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#1389148 - 05/11/10 05:41 PM redisclose GFE ?
drewella Offline
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I know that under the revised RESPA rules, if the customer did not lock the rate at the time of the initial GFE, then a revised GFE is required when the rate lock does occur. If there were no changes to the rate or related charges, is a GFE still required?

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#1389158 - 05/11/10 05:46 PM Re: redisclose GFE ? drewella
Dan Persfull Online
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Yes. When the consumer locks the rate that will have an affect on the important dates section and you must update that section.
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#1389291 - 05/11/10 07:54 PM Re: redisclose GFE ? Dan Persfull
drewella Offline
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AH SO! Thank you so much! You are correct!

I wonder if all of the GFEs that are flying around are really helping the consumer better understand what they are getting in to?

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#1389331 - 05/11/10 08:23 PM Re: redisclose GFE ? drewella
Mrs. Rizzo Offline
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Curled up by the fire...
Originally Posted By: drewella
I wonder if all of the GFEs that are flying around are really helping the consumer better understand what they are getting in to?


I'm gonna go with .....NO! LOL!
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#1389359 - 05/11/10 08:47 PM Re: redisclose GFE ? Mrs. Rizzo
drewella Offline
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Makes auditing a loan file a real treat!

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#1389563 - 05/12/10 02:02 PM Re: redisclose GFE ? drewella
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So it is very clear that a new GFE is required with an initial lock. The question I still have is whether or not a new GFE is required upon a lock extension? Or relock? What if you don't charge an extension fee to the borrower?

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#1389580 - 05/12/10 02:17 PM Re: redisclose GFE ? Brock
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Is it required? not that I find in the rules.
Would it be prudent? If the extension affects the important dates section, I'd redisclose unless the extension was for just a day or two to get to the closing.

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#1389601 - 05/12/10 02:32 PM Re: redisclose GFE ? Truffle Royale
Dan Persfull Online
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Q&A 19 on page 8 does not refer to the "initial" GFE or rate lock. It simply refers to if the consumer locks the rate after the GFE has been issued the originator must issue a revised GFE updating the important date sections. Extending an expired rate lock would be initiating a new rate lock after a GFE has been issued and IMO require a revised GFE reflecting the changes the extension had in the important dates section of the GFE.
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#1389713 - 05/12/10 04:21 PM Re: redisclose GFE ? drewella
drewella Offline
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So, this may be a rather stupid question but I'm going to ask anyway. When the rate is locked, then the date on line 1 of the Important Dates section would state the rate lock date and line 3 would also need to be completed. Correct? I read through Important Dates section of the FAQ and didn't find anything about this. The lender's argument is that all of that information is on the rate lock agreement.

Is the day the rate is locked considered a "borrower requested change"?

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#1389720 - 05/12/10 04:28 PM Re: redisclose GFE ? Dan Persfull
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Dan, does it change your position at all if we do not hold the borrrower accountable in any way for the changes to the important dates? Basically we will close the loan at the previously disclosed costs even if the failure to close by the end of the previous rate period costs our company a rate extension fee. I know the regs say "must issue" and that is very strong language, but I am struggling to see why this is required if the borrower is not being detrimentally affected by the lock extension.

I know, asking why with these regs will drive you crazy. wink

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#1389765 - 05/12/10 05:25 PM Re: redisclose GFE ? Brock
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Drewella, the rate lock agreement is not a GFE and when the consumer locks the rate is the only time the loan originator must issue a revised a GFE.

Line 1 would be updated to show the date the rate lock agreement expires and line 3 would specify the number of days the applicant must go to closing after the rate is locked.


Brock, no it does not change my opinion. The redisclosure requirement is based on the fact the consumer locked the rate. Not whether the change is detrimental or beneficial. The rate lock changes the important dates section from the date of the rate lock therefore HUD is saying you must redisclose these dates to the consumer. Whether you or I see the reasoning is of no consequence, it's what HUD requires that matters. You will have to contact them for the reasoning of this requirement.
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#1389784 - 05/12/10 05:45 PM Re: redisclose GFE ? Dan Persfull
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FAQ 4/2/10 P.9 20) reads:

Q: If a GFE has been provided and the interest rate has been locked may the loan originator provide a revised GFE if the borrower requests a different rate lock period?
A: If a borrower requests a change to the mortgage loan identified in a GFE and that request will change the terms of the loan the loan originator may provide a revised GFE to the borrower.


It says 'may provide' not 'must issue' as 19) does. What say you now, Dan?

