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#1428870 - 08/13/10 04:09 PM Re: changed circumstance Truffle Royale
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"Wouldn't you know you were going to have this fee on every refi you do? When you take the application you ask the borrower for the debts they want to repay with the loan and how many mortgages they have. Guess I don't understand how you couldn't know from the start that you were going to need one or more Fed Ex fees."

Thanks so much for your reply, Truffle. In response to your question (quoted above), we don't know because my area is consumer lending, not the mortgage department. So we do many loans in which nothing will be paid off. In other cases, we do not know anything will be paid off until underwriting reviews it and determines we can make the loan, but only if certain other loans are paid off. We only require the Fed Ex/wire if we are requiring the payoff, and, in this instance, we pay the fee. If the borrower decides at some point that they WANT us to pay off another lender with the proceeds, and they want the funds wired, I'm not disclosing that on the GFE because we're not requiring it. I would, however, disclose it on 1301 of the HUD because in that instance, we would be assessing that cost to the borrower.

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#1428911 - 08/13/10 04:31 PM Re: changed circumstance VRV
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Quote:
So we do many loans in which nothing will be paid off. In other cases, we do not know anything will be paid off until underwriting reviews it and determines we can make the loan, but only if certain other loans are paid off.
I may be way off base here but wouldn't finding out a loan has to be paid off fit under the FAQ p17 Changed Circumstance 1) where it reads: (3) New information particular to the borrower or transaction that was not relied on in providing the GFE; ? That would mean that you would redisclose and add the fee and appropriate credit. Or is this just too easy to possibly be right?

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#1428918 - 08/13/10 04:34 PM Re: changed circumstance Truffle Royale
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FWIW, I agree with TR's first and second responses.
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#1429032 - 08/13/10 05:49 PM Re: changed circumstance RR Joker
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That's exactly what I thought originally, and that's how I started out my question under the thread titled "Fed Ex/wire fees", but someone responded that they didn't think this did constitute a changed circumstance, so that led me to think I couldn't take this approach.

But if you both think, like I did in the beginning, that this does rise to the level of a changed circumstance, then I'm good. If we determine during underwriting that we will need to pay off loans and will therefore incur a Fed Ex or wire fee, I'll just issue a revised GFE. Thanks much!

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#1429044 - 08/13/10 05:55 PM Re: changed circumstance VRV
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You may also want to discuss this situation with your lead examiner...they will ultimately be the one you have to pacify.
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#1429102 - 08/13/10 06:32 PM Re: changed circumstance RR Joker
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Rereading both these threads, if you're doing refinances, you should know up front that you're going to have a payoff fed ex charge. So one charge/credit should be included in your original GFE.

If, after underwriting, you find out that the borrower needs to pay off additional loans and you will have to fed ex those too, then I believe you can use the FAQ reference I quoted above to rediclose to cover the ADDITIONAL payoffs.

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#1429104 - 08/13/10 06:34 PM Re: changed circumstance Truffle Royale
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That sounds reasonable to me too. Anything you would be aware of, you need to account for. Surprises only can likely become CC's.
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#1429257 - 08/13/10 08:26 PM Re: changed circumstance RR Joker
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That makes sense. There are certainly a small number of loans we make that start out as refinances, and for those, we would definitely know at application that there will be a required payoff. But the vast majority of our loans are second mortgages, and no one has any idea until underwriting gets done with it that we will be requiring some other loans to be paid off.

I really appreciate all your input. It's been very helpful and I feel like I have a game plan we can live with now. Thanks much!

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#1429390 - 08/16/10 01:25 PM Re: changed circumstance Truffle Royale
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Originally Posted By: Truffle Royale
MN, don't you have to deal with HVCC for your appraisals? I concur that you definitely cannot order one prior to receiving intent. Yes we have HVCC to deal with. When I say our LOs order it, I mean that they tell our LOS system they need an appraisal, and the LOS system randomly assigns an appraiser based on property location and also sends the order to the appraiser. So, our LOs are really just telling our system to order one - they have no control over who gets picked nor do they have any contact with the appraiser.

