Mortgage Compliance g g p Advisors Making Sense of the New GFE - - PowerPoint PPT Presentation

Mortgage Compliance g g p Advisors

Making Sense of the New GFE February 18, 2010

P li t K i t K lik ki B b W k C i Ch i t Panelists: Kristen Kalikakis, Bob Warnock, Craig Christensen 1

Instructions

• Because of the large number of registrants, the lines will be

Instructions

g g , muted.

• To ask a question, click the plus sign next to “Questions” on

the GoToWebinar box and type your question. You can also make comments in the “Chat” section.

• We will be having a Q & A session at the conclusion of the

material.

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Agenda Agenda

• 1. Use of New GFE
• 2. Tolerance Levels
• 3. Allowable Changed Circumstances
• 4. Q & A Session
• Top 5 Questions (submitted prior to webinar)
• Questions submitted during webinar

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So many variables, so little time… So many variables, so little time…

• Always check with your lenders and investors if you have

questions specific to your loan scenario.

• This can save time, effort, and any subsequent loss of

revenue revenue.

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Resources

• The bulk of the information we will be reviewing has been

Resources

g compiled from resources you may be familiar with and have ready access to.

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• HUD/FHA

/

– HUD Mortgagee Letters http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/index.cfm – RESPA information http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm

• Fannie Mae

– Announcements and Lender Letters for 2010 https://www efanniemae com/sf/guides/ssg/2010annlenltr jsp https://www.efanniemae.com/sf/guides/ssg/2010annlenltr.jsp – Fannie Mae Selling Guide https://www.efanniemae.com/sf/guides/ssg/sgpdf.jsp – Form 4506‐T Lender Tips (when to order 4506‐T, etc.) https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/pdf/4506tlendertips.pdf

• Freddie Mac

– Freddie Mac Resources for Sellers/Services (including news and the Seller/Servicer Guide) http://www freddiemac com/singlefamily/ http://www.freddiemac.com/singlefamily/ – Freddie Mac Single‐Family Seller/Servicer Guide Bulletins and Industry Letters http://www.freddiemac.com/sell/guide/bulletins/

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Why all the changes?

• The premise behind the change in the format of the form is

Why all the changes?

p g HUD wanted to provide consumers a standard Good Faith Estimate which clearly discloses key loan terms and closing costs as well as facilitate comparison shopping for the best costs, as well as facilitate comparison shopping for the best mortgage loan.

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When to disclose

• You are not required to provide a GFE to your borrower until you

When to disclose

have the following elements, which constitute a loan application: – Loan Amount Property Address – Property Address – Property Value – Borrower Name – Borrower SSN – Income Information

• When these qualifications have been met, the GFE must be

disclosed within three business days.

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(HUD FAQ page 6 #4 1‐28‐10) (Section 5 RESPA and 24 CFR 3500.7)

More about disclosing

• Do not issue GFE for TBD properties

More about disclosing

p p

• Provide separate GFE for each transaction involving more than
• ne mortgage loan
• First and closed‐ended second mortgage each have own GFE

and HUD settlement statement

• All fees must be disclosed regardless if paid by borrower

All fees must be disclosed, regardless if paid by borrower, seller, or other party

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(HUD FAQ page 7 #11 1‐28‐10)

2010 Good Faith Estimate

R i d ll li ti t k ft J 1 2010

2010 Good Faith Estimate

Required on all applications taken on or after January 1, 2010.

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ABC Mortgage Inc. 123 Main St. Anywhere, USA 55555 (555) 555‐5555 John Doe 123 Oak Ave. Anywhere, USA 55555 abc@abc‐mtg.com 2/18/2010

• Top section – complete with your company information and
• Top section – complete with your company information and

borrower information

• Purpose
• Shopping for your loan

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Shopping for your loan

(RESPA – table of contents, sec. Appendix C to part 3500. Instructions for Completing GFE)

GFE Page 1 – Important Dates GFE Page 1 Important Dates

• This section must be completed in its entirety
• 1. Interest rate can be available for any period of time that

the loan originator chooses.

• 2. Must be no less than 10 business days.

3 R t l k i d ( N/A if fl ti )

• 3. Rate lock period (or N/A if floating).
• 4. Determined by your lender.

