Biz, 80's Girl: Today, one of our vendors forwarded us a response one of their other clients received from HUD - our vendor is changing their system based upon this response the other client received. Our bank has not yet received a response from HUD to our question.

The other lender heard back from David L. Friend, Esq. at HUD that you calculate the payments in that "Summary of Your Loan" section based upon the amortized balanced.

You are requiring it...can the borrower shop or not?

I'm not sure, however, that this would be a FC. Surveys, in general, are not.

It's already starting - a former loan customer came in with a completed loan application yesterday, including verification of income and bank statements, asked what the rates were and said go for it; all of which was before our Loan Officer had an opportunity to issue the GFE. The applicant selected the title company, not our Prefered vendor, left the financial info and said send her the GFE. GRRR - not to the LO, but to HUD, duh! I told the LO to document in the file that we did not request them, and get the GFE out immediately. GFE could not be prepped because we had to call vendors for their quote on recording costs (paid to the title companies in our state). The LO was able to persuade the customer not to write the check, luckily! Life is not always going to happen the way HUD dictates? Should we have done anything differently?

Can someone answer this question for me? If a customer applies for a mortgage and we give them the GFE, but the customer doesn't come back, is this considered a withdrawn loan or not?

I've being told that it's not technically an application because we don't have the intent to proceed, but I'm not comfortable with that decision since we have a signed application.

Any thoughts?

Laffy Taffy, see rlcarey's post in this other thread .

Thanks!! I had missed that thread entirely!

If they bring you verification documents, you can accept them. You didn't request them. I don't think you did anything wrong. I wouldn't do anything differently.

I agree with David, you just can't predicate issuing the GFE on receiving verification documents.

If they bring you verification documents, you can accept them. You didn't request them. I don't think you did anything wrong. I wouldn't do anything differently.[/quote]

I'm struggling with this answer, maybe just because I know how our lenders think. We've trained our lenders they cannot accept any verifications until disclosure, even when customers offer them. Without an across-the-board no verifications until disclosure rule, what stops a lender from quietly requesting them while indicating 'the customer offered them'? Doesn't this acceptance defeat the purpose of the initial regulatory guideline?

RR-No they can not shop for it.
I thought that if a survey/mortgage report is completed after closing (to determine the placement of the new construction on the property description) that it was always a finance charge.

Question came in that sent me digging back and I found this. But I also found in the FAQ p25 under GRE-Block 4 #7) which states

Quote:

Charges that the seller pays as a matter of common practice and experience are not disclosed on the GFE.

Am I correct that this contradicts what HallieK wrote and David confirmed above? What am I missing?

The specific question put to me was for a purchase loan in MN. The title company says "...the title search, exam, assessment search and deed tax are seller expenses. These would not be on the GFE as buyer's expenses." They quote a statute for the deed tax but what about the rest? Are they correct?

Strange question but wanted to see if anyone else has hit this...What do you do on the GFE if you have some payment frequency other than monthly - for example a quarterly or even annual pay home loan (rare but is common for farmers)? Would you divide the payment in order to get a monthly split or simply modify the GFE (which HUD doesn't seem to want you to do) in order to reflect the correct payment frequency?

HUD says you must put those payments into monthly terms so that applicants are comparing apples to apples when shopping. See Q 6 on page 3 of the FAQ:

Yeild Spread Premuim question.

HELP!! My mortage company is the broker with one of our investors. We issue the GFE, the loan closes in our name, the investor funds the loan. At the time of the initial GFE, we do NOT know what the YSP will be or the cost to the customer. We do not know that until the rate is locked. The maximum the YSP can be is 3%. Because we are the borker the YSP must be shown on box 1 of the GFE. I do not know what to put in box 1 for the initial GFE, before we lock the rate. Do I ..

1)Reflect a 3% YSP in box 1 with no adjustments in box 2, then when the rate is locked and we know the actual YSP, adjust the YSP in box 2 down to the actual amount? (This is using the arguement that the YSP is actually a rate-dependant item and can change upon the locking of a rate)

2) Reflect a 3% YSP in box 1 with no adjustments in box 2, then when the interest rate locks put the appropriate credit in box 2 so that the adjusted origination charge reflects what the customer will actually be paying? (This is assuming that the number in box 1 cannot change due to locking rates)

3) none of the above and please let m eknow what to do!