As to the title, if you're paying for the cost, why/how are you letting the borrower chose a different company? Our LOs do a LOT of no cost loans, and they frequently do them on purchases so we aren't going to pick the title company on those. Our LOs are on 100% commission, so any tolerance violations or refunds needed come out of their pocket, not the banks. If they want to let a borrower choose they can.

One last question from she who does not do no-cost loans, if you ARE going to do no-cost, might it not be better to low ball the credit? Would that allow you to give an additional credit or PBL something to actually fulfill the no-cost part without jeopardizing the bank having to give the borrower money? Like I said, just askin'. I've actually told LOs to do that, but most of them don't want to because they think it will confuse the customer (credit is lower than costs). Seems silly since no one actually understands the GFE anyway, but it's their money!

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#1429945 - 08/17/10 02:01 PM Re: changed circumstance MN Banker
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Finally heard back from HUD today in response to the message I sent them on this topic.

My Question: Please forward this message to Mr. Friend or Mr. Fey.

They have stated that they read BankersOnLine regularly.
There is a poster there who states adamantly that redisclosing the GFE because fees have gone down is allowed by RESPA. You can see this post here.

Can you please comment on this for us either by reply or on the site? If true, this would drastically change the way the vast majority of us approach the GFE.


HUD Answer: A new GFE can only be issued if there are changed circumstances. Changed circumstances is defined in 3500.2 as: (1) Acts of God, war, disaster, or other emergency; (2) Information particular to the borrower or transaction that was relied on in providing the GFE and that changes or is found to be inaccurate after the GFE has been provided, which information may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property, or any other information that was used in providing the GFE; (3) New information particular to the borrower or transaction that was not relied on in providing the GFE; or (4) Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems.

A change in fees, up or down, is not a changed circumstance warranting a new GFE.(my emphasis added)

This was not signed by anyone at HUD nor was there any indication of who answered beyond the HSGRESSPA@HUD.gov email address.

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#1429954 - 08/17/10 02:07 PM Re: changed circumstance Truffle Royale
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At least it agrees with how we've understood things to be.
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#1430309 - 08/17/10 07:44 PM Re: changed circumstance Dan Persfull
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Originally Posted By: Dan Persfull
Quote:
and I'm in a dark place on this because our compliance consultant says he is the boss and a revised GFE will take place if any amount changes regardless


This consultant and his firm would be fired immediately. The consultant is just that a consultant and you are under no obligation to abide by their recommendations, especially one as ludicrous as that one.

You should be talking to your own compliance staff and management staff and probably this guy's management staff also unless of course he is the management staff. Then I would just show him out the front the door with an attitude like that.


That's why I rely on Bankersonline and talk to management about it. I'm going to talk to the examiners about it when they get here. We've had an outstanding rating in compliance and he is good at what he does. Just don't agree with him at times.

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#1430315 - 08/17/10 07:49 PM Re: changed circumstance RR Joker
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Originally Posted By: RR joker
Originally Posted By: pjs
Wait a minute Truff- I'd be saying if more Banks were honest we might not have a need for this new RESPA/HUD. I truly take offense at this statement. I realize there were/are a lot of dishonest brokers that took advantage of the housing boom, but banks and bankers, in general, are not. You can also blame government who believed "everyone DESERVES a home of their own"..don't worry about whether or not they can afford it. Come on!

