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#1390720 - 05/13/10 06:57 PM
No GFE provided
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100 Club
Joined: Jun 2007
Posts: 173
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Am I correct in assuming that, if no GFE was provided to the applicant at all, no fees can be charged to the borrower in connection with that loan (other than items that have no tolerance, such as escrow deposit)? In this situation, the applicant applied for a loan, was approved, and is now scheduled to close in a few days, but no GFE was ever provided. I don't see any option except to provide the loan with no fees--am I overlooking something?
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#1390851 - 05/13/10 09:14 PM
Re: No GFE provided
VRV
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Power Poster
Joined: Nov 2008
Posts: 4,132
Somewhere in the middle
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1. I am by no means an expert on this issue, but I would suggest sending a GFE so the borrowers understands what you are going to do for them.
2. I would pay all the items that have a tolerance related to them.
3. I would put a size 14 up someones you know what. I understand we all make mistakes, but cheese whiz, what kind of training did this person get.
4. Do a review of the process, how does a loan get to closing without disclosures being sent?
Those who are smarter than me can chime in, I would love to read what you think.
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I'm only responsible for what I say, not for what you understand.
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#1390870 - 05/13/10 09:49 PM
Re: No GFE provided
DD Regs
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100 Club
Joined: Jun 2007
Posts: 173
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Thanks so much for your thoughts. I agree with you that we should go ahead and send a GFE now that will show no fees being paid by the borrower. We will pay all third-party costs associated with the loan and waive our internal loan charges.
This error arose out of an unusual situation--it didn't come through our normal process, so that's how it happened. It's too complicated to explain in detail here, but suffice to say, it doesn't cause me any concerns about our procedures.
I really appreciate your thoughts. I was assuming we would be required to cover the borrower's costs, but I wanted to make sure I wasn't missing something that would provide some remedy here.
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#1390881 - 05/13/10 09:59 PM
Re: No GFE provided
VRV
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Power Poster
Joined: Aug 2001
Posts: 7,364
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I disagree. I would send the GFE, the violation being that it was not provided within 3 days....which would be a RESPA violation.
But I would appreciate a guru stepping in and shooting me down.
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The more you sweat in training, the less you bleed in battle.......
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#1390890 - 05/13/10 10:11 PM
Re: No GFE provided
Truffle Royale
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Joined: Aug 2001
Posts: 7,364
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I do not find anything in Reg X which states that if a GFE is not provided within 3 days of receipt of the application, that no fees can be charged to the borrower. But I was thinking....in addition to a violation for not providing the GFE timely, you would also have a violation for obtaining verification documents in advance of providing the GFE. Perhaps the best fix is, as you suggest, don't charge the fees.
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The more you sweat in training, the less you bleed in battle.......
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#1390930 - 05/13/10 11:30 PM
Re: No GFE provided
swiggles
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Joined: Jun 2007
Posts: 173
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Just like swiggles, I can't find anything that specifically addresses this situation. So I assumed that if you are not allowed to charge any higher fees (after taking allowable tolerances into consideration) than what you disclosed on the GFE, then it would be deemed that we disclosed $0 (due to no GFE being given) and therefore couldn't charge anything.
If you look at it as though you can go ahead and provide a GFE as soon as you realize you haven't done so, and then charge fees according to what was disclosed on this late GFE, it seems as though it defeats the purpose of the form, i.e., give the borrower all the information about what this loan will cost them as soon as they apply so they can comparison shop.
By the time you provide the delinquent GFE, it may be too late for the borrower to shop around and find a better deal, so they are stuck with this loan that is going to cost them a lot more than what was disclosed ($0.) Just seems as though it defeats the primary purpose of these new amendments. I will feel much more comfortable with not charging the borrower anything for the loan unless someone can come up with a basis in RESPA for not having to take this route.
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#1391009 - 05/14/10 01:18 PM
Re: No GFE provided
Truffle Royale
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Joined: Nov 2002
Posts: 20,656
The Swamp
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FWIW, I also agree.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1391150 - 05/14/10 03:24 PM
Re: No GFE provided
RR Joker
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Joined: Jan 2006
Posts: 111
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You are saying that anytime you do not provide the GFE within the three day requirement you are stuck with a no fee loan? So for whatever reason the GFE is not issued until the 4th or 5th day, the penalty is the borrower pays no fees?
IMO - that seems a little harsh not to mention not specifically supported within the regulation or FAQs (that I am aware of). I would be interested to see if others are taking the same position.
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#1391182 - 05/14/10 03:50 PM
Re: No GFE provided
BLB
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Joined: Aug 2001
Posts: 7,364
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You are saying that anytime you do not provide the GFE within the three day requirement you are stuck with a no fee loan? So for whatever reason the GFE is not issued until the 4th or 5th day, the penalty is the borrower pays no fees?
