My first thought is that the borrowers don't want to subordinate. You're requiring them to.

Second thought is, at the time of the GFE, you don't know that you'll want a subordination. It could be the borrowers come in wanting to pay off a first and second but the appraisal isn't high enough so they end up subordinating the second.

I guess my bottom line is that I'd say sub fees don't go on the original GFE but needing a sub might be a changed circumstance that would allow you to put the fee on a revised GFE.

Curious to see what others will say.

Thank you, David!

Question regarding attorney fees:
If the attorney we use prepares the loan docs, should that fee be in the origination section on the GFE?

RE: Subordinations-some of our borrowers want to keep the second/heloc open and come into the deal intending to subordinate. In some cases depending on the appraisal, the holder of the second may not agree to subordinate and require it be paid off...regardless of the reason why, our experience is the lender who is subordinating wants the fee up front to prepare the subord-they won't wait until closing. Sometimes to expidite we issue the check and charge the borrower at closing to recoup-other times the borrower pays directly. My thought would be if borrower pays directly, it woudl be a POC on hud but not on GFE-if we paid and will charge the borrower to recoup, it would be on the GFE.

Why woudn't this be a "Changed Circumstance?" The first FAQ on Changed Circumstances states:

1) Q: Once a GFE is issued are there any circumstances under which the loan terms or charges can change?
A: Yes. The loan terms or charges can change in the event that there are changed circumstances. ―Changed circumstances‖ is now defined in § 3500.2 as: (1) Acts of God, war, disaster, or other emergency; (2) Information particular to the borrower or transaction that was relied on in providing the GFE and that changes or is found to be inaccurate after the GFE has been provided, which information may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property, or any other information that was used in providing the GFE; (3) New information particular to the borrower or transaction that was not relied on in providing the GFE; or (4) Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems.

Princess-I would agree if the question was posed that due to the poor fico/pay history, there were pricing adjustments not previously disclosed. The scenario as presented, in my opinion warrants an AAN with counter since the terms of what they applied for changed due to fico/pay history.

Yes, exactly.

more questions:
on page 18 referring to new construction loans that will not close within 60 calendar days from application,
It states that the loan originator may provide the GFE along with a clear, conspicuous disclosure stating that at any time up until 60 calendar days prior to closing, the originator may issue a revised GFE. Do we have to provide a revised GFE?

We do not lock in the interest rate until the loan has been approved, should the important date field list N/A as stated in FAQ #5 for this ?

1. You don't have to provide a revised GFE, it's your right to do so if you want.

2. If you don't lock the rate, you must still complete #2 in the Dates section (10 business days). When you lock rates, you must complete #1, 3 & 4 and you must extend #2 for 10 more business days.

I saw something similar to this asked earlier in this thread, but couldn't locate the answer - I did try. I've looked at the GFE instructions and the FAQs but can't find the answer there either. Hoping someone here knows as we have 3 systems all calculating it differently....

Our question relates to how to properly complete the "Summary Of Your Loan" section of the new GFE for an ARM loan - specifically, the payment fields that come at first adjustment and the maximum the payment can rise to over the life of the loan.

On Page 1 of the GFE, in the "Summary of your loan" section, the 7th box down asks: "Even if you make your payment on time, can your monthly amount owed for P & I , and any mortgage insurance rise?" On an adjustable rate loan, this will be answered "yes, the first increase can be in (#1) months and the monthly amount owed can rise to $ (#2) . The maximum it can ever rise to is $ (#3)." My questions are relating to the blanks listed as 1, 2 & 3.

Let's say it's a 5 year adjustable on a 30 year note, with caps of 1% each adjustment, 5% cap over life of loan. Rate starting at 6.00% .

Obviously #1 will show 60 months.

#2 will have a payment amount that it will be at the 5-yr (60 month) adjustment point (1% adjustment). I need to know what balance this payment is to be calculated from: the current balance at the 5 year point, or the original loan amount? The original loan amount doesn't make sense to me, but we are getting three different figures from 3 different mortgage systems and can't tell what that payment is to be calculated from. I have not been able to find guidance on this in the regulation, instructions to the GFE, or in the FAQ to provide to the vendors to tell them how it's supposed to be done.