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GFE Page 1 – Summary and Escrow Account I f i Information

• Complete with information specific to loan

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Complete with information specific to loan

GFE Page 1 – Summary of Settlement Charges GFE Page 1 Summary of Settlement Charges

• Calculations determined on page 2 of the GFE

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Let’s go to page 2 Let s go to page 2

Remember…

• Always check with your lenders and investors if you have

questions specific to your loan scenario. q p y

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GFE Page 2 – Block 1 GFE Page 2 Block 1

• Subject to ZERO TOLERANCE

F i l d b li i d

• Fees may include, but are not limited to:

– Administration fees – Application fee – Attorney fee – Origination fee – Processing fee – Underwriting fee Attorney fee – Commitment fee – Courier fee – Originator Document Preparation fee – Lender Inspection fee Underwriting fee – Verification of employment – Wire fee – YSP

• A loan originator may not separately charge any additional fees for

getting this loan other than those disclosed as part of the origination charge.

Lender Inspection fee

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g

GFE Page 2 – Block 2 GFE Page 2 Block 2

C dit h f i t t t h

• Credit or charge for interest rate chosen
• Subject to ZERO TOLERANCE
• ONLY ONE BOX MAY BE CHECKED‐ a credit and charge may not occur

together on the same transaction.

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GFE Page 2 – Block 2 GFE Page 2 Block 2

• Box 1: Does not apply to any wholesale transaction If this
• Box 1: Does not apply to any wholesale transaction. If this

question does not apply to your transaction, mark the box and complete with the chosen interest rate.

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GFE Page 2 – Block 2 GFE Page 2 Block 2

• Box 2: YSP will show as a credit to your borrower on the HUD
• Box 2: YSP will show as a credit to your borrower on the HUD,

decreasing settlement charges.

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GFE Page 2 – Block 2 GFE Page 2 Block 2

• Box 3: Discount will show as a charge to the borrower
• Box 3: Discount will show as a charge to the borrower,

increasing settlement charges.

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GFE Page 2 – Block 2 GFE Page 2 Block 2

• Adjusted Origination Charges = (Block 1 – Block 2)
• Adjusted Origination Charges = (Block 1 – Block 2)

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GFE Page 2 – Block 3 GFE Page 2 Block 3

• Required services that we select
• Subject to a 10% tolerance
• Fees may include, but are not limited to the following:

– Appraisal – Condo questionnaire fee – Credit Report – Flood Certification Flood Certification – PMI – MERS – Tax Service Fee – Include FHA UFMIP and VA funding fees here

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GFE Page 2 – Block 4 GFE Page 2 Block 4

• Subject to a 10% tolerance
• Subject to a 10% tolerance
• Include fees for any service involved in the provision of title

insurance, including but not limited to: – Closing/escrow – Endorsements – Examinations – Title insurance – Title searches Title doc prep

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– Title doc prep

GFE Page 2 – Block 5 GFE Page 2 Block 5

• Subject to a 10% tolerance

O ’ Ti l I b k d N/A fi

• Owner’s Title Insurance may be marked as N/A on refinance

transactions.

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GFE Page 2 – Block 6 GFE Page 2 Block 6

R i d i th b h f

• Required services the borrower may shop for
• Subject to a 10% tolerance
• Services required by the lender that the borrower may shop for and select

the settlement service provider include, but are not limited to: p , – Roof certification – Septic and well – Pest inspection S

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– Survey

List of settlement service providers

• When the originator permits the borrower to shop for third‐

List of settlement service providers

g p p party settlement services, the originator must provide the borrower with written list of settlement service providers.

• A settlement service provider’s list must accompany the GFE

for those services listed in Blocks #4, #5 and #6. ,

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GFE Page 2 – Blocks 7 and 8 GFE Page 2 Blocks 7 and 8

• Block 7 subject to 10% tolerance
• In this block, the loan originator must estimate state and

government fees for recording the loan government fees for recording the loan.

• Block 8 subject to ZERO TOLERANCE

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GFE Page 2 – Blocks 9, 10 & 11

• No tolerance limit for these blocks

GFE Page 2 Blocks 9, 10 & 11

• B = Total of blocks #3 through #11

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• A + B = Total Estimated Settlement Service Charges

GFE Page 3 – Instructions: Understanding which h h l charges can change at settlement

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GFE Page 3 – Using the Tradeoff Table GFE Page 3 Using the Tradeoff Table

• Loan originator must complete the first column others are
• Loan originator must complete the first column, others are
• ptional.

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GFE Page 3 – Using the shopping chart GFE Page 3 Using the shopping chart

• The shopping chart is not required to be completed by the
• riginator

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• riginator.

