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#1293368 - 11/25/09 03:08 PM
Re: RESPA changes 1-1-10
Frank
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10K Club
Joined: Nov 2000
Posts: 18,762
Central City, NE
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Credit life is part of the balance of the loan which shows up on the GFE under "Your initial loan amount is ". Like you say, there's no explicit disclosure of it on the GFE. The instructions for the HUD-1 and the recently updated FAQ state that Lines 104 and 105 are for additional amounts owed by the borrower, such as charges that were not listed on the GFE. This seems to fit credit life perfectly. In addition if you list it here instead of the 900 series, it won't show up on the comparison chart on the HUD-1, thus looking strange with a charge in the HUD-1 column for credit life and a blank for the GFE column. Like I said, that's the unofficial take on the issue. Everything financed is part of the balance of the loan. With your logic, I wouldn't need to show the appraisal, credit report, etc. Appendix A specifically identifies optional insurance in the 900s. You still won't list it in the comparison chart.
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#1293458 - 11/25/09 03:52 PM
Re: RESPA changes 1-1-10
David Dickinson
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Diamond Poster
Joined: Sep 2008
Posts: 2,474
Midwest
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I am missing something but I had heard and don't recall the source that POC items should not be listed on the HUD? I know POC items cannot be on the GFE, but do you just include them in the amount then?
For example, a release fee is POC do we include the amount in the GFE block and then I don't see on the HUD you can list as POC--not enough room.
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#1293547 - 11/25/09 04:58 PM
Re: RESPA changes 1-1-10
David Dickinson
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Member
Joined: Jul 2006
Posts: 56
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Would like to go back to the prequalification discussion - I'm sure there's something I'm not thinking of, but here's my scenario.
Client comes in without an property address, but says he's going to start looking for a house - thinks it will be in the $200,000 range. We give a GFE, do our verifications & provide a prequal letter. He comes back next week - found a house, but it's $250,000. We can do a revised GFE because of changed circumstances.
Let's say he had found a house for $200,000 - why should I worry about the fact that I can't give a new GFE simply because I now have an address? Chances are it's in the same county as originally anticipated, so recording, etc. fees should be similar - what am I missing?
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#1293550 - 11/25/09 04:59 PM
Re: RESPA changes 1-1-10
David Dickinson
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Member
Joined: Jan 2009
Posts: 69
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Hello,
In the BOL webinar Qand A's you answered the following question:
GFE Block 1 vs. Block 2 : Our Origination Charge - or the credit or debits that affect this loan. Example: We charge a 1% loan fee, a doc prep fee and we do our own closings so we have a closing fee (I am saying all of these go in block 1). Then in Block 2 we have FNMA / FREDDIE Loan Level Price adjustments and FNMA $25.00 DU fee and let’s say the buyer wants to pay a fee to buy down the rate (I am saying we will total these all up and net out what box to check either positive or negative). LLPA of 1000.00 for cash out + 25.00 DU – 250.00 for a good credit score + 1% for buy down = a positive so it would be a charge of XX $$ in box 2. Answer: We agree with your statements. Reference FAQ #5 in “GFE – Block 2”.
However, when you read the FAQ #5, it is discussing LLPA in the context of a mortgage broker. Therefore, we assumed that a Fannie Mae LLPA is included in the origination charge and you would go with Box 1.
Am I incorrect?
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#1293555 - 11/25/09 05:02 PM
Re: RESPA changes 1-1-10
David Dickinson
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100 Club
Joined: Jun 2007
Posts: 133
Central Arkansas
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Credit life is part of the balance of the loan which shows up on the GFE under "Your initial loan amount is ". Like you say, there's no explicit disclosure of it on the GFE. The instructions for the HUD-1 and the recently updated FAQ state that Lines 104 and 105 are for additional amounts owed by the borrower, such as charges that were not listed on the GFE. This seems to fit credit life perfectly. In addition if you list it here instead of the 900 series, it won't show up on the comparison chart on the HUD-1, thus looking strange with a charge in the HUD-1 column for credit life and a blank for the GFE column. Like I said, that's the unofficial take on the issue. Everything financed is part of the balance of the loan. With your logic, I wouldn't need to show the appraisal, credit report, etc. Appendix A specifically identifies optional insurance in the 900s. You still won't list it in the comparison chart. Those fees you listed are settlement charges. I can't see optional credit life as a settlement charge. It's an optional product. The money borrowed is to purchase this product. Thus it's disclosed as part of the initial loan amount on the GFE. As far as listing it in the 900's, if you do that, you're required to list it on the comparison chart per the instructions in Appendix A. Better guidance is needed on this.