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#1389808 - 05/12/10 06:05 PM Re: redisclose GFE ? Truffle Royale
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Does not change my opinion. That question is under the changed circumstance section and the Q&A is stating the request for a new rate lock period would be a changed circumstance allowing a revised GFE.
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#1389815 - 05/12/10 06:12 PM Re: redisclose GFE ? Dan Persfull
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Yes, Dan, but I thought we were discussing the idea of requiring vs allowing. imho, #19 says a rate lock REQUIRES a redisclosure while #20 says you MAY provide a disclosure if the borrower requests a different rate lock period. I just don't see where the extension REQUIRES a redisclosure. Guess we'll have to agree to disagree and put it on our list of things to banter about over that beer I still owe you. wink

edited to add: For the sake of clarification, the #20 I quoted above is right after the #19 you quoted and both are under the GFE - General section, not the changed circumstance section.
Last edited by Truffle Royale; 05/12/10 06:37 PM.
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#1389888 - 05/12/10 07:37 PM Re: redisclose GFE ? Truffle Royale
drewella Offline
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Well, my original question was concerned an initial rate lock that occurs after the GFE is issued. So per #19 we MUST reissue. Merci

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#1390098 - 05/13/10 01:05 AM Re: redisclose GFE ? drewella
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Absolutedly agreed that you must redisclose when you lock the rate per #19, drewella.

Dan and I were answering Brock's question five posts after your original. Still hoping I may be able to sway his mind just once. smirk

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#1394291 - 05/20/10 08:11 PM Re: redisclose GFE ? Truffle Royale
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okay, different question. We instituted rate locks for HPML and HMDA purposes. They are not particularly customer driven, but we use a rate lock sheet that the borrower acknowledges and lock the rate for 30 days. I would think that these would be handled the same way for the important dates section. I don't know of any reason it has to be customer requested...any arguments ??
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#1470525 - 11/19/10 04:19 PM Re: redisclose GFE ? RR Joker
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So, if you were going to honor the initial rate, after the lock as expired, you would re-disclose with the same rate lock date, and just adjust the lock period? I'm assuming you would have to keep the same rate lock date, correct? If you didn't your rate lock date & Index would not match.

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#1470554 - 11/19/10 04:45 PM Re: redisclose GFE ? Lauren83
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Quote:
any arguments ??


How about Q&A 19 on page 8?

If by "acknowledges" you mean the applicant is agreeing to lock the rate for those 30 days then no arguments. But unless they are agreeing to the lock then I'll refer back to Q&A 19 because unless they expressively agree to the lock they are not locking the rate.
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#1470571 - 11/19/10 05:03 PM Re: redisclose GFE ? Dan Persfull
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They sign the rate lock sheet, so I would say they truly are acknowledging it.
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#1471269 - 11/22/10 08:02 PM Re: redisclose GFE ? RR Joker
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In a previous life I worked for a large bank that only required a GFE to be re-disclosed for rate locks and extensions if rate or fees increased. No need to re-disclose if rate/fees were the same or lower. (policy for new RESPA, not referring to guidelines before Jan 2010). I checked with someone still working for that bank and the policy has not changed.

I've recently learned at the bank I currently work at that not only is a new GFE required for locks and extensions, but if it isn't done w/in 3 days, the file won't be sold on the secondary market and will instead be closed as a portfollio loan using the secondary market rate/fees due to an incurable violation. Not a fun lesson to learn the hard way.

Anyone else gone through a similar situation after missing the 3 day window for re-disclosure after lock or extension?

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#1471295 - 11/22/10 08:44 PM Re: redisclose GFE ? Clif741
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If you missed your 3 day window you no longer have a qualified changed circumstance and have no basis for issuing a revised GFE and must live with the fees previously disclosed and in most cases this will likely put the loan outside the approved perimeters for the secondary market.


BTW...when the consumer exercises a rate lock option the lender must issue a revised GFE within 3 business days under the current rules.
Last edited by Dan Persfull; 11/22/10 08:52 PM. Reason: Add comment.
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#1471354 - 11/22/10 09:28 PM Re: redisclose GFE ? Dan Persfull
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To follow-up on this a bit...

If you have not issued a revised GFE for a fee within 3 days (say it was appraisal came back with Pest and Dry Rot) what do you think the proper procedure is?

I am getting that you go ahead and issue the revised GFE, to give an accurate view of costs, then remedy it with a lender -credit 'cure' on the Hud-1 for the fee. So Bank are disclosing the fee but doing cure by paying bank paying for it.

ETA: (and of course some high-intensity training for the staff who didn't issue it)
Last edited by Avanti; 11/22/10 09:29 PM.
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#1471385 - 11/22/10 10:08 PM Re: redisclose GFE ? Avanti
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I am going to assume the Pest / Dry Rot discovery in the appraisal mandated a pest inspection. This would be a qualified changed circumstance allowing you to issue a revised GFE showing the inspection costs.
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#1471964 - 11/23/10 08:42 PM Re: redisclose GFE ? Dan Persfull
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But missing the three day window to disclose it, which was the part I think Avanti was getting at, is not a violation. If the inspection is mandated in order to get the loan, then you're right, Avanti. You disclose and cure.

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