That saying we issue a revised GFE if the loan amount decreases or goes up- no fees are changed unless it's the law- and I'm in a dark place on this because our compliance consultant says he is the boss and a revised GFE will take place if any amount changes regardless. So, we do....we document it......and the only thing I can do right now is wait until October and see what the Fed examiners say. I've already stated all this so right now my hands are tied. So, on this part...are you saying you issue a revised GFE everytime the loan amount changes ,up or down...if so, I don't see that as a procedural problem. you can, but don't have to...it is a valid changed circumstance and you do say it's only for the fees the loan amount affects. I'm thinking this has been interpreted that your compliance consultant states you reissue anytime a fee changes, whether or not you have a CC...in re-reading this..I don't think that was what you meant, was it? If it IS...then he needs to go the way Dan replied and since when was a consultant EVER a BOSS?!?


I said some banks-some bigger banks have caused problems with being greedy. Also, like you said brokers and government. No offense meant Joker.

You're right about what I meant- loan amount changes Joker we re-issue a GFE. No, no not anytime a fee changes.

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#1430503 - 08/18/10 12:33 PM Re: changed circumstance pjs
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Originally Posted By: pjs
Originally Posted By: RR joker
Originally Posted By: pjs
Wait a minute Truff- I'd be saying if more Banks were honest we might not have a need for this new RESPA/HUD. I truly take offense at this statement. I realize there were/are a lot of dishonest brokers that took advantage of the housing boom, but banks and bankers, in general, are not. You can also blame government who believed "everyone DESERVES a home of their own"..don't worry about whether or not they can afford it. Come on!

That saying we issue a revised GFE if the loan amount decreases or goes up- no fees are changed unless it's the law- and I'm in a dark place on this because our compliance consultant says he is the boss and a revised GFE will take place if any amount changes regardless. So, we do....we document it......and the only thing I can do right now is wait until October and see what the Fed examiners say. I've already stated all this so right now my hands are tied. So, on this part...are you saying you issue a revised GFE everytime the loan amount changes ,up or down...if so, I don't see that as a procedural problem. you can, but don't have to...it is a valid changed circumstance and you do say it's only for the fees the loan amount affects. I'm thinking this has been interpreted that your compliance consultant states you reissue anytime a fee changes, whether or not you have a CC...in re-reading this..I don't think that was what you meant, was it? If it IS...then he needs to go the way Dan replied and since when was a consultant EVER a BOSS?!?


I said some banks-some bigger banks have caused problems with being greedy. Also, like you said brokers and government. No offense meant Joker.

You're right about what I meant- loan amount changes Joker we re-issue a GFE. No, no not anytime a fee changes.


Okay, somehow that's what I thought you really meant! I don't see any real problem with that so long as no fees are changed other than was was affected by the up/down loan amount change, which I also have a feeling he isn't suggesting.

No offense taken! It's just there were likely only a very few real banks heaviliy involved in this fiasco and unfortunatly ours has been hurt as a byproduct of it. Being a GA bank that handled a lot of C&D isn't a very good thing right now! crazy Getting caught on the wrong side of the pendulum swing bites! eek
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#1431141 - 08/19/10 04:45 AM Re: changed circumstance Truffle Royale
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Originally Posted By: Truffle Royale
Finally heard back from HUD today in response to the message I sent them on this topic.

My Question: Please forward this message to Mr. Friend or Mr. Fey.

They have stated that they read BankersOnLine regularly.


I would like to call the attention of HUD and ask them if they would consider a BOL intervention similar to what we did with FinCEN on the 314a process a few years ago.

Backstory: As a result of the USA PATRIOT Act, FinCEN started sending a list of names to financial institutions with a confusing, conflicting, and logistically almost impossible set of instructions on what needed to be searched.

Mary Beth Guard arranged a conference call with a few BOLers who were steeped in BSA/AML/PATRIOT compliance issues. I think the call was 90 minutes in which we hashed out the issues, concerns and difficulties for this brand new process and made suggestions for improvement. Mary Beth put all of this into a very well written letter to FinCEN.

FinCEN took the comments and suggestions to heart and a few months later we had a MUCH IMPROVED (and secure!) 314a process which now operates in a rather smooth and seamless fashion.

