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#1540083 - 04/25/11 02:21 PM Re: New RESPA Roundup Dan Persfull
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Thanks for the clarification Dan. That I totally agree with.

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#1540464 - 04/25/11 09:41 PM Re: New RESPA Roundup David Dickinson
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Originally Posted By: David Dickinson
I just talked to Rod Alba at the ABA. He has not read the Roundup yet, but I told him about it. He said (don't quote me) "there's no statutory authority for HUD to make this ruling (that a GFE delivered on the 4th day requires a bank to enter $0 in the GFE column of the tolerance tables). This is an administrative error and should be treated as such."

Rod indicated he would make this a priority next week, contact HUD and the ABA would be issuing a statement/guidance on this topic. Stay tuned.


Can't wait to hear Rod speak at the regulatory conference this summer about RESPA (amongst other topics)... he gets so fired up and passionate when the agencies get it wrong, its infectious!
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#1540822 - 04/26/11 03:40 PM Re: New RESPA Roundup Dan Persfull
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I emailed HUD about their latest Roundup. Here's my email and their response:

-----Original Message-----
Sent: Friday, April 22, 2011 9:59 AM
To: HSG-RESPA; Friend, David L
Subject: Loan Originator Fails to Issue GFE?

Regarding the latest RESPA Roundup, Section III, as it relates to violation with respect to delivery of the GFE. Please confirm/comment on the following:

1. If an originator fails to ever deliver a GFE to a borrower the Settlement Statement comparison chart must be completed with $0's for the GFE column.

2. If an originator fails to deliver a GFE within the prescribed timeframe of 3 days but ultimately delivers a late GFE (i.e. day 7) must the Settlement Statement comparison chart be completed with $0's for the GFE column? We already have many bankers asking this question.

Thank your for your prompt response.

From: "Friend, David L" <David.L.Friend@hud.gov>
Date: April 25, 2011 3:44:32 PM CDT
To: 'Jerod Moyer' <bccjerod@knology.net>
Cc: "Fay, Andrew B" <Andrew.B.Fay@hud.gov>
Subject: RE: Loan Originator Fails to Issue GFE?

Jerod
1. Yes, this is the scenario discussed in the April RESPA Roundup.
2. Late GFEs are not covered by the guidance provided in the RESPA Roundup. Please contact your prudential regulator concerning how they review and treat GFEs provided more than 3 days after a loan originator receives information sufficient to constitute an application.

David L. Friend, Esq.
Office of RESPA and Interstate Land Sales
Department of Housing and Urban Development
----------------------------------------------------------------

I wish they would clarify this. I don't think all examiners are going to interpret it this way. In fact, note the comment about "contact your prudential regulator" about late GFE's. Nice.
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#1540825 - 04/26/11 03:41 PM Re: New RESPA Roundup David Dickinson
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Ah ha! They are backing away from the issue.
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#1541137 - 04/26/11 07:42 PM Re: New RESPA Roundup Kathleen O. Blanchard
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Hee Hee - I think maybe Mr Friend found out that his opinion was not that well based in the law or regulation. Interesting back step.
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#1541144 - 04/26/11 07:49 PM Re: New RESPA Roundup rlcarey
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Very interesting...paddling upstream can be difficult! wink

can't you see the convo?

Mr. Regulator, how will you all handle this?

Regulator; it's not our law, it's HUD's.

But, Mr. Regulator, they are leaving it up to ya'll.

Regulator: it's not our law, it's HUD's. crazy
Last edited by RR Suzy; 04/26/11 07:50 PM.
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#1541259 - 04/26/11 09:36 PM Re: New RESPA Roundup RR Joker
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this has just made me livid (bacially over the 4506T issue alone) so I have been emailing HUD and my examiers on this. I got the canned response from HUD so I replied back with:

Quote:
Then am I also incorrect in listing the costs for flood determinations, credit reports and appraisals in Block 3 as well? The cost for these items are also known and fixed at the time the GFE is issued and have not been changed by their third party providers that provide the bank with these services in over a year. If any changes do occur, the bank has ample time to modify our GFEs going forward with any changes in pricing. I am very confused at this point in knowing which third party fees to list in Block 3, and which third party fees are Block 1 items. Is there a different formula or set of criteria other than Appendix C that we should be using to complete GFEs going forward?

I am more than a little concerned that it has taken over 15 months to reach this conclusion on this one item, which varies little from other third party provided items.

What do you advise the bank do in the meantime until our third party provider can determine the separate costs for the credit report and the 4506T and reprogram their billing and transmission systems, and we can reprogram our loan processing system to accept the revised programming, to reflect these changes?

And a further question I have is, with what weight are banks to be giving the FAQs and Roundups? While helpful, they do not appear to be published in the federal register, so do they have the effect of published rule or law? Will my examining body be looking to the unpublished FAQs and Roundups to review my bank on, or will they strictly be going based on published (federal register) rules to assess our compliance with RESPA? I am truly more confused now than ever on how to correctly implement RESAP changes within my bank that reflect the spirit of the law when it seems the targets set by HUD continue to move and be changed.