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#1293572 - 11/25/09 05:11 PM
Re: RESPA changes 1-1-10
David Dickinson
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Diamond Poster
Joined: Jun 2006
Posts: 1,194
South
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Credit life is part of the balance of the loan which shows up on the GFE under "Your initial loan amount is ". Like you say, there's no explicit disclosure of it on the GFE. The instructions for the HUD-1 and the recently updated FAQ state that Lines 104 and 105 are for additional amounts owed by the borrower, such as charges that were not listed on the GFE. This seems to fit credit life perfectly. In addition if you list it here instead of the 900 series, it won't show up on the comparison chart on the HUD-1, thus looking strange with a charge in the HUD-1 column for credit life and a blank for the GFE column. Like I said, that's the unofficial take on the issue. Everything financed is part of the balance of the loan. With your logic, I wouldn't need to show the appraisal, credit report, etc. Appendix A specifically identifies optional insurance in the 900s. You still won't list it in the comparison chart. So list the entire premium amount in the 900s, and make sure that it is NOT listed on the comparison chart?
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#1293603 - 11/25/09 05:27 PM
Re: RESPA changes 1-1-10
Sheldon Hendrix
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Power Poster
Joined: Feb 2005
Posts: 6,559
Foxboro
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That is great info, CR. Thanks!
_________________________
Best QB Ever. Worst Defense Ever.
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#1293619 - 11/25/09 05:34 PM
Re: RESPA changes 1-1-10
pjs
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Diamond Poster
Joined: Sep 2009
Posts: 1,601
Ohio
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I'm so glad THAT got cleared back up...I thought I had missed something somewhere along the way...good GOLLY miss MOLLY!
I love RESPA, I love RESPA, I love RESPA....really, I do.(not) My problem I can read it and understand it and get it in my head then something else comes along to question my thought process and then I get confused. Same here!
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#1293765 - 11/25/09 06:36 PM
Re: RESPA changes 1-1-10
ForceFull1
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Power Poster
Joined: Feb 2005
Posts: 6,559
Foxboro
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There is no reference to taxes on the GFE. Under the summary of your loan section there is a checkbox as to whether or not escrows are required, but nowhere else are taxes mentioned.
_________________________
Best QB Ever. Worst Defense Ever.
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#1293774 - 11/25/09 06:40 PM
Re: RESPA changes 1-1-10
Sheldon Hendrix
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Platinum Poster
Joined: Aug 2005
Posts: 914
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I could not open the GFE- I got an error message. Did anyone have that happen?
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#1293796 - 11/25/09 06:45 PM
Re: RESPA changes 1-1-10
TB 12
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10K Club
Joined: Jul 2003
Posts: 17,398
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So when the borrower walks out with their GFE saying two month escrow (for cushion) and gets wammed the day before closing having to bring in thousands of dollars more to pay the tax bill due they're supposed to remember that their last mortgage holder has that money in escrow and they'll get it back in a few weeks? Oh, and they're not going to rail at the bank about not telling the truth? Tell me again, HUD, how this is better for the borrower.
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#1293812 - 11/25/09 06:51 PM
Re: RESPA changes 1-1-10
Truffle Royale
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Power Poster
Joined: Feb 2005
Posts: 6,559
Foxboro
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Agreed Truff...another reason the regs should have been tweaked, not shredded and re written. (Although we run into that issue often ).
Last edited by Sox in 07; 11/25/09 06:57 PM.
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Best QB Ever. Worst Defense Ever.
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#1293833 - 11/25/09 07:00 PM
Re: RESPA changes 1-1-10
Sage
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Diamond Poster
Joined: Nov 2004
Posts: 2,309
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I could not open the GFE- I got an error message. Did anyone have that happen? I was able to open it.
_________________________
Opinions expressed are my own and not necessarily those of my employer. They are not legal advice.
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#1293855 - 11/25/09 07:08 PM
Re: RESPA changes 1-1-10
Sage
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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I could not open the GFE- I got an error message. Did anyone have that happen? I didn't have that problem.
_________________________
My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1293894 - 11/25/09 07:29 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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Took a while but it opened.
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Best QB Ever. Worst Defense Ever.
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#1293896 - 11/25/09 07:30 PM
Re: RESPA changes 1-1-10
TB 12
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100 Club
Joined: Jul 2008
Posts: 109
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**Homeowner's insurance**
We are a small institution that just does Re-fi's. No purchases. Mostly 2nds, but the occasional 1st. On the GFE we have to estimate Homeowner's Insurance. We require the consumer to have Homeowner's Insurance by settlement. We don't collect for it, we just want to make sure they have ti before settlement. On the HUD-1A, how do we list homeowner's insurance? Line 903. How are we going to know this information?
Thanks in advance!
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#1293922 - 11/25/09 07:45 PM
Re: RESPA changes 1-1-10
misha
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10K Club
Joined: Nov 2000
Posts: 18,762
Central City, NE
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Would like to go back to the prequalification discussion - I'm sure there's something I'm not thinking of, but here's my scenario.
