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#1342273 - 02/11/10 09:22 PM
Re: RESPA changes 1-1-10
Sinatra Fan
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10K Club
Joined: Oct 2006
Posts: 14,390
Cheeseheadland
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I just got an answer back today I sent on December 30th! totally forgot I sent that question, and it was a good one!
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#1342368 - 02/11/10 09:59 PM
Re: RESPA changes 1-1-10
#Just Jay
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Power Poster
Joined: Jun 2001
Posts: 8,272
Where the heart is
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I just got an answer back today I sent on December 30th! totally forgot I sent that question, and it was a good one! So are you going to share?
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#1342423 - 02/11/10 10:35 PM
Re: RESPA changes 1-1-10
Princess Romeo
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100 Club
Joined: Jan 2006
Posts: 190
TX
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So....a broker issued a GFE for a fixed rate loan, then asked us to make the loan. We would consider an ARM, but not a fixed rate. I don't believe this is a changed circumstance. Is there any way to issue a new GFE? Do we deny the loan? Make a counteroffer? Is there a way for the customer to request a new GFE? Does a different product constitute a different GFE?
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#1342768 - 02/12/10 04:07 PM
Re: RESPA changes 1-1-10
Brock
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Joined: Jul 2003
Posts: 17,410
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Brock, I sent this question to HUD the other day. Depending on what the reason is that your bank can't do the loan, this might answer your second question above. Q: The borrower still wants a 30 yr fixed rate loan. After the original GFE has been delivered, there is a changed circumstance in the loan that makes it no longer qualify for the original product offered. We have to find another investor willing to make the loan. Normally this means a change in fees and/or rate because we are no longer able to give the borrower the best possible rate that Investor A offered. A: It seems like if there was a change in the borrower's eligibility it could be considered a changed circumstance affecting loan and a revised GFE could be provided. As to your first question, everything that I've read says mileage charges that raise an appraisal fee do not qualify for a changed circumstance. That's why a lot of lenders are high balling the appraisal fee. Makes absolutely no sense if the intent of this new RESPA was to allow comparison shopping, I know. But that's DUHHUD for ya'.
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#1342910 - 02/12/10 06:03 PM
Construction-RESPA
RR Joker
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100 Club
Joined: Jan 2004
Posts: 125
Omaha, Nebraska
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We are doing a 9 month construction loan with no permanent commitment and the owner already owns the lot. Am I correct, that RESPA would not apply in this case and we would NOT have the use the new HUD, we can simply do a disbursement summary? THANKS
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#1342911 - 02/12/10 06:04 PM
Re: Construction-RESPA
Em
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Joined: Nov 2002
Posts: 20,656
The Swamp
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yes, Em, you are safe!
err..one caveat, IMO, however. If they are going to be paying out WITH permanent financing, we would require a commitment from whomever, otherwise we "may" be doing the Perm by default and in that case, we would disclose both.
Last edited by RR joker; 02/12/10 06:06 PM.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1342913 - 02/12/10 06:04 PM
Re: RESPA changes 1-1-10
Bville
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100 Club
Joined: Jan 2004
Posts: 125
Omaha, Nebraska
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I believe Subordination Fee to 3rd party is located in Block 3, line 808.
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#1343465 - 02/15/10 07:59 PM
Re: Construction-RESPA
manylayers
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10K Club
Joined: Mar 2006
Posts: 10,392
Curled up by the fire...
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You could go with borrower requested changes and do a changed circumstance. Only fees relating to the CC would be changed and I'm thinking the tolerances would still apply.
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#1343469 - 02/15/10 08:11 PM
Re: Construction-RESPA
Mrs. Rizzo
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10K Club
Joined: Aug 2002
Posts: 47,673
Bloomington, IN
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You need to read on down to xv on page 18:
xv) A mortgage broker issues a GFE based on one lender‘s loan products and origination fees, but places the loan with a different lender. A: No, this would not constitute a changed circumstance.
I would question whether you have a changed circumstance.
I don't think you can rely on a "customer requested change" in this instance. Any customer is going to go with a cheaper interest rate if you offer it to them. So what's to keep you from estimating the cheapest closing costs based on the higher rate and then "bait and switch" them after they agree to proceed. Oh BTW, we have this cheaper product but your appraisal is going to be $600 instead of $400.