Allowable Changed Circumstances

• A changed circumstance must be documented and approved

Allowable Changed Circumstances

g pp by your lender.

• A few changed circumstances they may allow for new GFE:

– Acts of god, war, disaster or other emergency – Information deemed inaccurate particular to the transaction (credit quality, loan amount, estimated value) – Borrower requested change in terms of the loan – Expiration of the GFE – Interest rate changes before the loan is locked – Parties are added or removed from title

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(HUD FAQ’s page 16 #3 and page 19 #11)

Allowable Changed Circumstances (continued)

• A revised GFE must be disclosed within 3 business days of

Allowable Changed Circumstances (continued)

y receiving the information sufficient to establish the changed circumstance.

• The revised GFE may ONLY reflect the increased charges

resulting from the changed circumstance. g g

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Being an expert

• Utilize available resources

Being an expert And always… y

• Check with your lenders and investors if you have questions

specific to your loan scenario.

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Contact Information

Mortgage Compliance Advisors, LLC

Contact Information

Mortgage Compliance Advisors, LLC 5505 South 900 East # 110 • Salt Lake City, Utah 84117 info@mortgagecomplianceadvisors com info@mortgagecomplianceadvisors.com

• Support (Current Clients): (801) 649‐6038
• Support (Not currently MCA clients): (877) 250‐5243

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Please send us your questions

• We will be holding free monthly webinars

Please send us your questions

g y

• Please submit any topics you would like discussed

– By email (info@mortgagecomplianceadvisors.com) or – Through the exit survey

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T 5 Q ti Top 5 Questions

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Question #1

• Q: We understand two circumstances in which the

Question #1

Q compensation to the originator can change: the loan amount changes and a portion of the origination charges are dependent on the loan amount; the loan program changes If dependent on the loan amount; the loan program changes. If a loan is floating and is later locked, we understand that the credit or charge to the borrower may change, but “Our Origination Charges” may not change and the originator’s comp (even if the YSP or rebate changes) will not

• change. Correct?

g

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Question #1 ‐ Answer

• A: According to our interpretation of the resources we have

Question #1 Answer

g p utilized, that is correct.

• HUD FAQ’s #19, page 8, states the following:
• If a borrower locks the interest rate after the GFE has been
• If a borrower locks the interest rate after the GFE has been

issued, a revised GFE must be issued within 3 days of the interest rate lock reflecting the date that the rate lock is good

• through. Any interest rate‐dependent charges (specifically

Block 2, Line A and Block 10 on the GFE) and terms that changed must also be updated on the revised GFE.

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changed must also be updated on the revised GFE.

Question #2

• Q: If I change the loan amount, does a new 1003, TIL and GFE

Question #2

Q g , , need to be signed?

• A: These documents will need to be re‐disclosed to the

borrower within 3 days and evidence of re‐disclosure or re‐ issue will need to be maintained in the file.

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Question #3

• Q: If the Buyer is paying a 1% commission of the contract

Question #3

Q y p y g amount to the seller (in this case a bank). The transaction is a short sale. Should this be disclosed as a closing cost on the GFE for the buyer? GFE for the buyer?

• A: No. This charge is considered real estate commission and

g will not need to be disclosed on the GFE.

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Question #4

• Q: If a GFE is issued for a purchase of a property and the transaction

Question #4

falls out of escrow, and the buyer finds another home to purchase… is this considered a “changed circumstance”? I read in the guideline that “address” is not considered a “changed i t ” circumstance”.

• A: A change in property address does constitute a changed

circumstance and a GFE may be reissued. For clarification, if the legal description is maintained when a property address changes, for example with a new construction, this does not constitute a changed circumstance and the GFE may not be reissued A loan changed circumstance and the GFE may not be reissued. A loan

• riginator may issue a revised GFE reflecting only the increased

charges resulting from the changed circumstance.

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Question #5

• Q: If a buyer applies to borrow $50,000 on a first mortgage

Question #5

Q y pp $ , g g and I issue a GFE based on that loan amount, and then the buyer decides to revise the loan amount to $250,000 (to possibly save on the origination fee) is this considered a possibly save on the origination fee), is this considered a “changed circumstance” allowing for an increase to my 801 compensation?

• A: Yes. A requested change by the borrower, such as a

requested increase in loan amount is considered a changed requested increase in loan amount, is considered a changed circumstance and the GFE may be reissued.

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Th k Y Thank You

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