#3 is supposed to show what the maximum monthly payment amount can ever rise to (at the ceiling). Again...what balance is to be used to calculate this payment? On that loan scenario above, the max rate is could go up to would be 11.00% over the life of the loan...what balance is used to calculate that payment?

Thank you very much for your assistance!

So even though you quote OTI, if it is not purchased it would not show up on the HUD, correct?

If something isn't purchased, it would not show up on the Settlement Statement. You only list actual fees there.

Respa Queen: Regarding subordinations, we also have wrestled with this item. Here is our position. I am interested in how others are handling this as well.

We are taking the conservative approach on this one and including it as a loan origination charge when it is known. Our Loan Originators have to ask about this at time of application and if the answer is yes, we increase our line 1 fee by $150 to allow for subordinations. In our area, this is generally enough for other lenders and the same amount we charge other lenders. If the actual cost is less, we will still charge $150 as we have extra time and expense to deal with the subordination. We are also reflecting it as an APR item.

Regards,

Second opinions eleswhere say that the subordination fee is an origination charge. We are putting it in our origination charge. If chance it is not known at the time the GFE is given and is later found out then can the loan application be denied because the lender required first position?

Our compliance consultant stated that a changed circumstance takes place when you didn't know about the subordination fee but tell me how the origination charge can be changed when HUD is specific that 801 can only change if the loan program changed or the origination fee was a percent of the loan amount. He did not get back to me on that.

ANYONE?? PLEASE??

David, thanks for your response. Can you direct me to where you can find the information you provided in answer #2?

Thanks

We're having to provide and pay an interpreter at a closing for a loan to a hear-impaired individual. Since we're paying the fee, it will be POC. Would this fee be listed in the 1300 series?

Would anyone be willing to share the wording on their disclosure for new home pruchases wehre settlement will be more than 60 days and we may reissue the GFE at any time up to 60 days before settlement?

Did you all see this post where Old School Banker got a response from HUD saying .......wait for it........................

AN ESCROW WAIVER FEE IS A CHANGED CIRCUMSTANCE AND YOU CAN PUT THE ESCROW WAIVER FEE IN THE ORIGINATION FEE BOX ON THE REVISED GFE

Probably more stupid questions . . . but then that seems to be the norm for me for the last several weeks!!!!!

#1)If a customer arrives at the bank, ready to make application and has with him, his tax returns we can accept them at that time, even though the GFE will not be issued at that time, it will be mailed, and the receipt of such is not dependent on the issuing of the GFE within the next 3 days, right?

#2) Block 4-if we do not allow the customer to shop for all the providers used that make up the estimate that goes in this block they do not have to be listed on the provider list, right? 12/30 FAQ #8 on page 12/13 seems to say otherwise.

(We have a fee paid to the county, for a tax certificate that must be presented when recording a deed. The charge can not be shopped for. This type of fee was specifically listed in the old rules as 1100 series charge-its not covered in the new ones. Its to assure the Register of Deeds that all property taxes are paid. It is not a tax service.)

Thanks again.

New Question: Ok, did I miss something or is this Title Agent just practicing som etype of CYA?


We have a Title agency tell us today that they cannot process an order for Title Work without a GFE "Per the new RESPA rules"

I asked them to provide Chapter and Verse for their standing. I said, we would be providing a Good Faith for them to process the closing docs, but they did not need it to Order the Title Seach.

Am I wrong?

Nope, you're not wrong, DD. Methinks they want to see what you put down in Block 4 so they know what you told the borrower it would cost. Maybe they think it affects what they bill for.

Yes, and I emailed HUD back asking for clarification as this contradicted what HUD had told us.

In their response, they agreed there were contradictions, but at this time believe it's a changed circumstance. In terms of whether or not you can change block 1 for this - they said there's no final verdict on that, but most likely you will have to treat it as a block 2 item like discount points. I posted HUD's answers to us on that other thread.

DD-ask if they would like you to call another provider!!!!

Thanks FlamingoGal- I was going to say maybe we should ask that same question tomorrow and get a different answer. It would have to be in HUD's F&Q and in writing before I tell the loan people that Block 1 can be changed.