I would NOT issue a new GFE. Why lower the total of your tolerance bucket? You don't have to issue a new GFE even when there is a changed circumstance. The point is the borrower is wiling to do the loan at $X. If the final costs are lower than $X, they would be willing to close, wouldn't they? By lowering your 10% tolerance bucket total, you're cutting your throat on other overruns.

Not only that, but that wouldn't be a reason to increase Block 1. If you did opt to redisclose, probably all you could do is increase Block 2.

I still have a problem with this type block 2 stuff because it really has zero to do with costs for the "specific interest rate chosen", but it's the only solution HUD has offered.

According to page 68245 of the FR, I would say they are wrong and that it goes in the 900 series. Also note...if it's for the LOL, that should be noted as well.

I understand what you're saying and I'm not disagreeing - but here is my thought process -

The Fannie appraisal waiver fee is an administrative cost of making the loan (GFE Block 1 Q2 p.23 - all loan originator charges including processing, application, administration fees, underwriting...yadda yadda yadda". It is not an appraisal fee - we won't get an appraisal. Because it's not a point or charge, I'm not sure I could put it in Block 2.

So while I've already had to stronghold people into not updating the appraised value when the invoice comes in lower, I'm concerned about the results of an audit when the examiners come in.

I don't know the answer RQ...I just know they've held their feet to the fire on Block 1 and that isn't a program or loan amount change, and if it was, it's not based on a percentage.

Maybe a dumb question, but...

For Freddie loans we have the borrower fill out an IRS form 4506 but we don't collect the filing fee or send it out unless it is selected for quality control. The filing fee doesn't have to be listed on the GFE/HUD does it?

Isn't this a fee your bank would be paying after the closing IF the loan was chosen to QC? Were you paying the fee pre-1/1/10? We do a second appraisal on certain loans chosen by the auditor and pay for it. It is never considered a part of the loan. Seems to me this is the same type of thing for you.

respa queen, your question sent me to my underwriter to talk this one out. Seems we run the DU as part of pulling the cbr so we'll know if the loan qualifies for the appraisal waiver fee before preparing the GFE. Then we can include the $75 in the Block 1 origination fee.

Not sure if what we doing is correct but when we do our post closing review and find that the intital escrow account disclosure is incorrect, we prepare a new statement and send them a letter explaining our error. If we collected too much, we send them a check, if we did not collect enough, we give them the option of spreading the shortage over the next 12 months or paying the amount in full. This has been our policy and procedure for at least 10 years.

How is everyone handling P.O.C. items? One publication says not to use P.O.C. and another says it's ok. Our problem - We charge everyone a $400 application fee up front. It is included in line 801 of our GFE "Origination Charges" with other fees too, which total $650. When we get to closing, they have already paid the $400, so they only owe us $250. How do we show the $400 credit? One attorney told us to put it on page 1 of the HUD under line 215 as a credit. Any ideas?

You can't put POC on lines 801-803. I agree with the attorney. Put the $400 deposit in the 200s. It will offset against the fees from page 2.

Goodnews...POC isn't allowed on the GFE, but is allowed on the HUD. The way your attorney suggests should work fine...show the total charge, and then the portion they already paid in the credit. Look at the section 200 language "amounts paid BY or in behalf of borrowers.

Since it's a non-itemized item, that will be your best, or really only bet, IMO because it's a part of the total origination charge.

NEW FAQ just posted. Going thorugh it now. I don't like this one though.

33) Q: Can loan originators request verification documents or charge fees prior to issuing a prequalification or preapproval?

A: No. In order to prevent over burdensome documentation demands on mortgage applicants, and to facilitate shopping by borrowers, the final rule specifically prohibits the loan originator from requiring an applicant, as a condition for providing a GFE, to submit supplemental documentation to verify the information provided by the applicant on the application. Loan originators, however, can require applicants to provide such verification information after the GFE has been provided, in order to complete final underwriting. In addition, the rule does not bar a loan originator from using its own sources before issuing a GFE to independently verify the information provided by the applicant.

Similarly, HUD has long supported a public policy goal of creating a circumstance where consumers can shop for a mortgage loan among loan originators without paying significant upfront fees that impede shopping. To this end, and consistent with the Federal Reserve Board’s recently issued revised regulations limiting the fees that a consumer may be charged for the delivery of TILA disclosures, loan originators may not charge consumers anything more than the cost of a credit report prior to issuing a GFE.

That's what I was telling everyone. I don't agree with it technically, but that's certainly what HUD was saying.

If we do not have any charges in blocks 1-3 (Origination charges)of the GFE we are putting "$0" on the GFE. My question is about the comparision chart on the HUD1 page 3. I thought we would list "$0" in this section of the chart. Our loan doc processors say that we do not have to put anything on page 3 of the HUD1 since we did not have a charge. That part of the comparision should be left blank. Any opinions?

I don't think there's any guidance for your situation.

OK, having a loan system problem and I am trying to find a work around. We have a 2nd mortgage (Closed End Home Equity) that we advertise as only costing say $500. We issue a GFE showing that it will only be $500.

We quoted on the GFE (Numbers are not actual just for illustrative purposes)

Appraisal $300
Title $100
Recording $100


The actual numbers came in at:

Appraisal $400
Title $200
Recording $125


Since this is done on a HUD1a, do we make the adjustment for each of these as follows:

Appraisal adjusted for tolerence on line 809 showing $100 POC L
Title adjusted for tolerence Line 1109 showing $100 POC L
Recording Fee adjusted for tolerence line 1207 showing $25 POC L

The probelm I am having is the laser Pro will not print line 1109 or 1207. Could I just give a credit on line 802 and then show the actual cost for each item so that it nets out as $500 in the end.

Sorry for the long question.

You could do a HUD-1 and put each credit in the 200s.

That was my other thought, just trying to fiugre out how to use the HUD 1a.

But could I do like a "No Cost Loan" and give them credit in line 802 if Laser pro can't fix theother lines?

The only thing I don't like about that (Line 802) solution is the GFE said one thing, the HUD will say another for as each item, but the net answer is the same $500. Should I give a corrected GFE at closing that explains the credit in Box 2 in the GFE that will relate to the credit in line 802 HUD.

I have the same concern about the GFE and HUD not matching. That's why I suggested a HUD-1.

I don't think you have a changed circumstance. Therefore, you can't issue a new GFE at closing - even though nothings really changing.

DDRegs - I know that this is contrary to what the general consensus thinks, but to me, there is no harm to the borrower by showing the credit in the 800 series of the HUD 1A vs. pg 1 of a HUD 1. In either situation it can be clearly labled as a Tolerance Cure. We are currently showing the multiple POC(L) entries as you suggest on the HUD 1A...we desparately don't want to use a HUD 1 for these types of situations!

We are refinancing a 1st REM through Freddie. Customer has 2nd REM at another financial institution. We will need to get that subordinated. We have already issued the GFE, come to find out that the other FI is charging a $50 fee to "research" whether or not they will issue the subordination. If we have to reissue a new GFE, where would this go?

If you DO have a "changed circumstance" and such changed circumstance affects tolearance that you have to push closing back for MDIA, do you also have to encompass a new 10-day shopping period? (not saying that they must be hand-in-hand)

Has this been asked before?

According to the newest Q&A...once intent has been expressed, you maintain the original 10-day date on future GFE's.

CSB1, Based on 2) under changed circumstances, I think you could successfully argue that this would be a changed circumstance and I'd put the fee in Block 3...they can't shop for it. You're going to have to add the recording fee for the subordination to Block 7 too.