IMO - that seems a little harsh not to mention not specifically supported within the regulation or FAQs (that I am aware of). I would be interested to see if others are taking the same position. No. That is not how my bank would handle the situation. As this would be an isolated case (I would hope!!), we would rather take the regulatory hand slap for failure to meet the 3-day deadline than the financial loss. Of course you know that the loan you mess up on will somehow find its way into the examiner's sample. Finding a pattern or practice of this would be a training issue. I would provide specific training and note that in our training records.
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The more you sweat in training, the less you bleed in battle.......
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#1391204 - 05/14/10 04:02 PM
Re: No GFE provided
Truffle Royale
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Power Poster
Joined: Aug 2001
Posts: 7,364
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As I said previously in this thread, there might also be a violation cited if the GFE is provided AFTER the loan officer obtains verification documents. So that's two regulatory "hits."
Our procedures are so tight that I doubt this scenario could happen at all. But there can always that one slip up.
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The more you sweat in training, the less you bleed in battle.......
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#1391223 - 05/14/10 04:10 PM
Re: No GFE provided
Truffle Royale
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Power Poster
Joined: Aug 2001
Posts: 7,364
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Back atcha!!!!
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The more you sweat in training, the less you bleed in battle.......
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#1391226 - 05/14/10 04:11 PM
Re: No GFE provided
swiggles
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Power Poster
Joined: Aug 2001
Posts: 7,364
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P.S. TGIFBV!!!! Thank God it's Friday before vacation. I will be in Michigan by this time tomorrow!!!!!
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The more you sweat in training, the less you bleed in battle.......
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#1391238 - 05/14/10 04:15 PM
Re: No GFE provided
BLB
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Joined: Aug 2002
Posts: 3,094
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Providing it on the 4th or 5th business day when the loan closing is still 20 days away, is one thing (still would be a viol), but right before closing? I can't imagine this would be ok. The spirit of the revised reg is the whole "shopping" thing along with the accuracy/dependability of the GFE.
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Opinions are my own and not of my employer.
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#1391301 - 05/14/10 05:13 PM
Re: No GFE provided
Truffle Royale
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100 Club
Joined: Jun 2007
Posts: 173
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I really appreciate everyone's input on this problem. It is very helpful to get others' thoughts. It's clear that we all agree that it's a violation not to provide the GFE within 3 days and it appears we agree that RESPA doesn't explicitly state what a lender can or must do if this happens--I guess the outstanding question is what would a regulator expect the lender to do when this happens?
If we gave a GFE within 3 days, but inadvertently left off a fee that should have been disclosed, I think it's clear from RESPA that we would not be able to charge that fee. Using that analogy, I'm not sure how we would justify charging any fees that were not disclosed (whether it be because it was omitted from the GFE or because no GFE was provided.)
I think I feel most comfortable just eating the costs. It seems like the best course of action to try to make amends for the error since it was our fault that the borrower who didn't get their consumer protection
I too would love to get HUD's thoughts on this. Does anyone want to take the lead on this?
Last edited by VRV; 05/14/10 05:17 PM.
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#1391321 - 05/14/10 05:32 PM
Re: No GFE provided
VRV
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10K Club
Joined: Aug 2002
Posts: 47,673
Bloomington, IN
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If you provide the GFE a day or two late I do not feel the intent of the rule is to cause you to have to eat those fees.
However as mentioned by proceeding the loan application you have violated several of the GFE rules, especially if you collected any fees.
This is just my thoughts, no official guidance to back it up.
1. Issue the GFE and allow the applicant to give their intent to proceed before continuing any further with the transaction.
2. I would seriously consider refunding any fees that were collected before issuing the GFE.
3. If you are 3 or 4 weeks into the application process or 2 weeks or less from closing when you discover the GFE has not been provided then you most likely deserve to eat 100% of the fees.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#1391358 - 05/14/10 06:00 PM
Re: No GFE provided
Dan Persfull
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Joined: Aug 2001
Posts: 7,364
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Well....there 'ya have it....straight from the horse's Dan's mouth.
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The more you sweat in training, the less you bleed in battle.......
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#1391780 - 05/17/10 01:09 PM
Re: No GFE provided
Truffle Royale
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10K Club
Joined: Aug 2002
Posts: 47,673
Bloomington, IN
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What I was inferring is if you issue the GFE late then I wold suggest refunding any fees you collected, except for a credit report fee, before you issued the GFE.
IOWs, if you collected the appraisal fee I would refund and waive that fee because you collected it before the GFE was issued, however I wouldn't waive all the other fee such as title insurance services, recording fees, etc.
As I said I don't think the intent of the rule is to cause the FI to absorb all the fees if the GFE is issued a few days late. But I also am saying you can't wait and issue it just before closing and not suffer any consequences.
If you have a pattern of this happening then yes the FI, and in particular the person or persons (and especially their supervisor) responsible for delivery of the GFE should suffer consequences.
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The opinions expressed are mine and they are not to be taken as legal advice.
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