Thread Options
|
#1548700 - 05/10/11 03:03 PM
Overstating fees
|
100 Club
Joined: Oct 2008
Posts: 114
|
I understand that we don't want to "pad" fees on a GFE and that it might be a red flag to examiners (besides being competitively stupid). However, our RE Department believes that the "overstating" red flags would also apply to disclosing a fee on the GFE for a required settlement service provider that in the end isn't charged to the borrower after all.
I disagree. If it is a good possibility that a fee for a required settlement service provider will be charged, it should be included on the initial GFE. Then if the fee isn't charged after all, no harm has been done and it is not a violation. Here's the specific example:
Borrower has not locked a rate on the loan at the time the initial GFE is issued. However, lender knows that some, not all, of their investors will require an appraisal review fee. Since the bank does not know which Investor will purchase the loan, and therefore require the appraisal review fee, the fee is being left off the GFE altogether. When the borrower locks the loan with the Investor, and the fee is going to be charged, it cannot be added as a Changed Circumstance. However, this fee is being charged on the HUD under the "10% tolerance".
I have recommended to the RE Department that if they have this scenario, they should disclose the appraisal review fee on those loans that have not been locked because there is a good possibility that the fee will be charged. They don't want to do that because they claim it is overstating the fees.
I'm fine with them not disclosing the fee if the loan is locked at the same time the GFE is issued and we know the Investor isn't requiring the fee, but if it is not locked with an Investor, it should be disclosed because of the likelihood it will be charged once an Investor is selected and the loan locked.
Anyone have a different opinion or a better way to do it?
|
Return to Top
|
|
|
|
#1548737 - 05/10/11 03:27 PM
Re: Overstating fees
Insanity Queen
|
Diamond Poster
Joined: Jul 2002
Posts: 1,678
United States
|
The definition of a GFE is that it is an estimate of the charges the borrower is likely to incur at settlement. So, if it's likely that they will be assessed the fee, it should go on the GFE. I agree with you, if they don't know the investor up front, they give the fee as part of the estimate. If they do know who the investor is, they estimate accordingly.
_________________________
Opinions expressed are solely my own.
|
Return to Top
|
|
|
|
#1548759 - 05/10/11 03:37 PM
Re: Overstating fees
DawgFan
|
100 Club
Joined: Oct 2008
Posts: 114
|
|
Return to Top
|
|
|
|
#1549292 - 05/11/11 12:40 PM
Re: Overstating fees
jlroberts
|
Platinum Poster
Joined: Jan 2006
Posts: 642
Missouri
|
We were told we could quote fees based on worst case scenerio. There are so many of those fees out our control. For example the appraisal fee; with Appraisal Independence we don't have a choice to order from the least expensive appraiser (we use a rotation list)so we quote the fee of the highest appraiser.
Same goes for Title Compnay and Survey fees.... Ditto for us.
_________________________
Born once? Die twice. Born twice? DIE ONCE!
Loan Review, HMDA, ALLL
Opinions are my own and do not reflect any others
|
Return to Top
|
|
|
|
#1556297 - 05/25/11 01:49 PM
Re: Overstating fees
Truffle Royale
|
100 Club
Joined: Nov 2005
Posts: 101
Nebraska
|
On the scenario listed for the appraisal review fee...if it was listed on the GFE and not used, do you leave it off of the HUD?
|
Return to Top
|
|
|
|
#1556376 - 05/25/11 02:58 PM
Re: Overstating fees
Truffle Royale
|
100 Club
Joined: Nov 2005
Posts: 101
Nebraska
|
Thanks, I was hoping that something had come out since then and had a different answer.
|
Return to Top
|
|
|
|
#1556396 - 05/25/11 03:16 PM
Re: Overstating fees
Truffle Royale
|
Power Poster
Joined: Oct 2009
Posts: 9,088
OK
|
I'm thinking Carolyn was hoping it could go in the comparison chart, not that the actual fee would show up on the HUD-1.
_________________________
I'm fixin' to fix that.
|
Return to Top
|
|
|
|
#1556476 - 05/25/11 04:15 PM
Re: Overstating fees
Truffle Royale
|
Power Poster
Joined: Oct 2009
Posts: 9,088
OK
|
Yes i agree totally. I just thought that might have been what the "hoping" for was in reference to.
_________________________
I'm fixin' to fix that.
|
Return to Top
|
|
|
|
#1556479 - 05/25/11 04:19 PM
Re: Overstating fees
raitchjay
|
Power Poster
Joined: Oct 2009
Posts: 9,088
OK
|
I mean...as a compliance officer, i don't want my bank getting in trouble. If HUD said that we could put fees not actually purchased into the comparison chart (like OTI), i would like it. (Not saying that's fair to the consumer or HUD's intent, but it would suit my intent as a compliance officer.) I'm guessing Carolyn is in my camp.
_________________________
I'm fixin' to fix that.
|
Return to Top
|
|
|
|
|
|