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#1415003 - 07/14/10 07:10 PM Summary of Loan vs. Loan Terms
VRV Offline
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Joined: Jun 2007
Posts: 173
If the Summary of Loan on the GFE says one thing (e.g., no prepayment penalty), but the Loan Terms on the HUD say something different (e.g., there is a prepayment penalty), and the Note really does call for a prepayment penalty, are we required to do anything in this situation? There were no changed circumstances and no revised GFE was issued. Can we still charge the prepayment penalty (assuming it becomes applicable)? Do we need to send anything to the customer? Or are we locked into not charging a prepayment penalty because that's what the GFE said? In that event, do we need to send a corrected HUD to the customer?

I notice that Q. 6 under HUD-1--Page 3 says that the settlement agent is not required to compare the Loan Terms section to the Summary of Loan Terms on the GFE, but also says that if the settlement agent becomes aware of inconsistencies, the discrepancy "should be communicated to the lender."

Not sure, though, what that means the lender would be required to do in that circumstance. And therefore, I don't know what we need to do in these situations when there is no settlement agent, but we discover the discrepancy ourselves.

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RESPA
#1415148 - 07/14/10 11:10 PM Re: Summary of Loan vs. Loan Terms VRV
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,633
Galveston, TX
You have an uncorrecctable violation unless the regulators dream up a corrective action. The GFE is not your contract.
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#1415263 - 07/15/10 02:30 PM Re: Summary of Loan vs. Loan Terms rlcarey
VRV Offline
100 Club
Joined: Jun 2007
Posts: 173
So it sounds like you're saying that we can legally charge the prepayment penalty, but that we have a RESPA (GFE) error that cannot be corrected. Would we help the situation by sending the customer a letter and corrected HUD removing the prepayment penalty and changing the loan on our system to remove the prepayment penalty if it ever became applicable? Wouldn't that correct our RESPA error?
Last edited by VRV; 07/15/10 02:31 PM.
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