Also, if it is easier to IM me, please do!

Question: Borrower came in a few months ago and was credit approved only (prequal)and a GFE was provided. Now the borrower has found a property address. Are we bound to the old GFE and those fees that were diclosed a few months ago, or can we disclose a new GFE with new fees/terms based on the fact that we now have an "application" as defined by RESPA's new rule?

Perfect - I thought I had read those carefully but missed that point. Will be confusing for the borrower but that appears to be okay with HUD... Thanks for the quick assistance!

Since the amount of the loan changing was not based on the borrower decreasing their request but instead based on not being approved for that amount we are assuming this does not count as a changed circumstance.

I do beleive it is a changed circumstance:
(ii) (ii) 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. This 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;

Note the credit quality portion of this statement!

Since the credit quality of the customer was the same when we issued the GFE as it was when we decided to decline them I don't think it "changed" so therefore can't be considered a changed circumstance and I certainly don't want to argue this point with an auditor so I think I am sticking with this answer provided by David D. last week..

Two options:
1. Deny them for the $50M and ask them if they want to reapply for $25M. If they do, issue a GFE representing the new loan amount.

2. Counteroffer them with $25M. If they accept the counteroffer, issue a new GFE representing the new loan amount.
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If the homeowner's insurance premiums are paid prior to settlement:
1) Is the premium still shown on Line 903 of the HUD?
2) If the premium is shown on the HUD, does the premium need to be shown as POC outside the column?

The HUD-1 Instructions says to list any homeowner's insurance premiums that the lender requires to be paid at the time of settlementon on Line 903. The RESPA FAQs and HUD-1 Instructions do not address where and how to post homeowner's insurance paid outside of closing (aka: prior to settlement).

On purchases, we require one year paid insurance policy at closing-if the borrower pays it prior to closing and brings a paid reciept to the table, it would be a POC on 903. If they are paying it at closing, it would be a charge to the borrower on 903.

David - in your webinar "How to Complete the NEW Good Faith Estimate and Settlement Statments" Q&A you had the following question & response:

Question 50. If we don't charge our customer for the credit report fee, must we list that and then show it as a credit on the HUD? Do we have to list this on the GFE?

Answer: If the lender knows, at the time the GFE is provided, that it will waive the credit report fee, the fee must still be disclosed on the GFE (in Block 3) and HUD Settlement Statement (on Line 805). An offsetting credit (for the credit report fee) will also be shown on the GFE (in Block 2) and the HUD Settlement Statement (on Line 802).

If the lender decides to waive the credit report fee after the GFE is issued, it would already be disclosed on the GFE (in Block 3) and still needs to be listed on the HUD Settlement Statement (on Line 805). There will be no offsetting credti on the GFE in Block 2; however, the HUD Settlement Statement will shown an offseting credit in the 200 series."

Where does the reference to before or after the GFE is issued come from? We have never charged the credit bureau fee; it's always been included in our admin fee. I've been told we need to show it in Block 3 of the GFE but disclose it on Line 805 on the HUD and show the offsetting credit in the 200 series. But your response indicates we would only do that if it was decided to waive it "after the GFE is issued". I'm confused. This could be the only fee we would have like this (i.e. it's not a "no cost" loan). Would appreciate your help in understanding your response. Thank you!

If-hopefully a big if, a bank has to refund part of a Block 1 fee (charged for origination but not paid directly to the Bank) after closing to make the HUD correct, are you just expensing that or would you adjust deferred fees. For example, lets say your loan fees are typically $500 but you had to reimburse for an origination fee paid to a third party of $100. Would you adjust the deferred fees-and base them on $400 now?

I apologize if this is just too stupid a question-FASB-is not my thing.

Thanks

Biz, it would make sense that you would adjust deferred fees because the new amount will be the "correct" amount.

We are doing a HELOAN...the borrower pays for property taxes and homeowners insurance outside of closing. In the past, we would list them on the GFE and HUD as POC.

I think I know where to put the HOI premium (Box 11, then we have to give a credit for it in Box 2 because BYTE software does not allow a POC in box 11).

Where do we reflect the property taxes on the new GFE?