In the meantime I am corresponding with my field supervisor with FDIC to get his take on this, and to try to get a feel for what weight they place on these Roundups as well.

Grrrr....
Last edited by Just Jay; 04/26/11 09:52 PM. Reason: :)
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#1541322 - 04/27/11 04:24 AM Re: New RESPA Roundup David Dickinson
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Originally Posted By: David Dickinson


2. Late GFEs are not covered by the guidance provided in the RESPA Roundup. Please contact your prudential regulator concerning how they review and treat GFEs provided more than 3 days after a loan originator receives information sufficient to constitute an application.


PUNT!

I still like my idea about declining the application for the following reason:

"Lender was unable to provide the required disclosures within the short time frame set by the Department of Housing and Urban Development, therefore we are unable to proceed with this application. You are welcome to apply again."

I just don't know if I would have the cojones to really do that..... I guess it depends on my mood......
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#1541407 - 04/27/11 01:21 PM Re: New RESPA Roundup Princess Romeo
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Also, section 2 of the Roundup states "Only after a loan applicant both receives a GFE and indicates an intention to proceed with the loan covered by the GFE may the loan originator collect fees beyond the cost of a credit report."

However, the regulation states that "The lender may not charge additional fees until after the applicant has received the GFE." This language appears in 3500.7(a)(4) and 3500.7(b)(4). There's nothing there about a borrower expressing an intent to proceed, except for 3500.7(f)(4) which states that the charges in the GFE expire if the borrower does not express an intent to proceed within 10 business days from the date the GFE is provided (or longer, if the lender specifies).

It sounds like someone wrote to HUD and complained after they decided to back out of a loan and didn't get their fees back. The regulation clearly permits the charging of fees beyond a credit report once the GFE is considered received.
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#1541554 - 04/27/11 02:42 PM Re: New RESPA Roundup DawgFan
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Just Jay: Excellent email to HUD. PLEASE post their reply (if any).

DawgFan: I see your point, but actually the Federal Register stated the applicant had to "decide to proceed" before additional fees could be charged. This was also clarified in an FAQ earlier. Here's an excerpt from our Desk Top Reference Manual (which you can find in the BOL Store) on this topic:

D. Prohibitions:

1. GFE Conditional Fees:

a. Credit Report:
The lender may not charge additional fees (except for the cost of the credit report) until after the applicant has received the GFE. If the GFE is mailed to the applicant, the applicant is considered to have received the GFE 3 calendar days after it is mailed… [§3500.7(a)(4)]

b. Other Fees:
After a loan applicant both receives a GFE and indicates an intention to proceed with the loan covered by the GFE, the loan originator may collect fees beyond the cost of a credit report for origination-related services. [RESPA FAQ – GFE General #10]

Acknowledgement of receipt of a GFE, by itself, does not constitute an expression of an intention to proceed with the loan covered by the GFE. [RESPA FAQ – GFE General #28]

2. GFE Conditional Verification Documentation:
The lender is not permitted to require, as a condition for providing a GFE, that an applicant submit supplemental documentation to verify the information provided on the application. [§3500.7(a)(5)] …such a requirement may inhibit borrowers from shopping for the best loan by leading borrowers to believe that they are committed to obtaining a loan from that loan originator… [RESPA FAQ – GFE General #31]

After the GFE has been received, the loan originator may collect additional fees needed to proceed to final underwriting for borrowers who decide to proceed with a loan from that originator. As noted, at that time, verification information or any other information could be required from the applicant, such as bank statements and W–2 forms, to confirm representations made by the applicant in the application. [Federal Register 11-17-08, page 68212]
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#1541582 - 04/27/11 03:01 PM Re: New RESPA Roundup David Dickinson
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Thanks, David. Would have been nice if they had put that in the regulation to begin with (insert joke about HUD spelled backwards here).

Thanks for the info!
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#1541637 - 04/27/11 03:30 PM Re: New RESPA Roundup DawgFan
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Since it was in the Federal Register, I believe it was in there to begin with. That's how I've understood it all along...without going back to look.
Last edited by RR Suzy; 04/27/11 03:31 PM.
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#1541695 - 04/27/11 03:59 PM Re: New RESPA Roundup RR Joker
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But Dawg is right that it really wasn't clear in the original regulation. Another example of how HUD did a horrible job of writing this regulation (and why it is being taken away from them).
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#1541704 - 04/27/11 04:04 PM Re: New RESPA Roundup David Dickinson
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David, I would be happy to discuss my email with you, but I see you are not able to accept private messages. Please feel free to PM me to discuss further.
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#1541787 - 04/27/11 04:58 PM Re: New RESPA Roundup #Just Jay
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Please keep us in the loop regarding your emails. Got examiners coming so I need to know the latest interpretations. Thanks.