IMO you don't have a changed circumstance in this scenario.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#1343470 - 02/15/10 08:16 PM
Re: Construction-RESPA
Dan Persfull
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Joined: Jul 2003
Posts: 17,410
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This is what kills me about the new RESPA. Look at the answer I got from HUD above. Apparently if the borrower doesn't qualify for one investor's product, they say it IS a changed circumstance to switch investors. BUT, if a good borrower wants to take advantage of a better interest rate it's NOT a changed circumstance?! How does that work, exactly?
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#1343472 - 02/15/10 08:23 PM
Re: Construction-RESPA
Truffle Royale
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New Poster
Joined: May 2009
Posts: 15
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Broker's GFE shows the credit for the YSP, however he simply for got to add it into the origination charges. :-o The loan hasn't locked yet. When the loan locks, it will be a changed circumstance, but the broker will not be able to then ADD a YSP in the orgination charges, right???
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#1343476 - 02/15/10 08:36 PM
Re: Construction-RESPA
Truffle Royale
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10K Club
Joined: Aug 2002
Posts: 47,673
Bloomington, IN
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The changes don't keep the customer from taking advantage of the better rate, it just prevents you from the bait and switch tactic. And the customer's credit quality has nothing to do with this particular change in rates.
That was one of the ploys used by unscrupulous brokers. They would quote the fees based on the higher rate then once they had the applicant hooked they would offer them a 1/8 to 1/2 percent lower rate if they wanted to pay higher fees which instead of $200 as in my example it was usually $2,000 to $4,000.
The only thing the borrower is requesting changed is the interest rate so the only fees that could be revised would be the fees that are dependent on the interest rate.
If the product is the same (30 year fixed for example) and the only difference is the investor and the fees then I don't think you can argue the borrower is changing products. However, if they are going to a different product, such as fixed to variable then you could possibly rely on the following from page 26:
8) Q: When the interest rate goes from float to rate lock, may Block 1 on the GFE change? A: No. However, Block 1 can increase due to a changed circumstance if the change affects the loan amount and all or a portion of the Origination Charges were calculated as a percentage of the loan amount. Block 1 may also increase if the borrower either requests a different loan product or the borrower is no longer eligible for the loan product contained in the initial GFE, but is eligible for a different loan product.by the interest rate.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#1343495 - 02/15/10 11:37 PM
Re: Construction-RESPA
manylayers
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Power Poster
Joined: Aug 2002
Posts: 3,094
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Very often the recording fee quoted on the HUD-1 at closing will differ from the actual billing we get later(after closing) from the clerk of court. Do we need to revise the HUD-1 to show the actual fee? (since the bank will have to pay the difference) If so, is this an acceptable way to disclose the increase: example: $50 shown on HUD-1 and $52 on actual billing On line 1201 we put the final charge of $52 in the borrower column and a credit on line 204. Or do we put $50 in the borrower column, with POC(L) $2 outside the column - with nothing on the 1st page?
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#1343834 - 02/16/10 05:24 PM
Re: Construction-RESPA
Brock
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Gold Star
Joined: Nov 2004
Posts: 313
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I have a title company who just informed us that they can't issue a HUD under the new 2010 rules until they have a 2010 GFE - which is perfectly understandable except, this is a business loan (granted, it's for a consumer under her SSN) and we did not issue a GFE. My understanding is that RESPA excludes business purpose loans even if it is for a 1-4 family residential property? Our borrower is purchasing this as an investment to renovate and flip for a profit. Has anyone else run into this with their title company - and if so, how did you resolve it? I've given them an excerpt from RESPA's section 3500.5 explaining coverage/exemptions and Reg Z's section 226.3(a)(1) for the definition of a business purpose loan, just waiting on a reply. Anything else I should consider? Am I missing something? Thanks!
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#1343875 - 02/16/10 05:47 PM
Re: Construction-RESPA
trout22
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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Curiously, trout...you say this is for investment to renovate and flip...is this person in the business to do this? Is it supported by tax returns? If not, I'd consider this a personal investment rather than a business investment and would disclose it as a consumer loan.
If it truly is business, there's no need for a SS to be completed, so I'm not sure what the issue really is.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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