Skip to content
BOL Conferences Top Gun 23
Thread Options
#1615715 - 10/13/11 10:47 PM GFE borrower requests different loan product
ahou Offline
Power Poster
ahou
Joined: Aug 2002
Posts: 3,094
I'm so tired.....can block 1 change if the borrower requests a different loan product? (fees other than orig fee that is % of ln amt)
_________________________
Opinions are my own and not of my employer.

Return to Top
RESPA
#1615847 - 10/14/11 02:54 PM Re: GFE borrower requests different loan product ahou
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,025
Bloomington, IN
Customer requested changes are qualified change circumstances allowing the GFE to be revised reflecting the changes affected by the change circumstance.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#1615858 - 10/14/11 03:09 PM Re: GFE borrower requests different loan product Dan Persfull
ahou Offline
Power Poster
ahou
Joined: Aug 2002
Posts: 3,094
Even charges in block 1? HUD had stated in their webinar that even with changed circumstances, block 1 could not change - other than when the ln amt changes and an orig fee based on a % of the loan amt is part of blk 1.
_________________________
Opinions are my own and not of my employer.

Return to Top
#1615872 - 10/14/11 03:23 PM Re: GFE borrower requests different loan product ahou
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,025
Bloomington, IN
I didn't sit in on but one Webinar presented by HUD and I don't recall that statement in the one I sat in on, but from the 4/2/10 FAQs.

3) Q: Can the charge shown on the GFE, Block 1, "Our origination charge", increase after the GFE has been issued?
A: No. Block 1, "Our origination charge" cannot increase unless there is a "changed circumstance" as defined in 24 CFR 3500.2.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#1615887 - 10/14/11 03:47 PM Re: GFE borrower requests different loan product ahou
ahou Offline
Power Poster
ahou
Joined: Aug 2002
Posts: 3,094
The FAQs talk about limitations in blk 1 changes in reference to when the loan amt changes, but not for product changes. Other than the webinar ppt slide, I can't find where it clearly states that blk one charges (other than % of ln amt) can not change.

Q: If all or a portion of the charge in Block 1 is calculated as a percentage of the loan amount, and the loan amount changes, can the loan originator issue a revised GFE with an updated charge in Block 1?
A: Yes, but only if issuance of a revised GFE is permissible under 24 CFR 3500.7(f). In particular, if the loan amount changes and all or a portion of Block 1 is calculated as a percentage of the loan amount, then that portion in Block 1 may be recalculated.
_________________________
Opinions are my own and not of my employer.

Return to Top
#1615913 - 10/14/11 04:23 PM Re: GFE borrower requests different loan product ahou
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,025
Bloomington, IN
The FAQ I quoted clearly refers to the 3500.2 definition. If you read the definition of a Changed Circumstance it includes "circumstances that are particular to the borrower". The borrower requesting a new loan product would be a circumstance that is particular to the borrower (they requested the particular change) and would be a changed circumstance allowing revisions to affected charges including Block 1.

I stand by my opinion.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#1615974 - 10/14/11 05:25 PM Re: GFE borrower requests different loan product Dan Persfull
ahou Offline
Power Poster
ahou
Joined: Aug 2002
Posts: 3,094
Your opinion is very well respected by all of us on BOL.
_________________________
Opinions are my own and not of my employer.

Return to Top
#1638990 - 12/14/11 06:52 PM Re: GFE borrower requests different loan product ahou
MN Banker Offline
Platinum Poster
Joined: Aug 2006
Posts: 980
I'm bumping this because I think I've lost my mind!

I could have SWORN when this first came out there was an FAQ or something that stated block 1 could ONLY increase if the loan amount increased or there was a program change. Period. I have this in all my training and I've drilled this into everyone's head...and now I can't find it anywhere. Did I read something incorrectly? Did this use to be in the FAQs, and then they got rid of it? Did I make up this rule that has been driving me crazy for almost 2 years now??!!

Help!

ETA: And I remember this is why the escrow waiver thing was a huge deal, because HUD was saying block 1 couldn't increase unless it was for one of those two things above, which is why they came out and said an escrow waiver fee had to go in block 2 if it was the result of a changed circumstance.
Last edited by MN Banker; 12/14/11 06:54 PM.
Return to Top
#1638999 - 12/14/11 07:13 PM Re: GFE borrower requests different loan product MN Banker
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
You haven't lost your mind. FAQ #8 in the "GFE Block 1" section. HUD did say in their video training seminars (over and over) "Block 1 can never change", but they were clearly wrong. These seminars were in the Spring of 2010 and Andrew Fay clarified at the June 2010 ABA Conference that this was not correct.

Back to Dan's post (from nearly 2 months ago): I would say this is a borrower request change and believe it's a changed circumstance too. The other alternative would be to consider this a withdrawal (they borrower no longer wants the product they applied for) and a new application (give a new GFE - starting over).
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#1639009 - 12/14/11 07:13 PM Re: GFE borrower requests different loan product David Dickinson
MN Banker Offline
Platinum Poster
Joined: Aug 2006
Posts: 980
Thanks David! I sure wish they would put those clarifications in writing so we could support ourselves when the investors think that block 1 can "never increase ever"!!

I'll direct them to what Dan listed above and call it a day - thanks again!

Return to Top

Moderator:  QCL