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#1544305 - 05/02/11 07:19 PM Re: New RESPA Roundup Truffle Royale
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So in my defiant compliance with this new roundup, how are others handling the cost of the 4506T... adjust the orig fee based on number of applicants, or just simply raised your overall fee across the board?
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#1545173 - 05/04/11 12:32 PM Re: New RESPA Roundup David Dickinson
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Thanks for checking. I e-mailed HUD and they responded confirming the Roundup - if the GFE is sent on the 4th day, all 0's have to show on the HUD
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#1545802 - 05/04/11 07:12 PM Re: New RESPA Roundup SnuffytheSeal
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Originally Posted By: respa queen
Thanks for checking. I e-mailed HUD and they responded confirming the Roundup - if the GFE is sent on the 4th day, all 0's have to show on the HUD


REALLY?! Because that's the exact opposite response David got from Mr. Friend posted on page 3 of this thread. Good to see the left hand still doesn't know what the right hand is doing.

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#1545952 - 05/04/11 08:19 PM Re: New RESPA Roundup David Dickinson
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David, has there been any follow-up from Mr. Alba at the ABA?

Thanks

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#1547271 - 05/06/11 02:29 PM Re: New RESPA Roundup WHEDA
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My Alba is working hard on this.

I've been sitting on this because I absolutely believe it is wrong, but last week I got the following email from Andrew Fay at HUD (David Friend's boss):

From: "Fay, Andrew B" <Andrew.B.Fay@hud.gov>
Date: April 29, 2011 10:05:35 AM CDT
Subject: RE: Loan Originator Fails to Issue GFE?

Please note that if a loan originator fails to deliver a GFE within the 3 day time limit required by 24 CFR 3500.7(a) or (b), the settlement statement comparison chart must be completed with $0’s in the GFE column.

Andrew Fay

Supervisory Investigative Coordinator
Office of RESPA and Interstate Land Sales
Department of Housing and Urban Development
202.708.0502 (phone)
202.708.4559 (fax)
www.hud.gov/respa

---------------------------------------------

Andrew actually copied the email David Friend sent to me the week prior. In other words, Andrew Fay is "trumping" David Friend with this new response. I forwarded this info to Rod Alba at the ABA and he contacted HUD. Rod emailed me the following in response to Andrew Fay's email:

David,

Please Note--

I had communications with the RESPA legal office, I have been advised that the HUD General Counsel's position, and therefore, the official HUD position, is that "any reference to 24 CFR 3500.7(a) & (b) implicates both the requirement for delivery, and that such delivery must occur within the 3 day timeframe as expressly stated in the rule language, and as such rule language was cited in the RESPA Roundup."

They recognize that there may have been some "apparent misunderstanding of the RESPA Roundup on this point," and the GC's Office and Office of Housing is now clearly advising that:
"If a loan originator fails to deliver a GFE within the 3 day time limit required by 24 CFR 3500.7(a) or (b), the settlement statement comparison chart must be completed with $0’s in the GFE column."

It goes without saying that these declarative statements are extremely concerning, both procedurally and substantively. ABA plans to have further communications with HUD and I will keep you informed. For the time being, we should all be aware that HUD is taking a very rigid stance on this "Roundup" ruling.

Rod J. Alba
American Bankers Association
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#1547281 - 05/06/11 02:42 PM Re: New RESPA Roundup David Dickinson
#Just Jay Offline
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Quote:
They recognize that there may have been some "apparent misunderstanding of the RESPA Roundup on this point,"


Gee, I wonder why...
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#1547451 - 05/06/11 04:33 PM Re: New RESPA Roundup #Just Jay
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Wow! Talk about playing hardball.

Thank you for the update David.

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#1547535 - 05/06/11 05:19 PM Re: New RESPA Roundup WHEDA
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They can only swing that this pitch until 7/20/11 however.

AUTHORITY OF THE DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT.—The Bureau shall have all powers
and duties that were vested in the Secretary of the Department
of Housing and Urban Development relating to the
Real Estate Settlement Procedures Act of 1974 (12 U.S.C.
2601 et seq.), the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008 (12 U.S.C. 5101 et seq.), and
the Interstate Land Sales Full Disclosure Act (15 U.S.C.
1701 et seq.), on the day before the designated transfer
date.
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#1547964 - 05/09/11 01:30 PM Re: New RESPA Roundup rlcarey
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Agreed, but I would think that the CFPB would hold to HUD's interpretation, don't you?
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#1624345 - 11/03/11 09:44 PM Re: New RESPA Roundup rlcarey
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I searched the threads to see if there have been any updates on this issue (HUD's interpretation that late GFE = free loan) since the CFPB has assumed authority for RESPA, but haven't been able to find anything.

Has anyone brought this issue up with the CFPB and received a response? Has the ABA made any progress on the issue?

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