#1290585 - 11/20/09 04:52 PM Re: RESPA changes 1-1-10 RR Joker
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Third Party Service Provders - Block 6- If the offer to purchase has listed Well, home inspection etc. Do we need to provide a Providers List? This is something the seller ususally pays for and is ordered by the Realtor. Very confusing how would the bank know who to list on the provider list and keep up on the fees.

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#1290648 - 11/20/09 05:28 PM Re: RESPA changes 1-1-10 TB 12
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Originally Posted By: Sox in 07
Another chapter in the "does this make sense" book. Most of our investors require signatures on the HUD anyway, so we will continue that practice.
Hadn't thought of that. How can investors require something that HUD prohibits?

edited to add: By that I mean an addendum not a signature. I don't think they prohibit signatures on the docs, do they? I'm so confused by the repeated FAQs and all. Thank cod this thread let's me know I'm not the only one. crazy
Last edited by Truffle Royale; 11/20/09 05:38 PM.
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#1290691 - 11/20/09 05:58 PM Re: RESPA changes 1-1-10 Truffle Royale
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Trixie-do you as the lender require the well and home inspection, or are they just borrower requested contingencies on the sales agreement.

Truff-that is correct-they sign the documents themselves-no addendum (although there is an addendum to the HUD for FHA loans).
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#1290709 - 11/20/09 06:11 PM Re: RESPA changes 1-1-10 Trixie
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I want the answer to be that "insurance does not require a list" but can you point me to where the regs say that?

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