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#1367036 - 03/31/10 03:21 PM disclosure of fees under RESPA rules
VRV Offline
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Posts: 173
We are entering into an arrangement with a third party that will handle internet applications for us. They will obtain the application/lead from the internet aggregator, underwrite it, process it, and provide disclosures on our behalf. We will pay them a fee for each application. The amount of the fee will vary depending on various factors, such as loan amount, type of loan, etc., but there is a set schedule for how much we will pay them for each application. Out of this fee, the third party will pay for the costs of obtaining whatever type of appraisal is necessary, and getting title work, etc. Even if they end up needing to get a more sophisticated appraisal than anticipated, the fee we pay them will not change. The increased cost will simply leave them less profit on that loan. The borrower doesn't pay for any of this.

I was going to just include the amount of the fee to the third party in the Origination Charge, and then credit it back out in Block 2, so there is no cost to the borrower.

Is this acceptable? Or does the amount of each separate expenditure by the third party for appraisal, title search, etc. have to be separately disclosed in Blocks 3 and 4, and on the corresponding lines on the HUD?

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RESPA
#1367579 - 04/01/10 12:19 AM Re: disclosure of fees under RESPA rules VRV
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,617
Galveston, TX
I'm confused. If they are taking the application and doing all of this work, they will already have to have issued a GFE that you are going to have to live with.......

You do not get to issue a new GFE when you get the package.
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#1367645 - 04/01/10 12:47 PM Re: disclosure of fees under RESPA rules rlcarey
RR Joker Offline
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RR Joker
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The Swamp
You say they will "provide all disclosures" on your behalf...are you attempting to try and make sure they have prepared correctly?

If so, then they should have their fee in Block 1, credit whatever the borrower is not going to pay in block 2 (including any 3rd party charges) and itemize the 3rd party charges in Block 3, etc.
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#1367652 - 04/01/10 12:58 PM Re: disclosure of fees under RESPA rules RR Joker
rlcarey Offline
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rlcarey
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Galveston, TX
They are acting as a broker and you have to live by whatever they have disclosed to the borrower if you choose to accept the application from them subject only to the ability to change a GFE as described below in HUD's Q&A.

26) Q: If a lender agrees to proceed with a transaction for which a mortgage broker has provided the GFE to the borrower, may the lender provide a revised GFE?

A: The lender may provide a revised GFE consistent with the provisions of 24 CFR 3500.7(f).
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#1367654 - 04/01/10 01:00 PM Re: disclosure of fees under RESPA rules rlcarey
RR Joker Offline
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RR Joker
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The Swamp
In case I was misunderstood, I agree...you won't be able to change what they do...you can just consult with them on doing it correctly to begin with, thus my response.
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#1367900 - 04/01/10 04:16 PM Re: disclosure of fees under RESPA rules RR Joker
VRV Offline
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Joined: Jun 2007
Posts: 173
RR, your assumption was correct. The vendor will be preparing the GFE for us, but will be doing so at our direction. So I am trying to make sure I know how it should be done, so I can instruct them accordingly. Sorry I didn't make that clear.

Thanks also for the direction on how it should be disclosed. So maybe you can confirm that what I'm thinking is correct.
Here's a hypothetical, simplified example: We pay the vendor $1000 total for their services. They pay the appraiser $100 out of this sum and keep the rest for themselves. I assume that $900 would go in Block 1 under Origination Charge; $1000 would go in Block 2 as the Credit; negative -$100 would be the Adjusted Origination Charge; $100 would go in Block 3 for appraisal, and the bottom line for settlement charges would be $0.

Right?

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#1368064 - 04/01/10 06:49 PM Re: disclosure of fees under RESPA rules VRV
RR Joker Offline
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RR Joker
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Posts: 20,654
The Swamp
eek..no that doesn't look right. The vendor should be netting $900 in their pocket, correct? If so then:

Block 1 = $1000 (plus your origination charges)
Block 2 = a credit of whatever the vendor is not going to passon to the customer between any part of the $1000, if any and any 3rd party fees. In this case Block B would show a credit of $100. (assuming their are no discount points involved) for a net in Block A of $900.00
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Say you'll haunt me - Stone Sour

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#1368072 - 04/01/10 06:59 PM Re: disclosure of fees under RESPA rules RR Joker
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
RRJ, if I read the post correctly this cost is not being passed to the consumer, the bank is paying this fee therefore there should be a credit to the consumer to offset the $1000 fee.
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#1368143 - 04/01/10 07:54 PM Re: disclosure of fees under RESPA rules Dan Persfull
VRV Offline
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Joined: Jun 2007
Posts: 173
Dan is right--none of this charge gets passed on to the customer. It is strictly between us and the vendor. The only charge the customer will pay is our $150 loan fee. I left that out of my example, just to keep it simple, cause I know how to handle that. But if it will help, let me set it out again with that included.

Customer pays nothing except $150 loan fee to us. All other expenses/fees/charges are paid by us by way of the $1000 fee we pay to the vendor who uses the fee we pay them to pay for third party costs, such as appraisal, and keeps the balance to pay for their services. So here's how I'm thinking it should look:

Block 1 $ 1050 ($900 plus $150)
Block 2 $-1000 (total fee paid to vendor)
Adj Orig Chrge $ 50 (Difference)

Block 3 $ 100 (Amount paid to appraiser by vendor)

Settlement Chgs $ 150 (Total of $50 plus $100)

Does this look right?

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