How about we try the same with RESPA - specifically GFE and HUD-1 issues with respect to:

1. How not to end up with a lose-lose situation on a No-Cost loan - i.e. Does the lender REALLY owe the borrower a refund if the third party charges are either over-estimated or under-estimated????
2. How to uniformly show a lender credit on the GFE and HUD - in a manner that can be understood by the borrower, lender and examiner.
3. How to uniformly execute tolerance cures when the error is discovered just before or at closing - in a manner that can be understood by the borrower, lender and examiner.
4. How to uniformly execute tolerance cures when the error is discovered AFTER closing - in a manner that can be understood by the borrower, lender and examiner.
5. How to turn in slimy brokers who are stealing customers by lying about the true cost of the loan? (okay - the last one is wishful thinking on my part - but SERIOUSLY! Can't we honest bankers and credit unions turn in the bad apples?)
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#1431205 - 08/19/10 01:30 PM Re: changed circumstance Princess Romeo
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Curiously, PR...with the rules the way they are now, how are brokers still lying about the true cost of the loan? Can you give some examples?

Also, don't you think the new compensation rules might put a final halt to that?

I'll be the first to say I see absolutely zero difference between a ysp and a srp, other than one must be disclosed and the other is a "secondary market fee" not requiring disclosure...you will NEVER convince me they aren't the same...So currently, brokers are the ones that are on the short end of the stick at the moment...aren't they?

What am I missing?

This isn't an argument for what you have laid out above. The only issue up there that I still have issues with is #1 because it makes no sense for a lender to lose just because they overestimated something...but I'm just curious as to what you are experiencing with #5?!?
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#1431279 - 08/19/10 02:33 PM Re: changed circumstance RR Joker
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With #5 - a broker issued a GFE that shows a boatload of fees but tells the consumer that it's a no-cost loan - and the consumer believes the broker!

I have a lender that is really, really upset about losing deals to this broker and wants to know HOW they can get away with it. I suggested that the lender should e-mail that broker's GFE to HUD and ask that same question.

Items 2-4 are there because I see potential train wrecks come exam time (not to mention in court when a borrower turns to an attorney to get out of a loan) over the Bass-akward way these things can be shown on the HUD. I've been in compliance for over 30 years and I am having a hard time understanding the logic.
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#1431338 - 08/19/10 03:07 PM Re: changed circumstance Princess Romeo
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I've been in compliance for over 30 years and I am having a hard time understanding the logic.
WAIT! There's logic behind this???!!! crazy smirk

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#1431359 - 08/19/10 03:23 PM Re: changed circumstance Truffle Royale
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Originally Posted By: RR joker
Curiously, PR...with the rules the way they are now, how are brokers still lying about the true cost of the loan? Can you give some examples?


I've seen non-bank lenders do some crazy things. We had one consumer come in and tell us that she asked a broker (not sure if they were a true "broker", but I do know they were a non-bank lender) for a GFE and they said "well, I could give you a GFE but it would be pointless since this is a no-cost loan - the GFE wouldn't have anything on it".

I get LOs coming to me all the time with things they've seen from non-bank lenders that aren't compliant. My motto has become "just because someone else does it doesn't make it right!". I don't know that we've ever lost a loan to a broker, but I DO know that many, many of them are not complying with the regulation. How they're getting their loans sold I have no idea, since I know our investors go through our files with a fine tooth comb.

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#1431384 - 08/19/10 03:40 PM Re: changed circumstance MN Banker
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Nice! We haven't run into that problem with rogue brokers...at least not to my knowedge. If you could get your hand on the GFE and the HUD, I'd turn them in to HUD or the DOJ.

I don't really think the GFE alone would do it (in the case there is a second fee sheet involved)
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#1431424 - 08/19/10 04:06 PM Re: changed circumstance RR Joker
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Fortunately in every situation I've seen the consumer never actually closed with the broker, so no HUD. I'd love to turn some of them in but so far I haven't seen enough "evidence" to actually do it!

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