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#1959148 - 09/04/14 12:48 PM Guarantedd Rural Housing - GFE/TIL
Anonymous
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Hope you can help, I am not familar with this loan program and am going back and forth on how a fee charged should be disclosed according to Reg X and Reg Z.

GRH charges an "Guaranteed Annual Fee" (not the upfront guarantee fee financed in the loan. The fee is based on the total loan amount, the initial fee for the first year of the loan will be determined and calculated based on the average yearly scheduled Unpaid Principal Balance (UPB) for the first year. The remaining years of the loan will also be calculated and charged on average yearly scheduled UPB, not the actual UPB.

This fee can't be paid upfront, escrows must be established to collect from the borrower. The monthly payments will decrease each year as the average UPB decreases.

Questions:
Is this fee considered a type of mortgage insurance for disclosing purposes for the GFE or TIL payments? How would this be revealed in an amortizaton schedule and calculated for Reg Z purposes?

Thanks for any help you may be able to provide on this.

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#1959177 - 09/04/14 01:58 PM Re: Guarantedd Rural Housing - GFE/TIL Anonymous
Anonymous
Unregistered

Yes, USDA annual fee is treated like mortgage insurance that is paid out over the entire life of the loan and it will affect the APR.
USDA has a training page with many different tutorials and FAQs. If you look for an excel spreadsheet called "Guarantee Fee & Annual Fee Calculator", it should help you calculate the TIL and amortization schedule. I have included a link to the training page for you.

https://usdalinc.sc.egov.usda.gov/USDALincTrainingResourceLib.do

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#1959349 - 09/04/14 04:51 PM Re: Guarantedd Rural Housing - GFE/TIL Anonymous
Truffle Royale Offline

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The annual fee is going up for loan commitments dated 10/1 and later. If you don't think your loan will get approved by 10/1, it's better to show the higher fee on the GFE now.

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#1959382 - 09/04/14 05:52 PM Re: Guarantedd Rural Housing - GFE/TIL Truffle Royale
RolTyde Offline
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Posts: 78
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Do you mark on the TIL that "MMI" is required? USDA doesn't call it mortgage insurance but that's what it is and it's required.

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#1959534 - 09/05/14 12:15 AM Re: Guarantedd Rural Housing - GFE/TIL Anonymous
Anonymous
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Thank you everyone for your responses. This is greatly appreciated. Sorry it took so long to respond.

TR - I am keeping in mind about the 10/1 fee increase and will be addressing this. I don't want anyone thinking they have a valid change of circumstance when they perfectly well know the loan will close after 10/1/14 when they initially disclosed the GFE. This change coming up is what started my whole research about this fee in the first place.

My thought on the TIL - if it is treated like MI and I belevie it should. I would think the TIL should be completed as it would with PMI/MIP.

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#1959536 - 09/05/14 03:45 AM Re: Guarantedd Rural Housing - GFE/TIL Anonymous
Truffle Royale Offline

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I agree that it's definitely NOT a valid CC. But keep in mind, it's not when the loan closes that triggers the increase in the annual fee. It's when the loan is APPROVED by RD on or after 10/1.

That said, it's 9/4 so I don't think you're out of line to begin using .5 to calculate your GFE estimates.

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#1959539 - 09/05/14 07:41 AM Re: Guarantedd Rural Housing - GFE/TIL Anonymous
Anonymous
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Thanks TR for the correction - I read that..but ended up stating closing. Approved by RD!

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