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#1781727 - 01/31/13 05:59 PM purchase loans not subject to changed circumstance
river girl Offline
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Joined: Nov 2004
Posts: 1,005
We have a new loan processor who came from a very large FI. She is challenging me on purchase loans.
She says if the loan is to purchase their primary residence, we don't have to worry about changed circumstances. Meaning, we can update the GFE with "actual fees" once the bill arrives for items such as title policy, etc.

I have looked and looked and don't see purchase loans as an exemption to the Changed Circumstance rule. I asked her where this was written and she doesn't know...just knows the way they did it at her previous FI.

Am I missing something?

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RESPA
#1781730 - 01/31/13 06:02 PM Re: purchase loans not subject to changed circumstance river girl
Tater Offline
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Joined: Jan 2006
Posts: 629
Missouri
Never heard of anything in that regard. Unless she can source it (have her call the former employer and get the citation), I wouldn't change what you're doing - especially if you've passed a regulatory exam in the current procedures you follow.

Just my $0.02
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#1781747 - 01/31/13 06:21 PM Re: purchase loans not subject to changed circumstance river girl
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
If as Tater states she can't provide the documented regulatory citation politely tell her she doesn't work for the other FI any longer and that she has no idea what she is talking about - because she doesn't.
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#1781749 - 01/31/13 06:22 PM Re: purchase loans not subject to changed circumstance river girl
RulesFollower Offline
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Posts: 185
RESPA is very clear about when you can INCREASE fees but if she is lowering fees to match the bills that is not a violation but is not smart practice as it eliminates your cushion to prevent a tolerance violation....had a processor do the same thing and then when the recording fee came in from the title company she had a 10% violation because she had no wiggle room!

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#1781757 - 01/31/13 06:38 PM Re: purchase loans not subject to changed circumstance river girl
Truffle Royale Offline

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I don't think that's correct, RulesFollower.
It is a violation to redisclose to change fees to match actual bills.
You must have a valid changed circumstance to redisclose the GFE.
A fee change, be it up or down, is NOT a valid changed circumstance in and of itself.

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#1781763 - 01/31/13 06:43 PM Re: purchase loans not subject to changed circumstance river girl
Dan Persfull Offline
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Dan Persfull
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Posts: 46,844
Bloomington, IN
You must have a valid changed circumstance to redisclose the GFE.
A fee change, be it up or down, is NOT a valid changed circumstance in and of itself.


I agree.
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#1781774 - 01/31/13 06:53 PM Re: purchase loans not subject to changed circumstance Dan Persfull
river girl Offline
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Joined: Nov 2004
Posts: 1,005
Thanks everyone. I thought I knew my RESPA but like I said, she came from a much larger FI and is adamant we are doing it wrong.

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#1781775 - 01/31/13 06:52 PM Re: purchase loans not subject to changed circumstance river girl
RulesFollower Offline
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Joined: Oct 2011
Posts: 185
The FAQ refers to "increase" in fees, we interpret that a decrease in fees is not a violation:

A loan originator may choose to issue a revised GFE reflecting only the increased charges resulting from the changed circumstance or may choose not to reissue a GFE if the increase is minimal. If the loan originator chooses to issue a revised GFE, only the increase in recording fees may change on the GFE: all other charges must remain the same.

A loan originator may issue a revised GFE reflecting only the increased charges resulting from the changed circumstance.

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#1781813 - 01/31/13 07:53 PM Re: purchase loans not subject to changed circumstance river girl
RR Joker Offline
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The Swamp
RF..first you have to have a CC, then you CAN (don't have to) issue a revised GFE, but the only changes you can make are those increases affected by that CC.

ETA: what I just wrote, is an interpretation of what you pasted above.
Last edited by RR Joker; 01/31/13 07:57 PM.
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#1781823 - 01/31/13 08:04 PM Re: purchase loans not subject to changed circumstance river girl
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,844
Bloomington, IN
A loan originator may choose to issue a revised GFE reflecting only the increased charges resulting from the changed circumstance or may choose not to reissue a GFE if the increase is minimal. If the loan originator chooses to issue a revised GFE, only the increase in recording fees may change on the GFE: all other charges must remain the same.

Using the above cite you provided where is your authority to issue a a revised GFE to lower the fees without a changed circumstance? The cite you provide plainly states when a GFE is revised due to a change circumstance that only those fees affected by the changed circumstance can change. All other fees have to remain the same.

There is no allowance in the Reg to issue a revised GFE without a qualified change circumstance. You need to refer back to Q&A # 1 on the page you took the cite from, and to 1024.2, that defines a changed circumstance. In the definition of a changed circumstance you will not find a reference to the fees increasing or decreasing, only that they become inaccurate due to a discovered qualified change after the GFE has been issued.
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#1781838 - 01/31/13 08:28 PM Re: purchase loans not subject to changed circumstance river girl
RulesFollower Offline
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Joined: Oct 2011
Posts: 185
Thanks for the opinions, makes me glad I am not the Compliance Officer at the bank!

I know regs are viewed as black and white but lowering customer fees does not violate the spirit of new RESPA which is to prohibit unscrupulous lenders from "increasing" fees without a valid reason or borrower notification. Lowering fees only benefits the borrower and they all like that!

Just FYI, we have not had any problems with audits or investor purchases due to our practice.

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#1781864 - 01/31/13 09:17 PM Re: purchase loans not subject to changed circumstance RulesFollower
#Just Jay Offline
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#Just Jay
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Cheeseheadland
Originally Posted By: RulesFollower
Lowering fees only benefits the borrower and they all like that!


And the HUD1 is the vehicle to disclose and highlight the lower than expected fees. The GFE is an initial loan estimate, not meant to be used as a play by play disclosure analysis.
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#1781938 - 01/31/13 10:45 PM Re: purchase loans not subject to changed circumstance river girl
Truffle Royale Offline

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Posts: 17,349
Examiners know nothing about 'spirit'. They review based on the letter of the Regulation. You're talking about the Good Faith ESTIMATE here, not, as Jay pointed out above, the final tally...that's the HUD.

Personally, I wouldn't be hanging my hat on the fact that my bank hadn't gotten cited for this so it must be ok. Some of the best in the business are telling you this is wrong. You might want to print this thread for your CO.

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#1781954 - 01/31/13 11:10 PM Re: purchase loans not subject to changed circumstance river girl
RulesFollower Offline
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Joined: Oct 2011
Posts: 185
So much of the regulations are not spelled out specifically and are based on interpretation.....if that were not so we could all just read the regs and know without a shadow of a doubt exactly what to do in all situations and there would be no need for a discussion thread such as this where so many different opinions are shared.

Thanks to all that responded with their opinion!!

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