Client comes in without an property address, but says he's going to start looking for a house - thinks it will be in the $200,000 range. We give a GFE, do our verifications & provide a prequal letter. He comes back next week - found a house, but it's $250,000. We can do a revised GFE because of changed circumstances.
Let's say he had found a house for $200,000 - why should I worry about the fact that I can't give a new GFE simply because I now have an address? Chances are it's in the same county as originally anticipated, so recording, etc. fees should be similar - what am I missing? That would be a changed circumstance. The identification f the house, by itself, is not, but the change in the amount requested would be.
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#1293939 - 11/25/09 07:53 PM
Re: RESPA changes 1-1-10
David Dickinson
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New Poster
Joined: Oct 2009
Posts: 8
Indiana
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We crossed this bridge a while back when we had a dispute between our vendor and consultants. We asked HUD and they made it clear: ****
Our questions to HUD:
Block 9 of the new GFE form addresses situations where property taxes are required to be escrowed, in whole or in part. What about cases where the bank is not requiring that they be escrowed? Where, if anywhere, do we insert the tax information on the new GFE?
Our consultants felt that they should be listed in Block 6 "Required services that you can shop for", but our vendor strongly disagrees, stating that the consumer cannot "shop" for real estate taxes - they can only be paid through the local taxing authority.
Response from HUD:
"Thank you for contacting the Office of RESPA. The Good Faith Estimate (GFE) is to disclose all fees and charges to be collected at the time of settlement. Therefore, you would not disclose property tax or escrow that is not to be collected at closing. In answer to your second question, your vendor is correct. You would not disclose property tax in Box 6, Required Services that you can shop for." ****
We were pleased to actually get a straight answer in this mess....
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#1293951 - 11/25/09 07:59 PM
Re: RESPA changes 1-1-10
tayls
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Gold Star
Joined: Nov 2003
Posts: 251
smalltown Iowa
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The Good Faith Estimate (GFE) is to disclose all fees and charges to be collected at the time of settlement. Therefore, you would not disclose property tax or escrow that is not to be collected at closing. In answer to your second question, your vendor is correct. You would not disclose property tax in Box 6, Required Services that you can shop for. Thanks for the assist, Tayls. Not sure that HUD could have made that any less clear. So if we anticipate having to collect a tax payment at closing, we DO need to list it on the GFE? It seems like that is what they are saying, but HUD didn't exactly answer that with a yes/no. And if yes, does it go in block 3?
Last edited by ForceFull1; 11/25/09 08:23 PM.
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#1293964 - 11/25/09 08:02 PM
Re: RESPA changes 1-1-10
Frank
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10K Club
Joined: Nov 2000
Posts: 18,762
Central City, NE
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Those fees you listed are settlement charges. I can't see optional credit life as a settlement charge. It's an optional product. The money borrowed is to purchase this product. Thus it's disclosed as part of the initial loan amount on the GFE. Optional credit insurance IS a settlement service. You can find this in the definition - §3500.2 "Settlement Service" #12. As far as listing it in the 900's, if you do that, you're required to list it on the comparison chart per the instructions in Appendix A. Not true. Appendix A says to list "each charge included in Blocks 3 and 7. Then it goes on to say "for each charge included in Blocks 4, 5 and 6 . . . I see no where instructing us to include things that weren't on the GFE to be included in the comparison charge.
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#1293996 - 11/25/09 08:13 PM
Re: RESPA changes 1-1-10
kristin09
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10K Club
Joined: Nov 2000
Posts: 18,762
Central City, NE
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Hello,
In the BOL webinar Qand A's you answered the following question:
GFE Block 1 vs. Block 2 : Our Origination Charge - or the credit or debits that affect this loan. Example: We charge a 1% loan fee, a doc prep fee and we do our own closings so we have a closing fee (I am saying all of these go in block 1). Then in Block 2 we have FNMA / FREDDIE Loan Level Price adjustments and FNMA $25.00 DU fee and let’s say the buyer wants to pay a fee to buy down the rate (I am saying we will total these all up and net out what box to check either positive or negative). LLPA of 1000.00 for cash out + 25.00 DU – 250.00 for a good credit score + 1% for buy down = a positive so it would be a charge of XX $$ in box 2. Answer: We agree with your statements. Reference FAQ #5 in “GFE – Block 2”.
However, when you read the FAQ #5, it is discussing LLPA in the context of a mortgage broker. Therefore, we assumed that a Fannie Mae LLPA is included in the origination charge and you would go with Box 1.
Am I incorrect? If there is a broker involved, all of the fees you listed would be in Block 1 or 2 as indicated in the question and our answer. This is supported by FAQ #5. If no broker is involved, all of the fees could be listed in Block 1.
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