Most Popular Lending Content
RESPA & Indirect Home Improvement Financing
10/21/2002
I have two questions regarding RESPA issues related to indirect home improvement financing. First, we are paying a broker - who is not an employee of the bank - for signing up contractors to submit credit applications on their customers to us. Since most of these loans are secured by a mortgage on a primary residence and we are paying the broker a percentage of total loan volume generated, how do we treat this with respect to the Good Faith Estimate and HUD-1A? Secondly, since we require hazard insurance coverage from an insurer chosen by the borrower, is it not permissible under RESPA to provide only an estimate of the annual hazard insurance cost on both the GFE and HUD-1A forms? We are being told that the GFE can reflect an estimate, but that the HUD-1A must be the actual annual premium amount being paid by a given borrower. This presents a problem, in that, since the program is indirect, we do not know what the actual premium cost is for any given borrower and , therefore, use an estimated cost amount on both documents. Are we in compliance?
Bridge Loans & Rescission
10/21/2002
When using a mortgage on someone's current residence as a down payment for the purchase of a new home (bridge loan) do you need the 3 day right of rescission?
Pre-nuptial Agreements, Real Estate, and Mortgage Loan Signatures
10/21/2002
I have a husband and wife that signed a pre-nuptial agreement keeping real estate prior to marriage separate. The husband wants to borrow on his real estate which is in his name only. Does the wife have to sign the mortgage for his loan on his property owned prior to marriage when there is a pre-nuptial in place and can we request a copy of the pre-nuptial?
If we approve a customer for a loan and they want a copy of their credit report can we give it to them?
10/21/2002
If we approve a customer for a loan and they want a copy of their credit report can we give it to them?
Rate Buydown Fees, Prepaid Finance Charges, and APR
10/21/2002
In a falling rate environment as we have now, we for a short period will offer our mortgage pipeline customers a chance to buydown their rate. For example, an applicant's rate, 6.50%, is locked in at application and when approved they are issued a commitment for 60 days at that rate. The rate has now dropped to 6.0% and instead of making them withdraw their application or apply elsewhere, we will let them pay us $500 to get the lower rate. We show this $500 fee as a P.O.C. item on the HUD-1. Should we include this fee as a prepaid finance charge and therefore include it in the APR calculation? Also, what would be the best description for this fee?