Mortgage Compliance g g p Advisors Making Sense of the New GFE February 18, 2010 P Panelists: Kristen Kalikakis, Bob Warnock, Craig Christensen li t K i t K lik ki B b W k C i Ch i t 1
Instructions Instructions • Because of the large number of registrants, the lines will be 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. 2
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 3
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. 4
Resources Resources • The bulk of the information we will be reviewing has been g compiled from resources you may be familiar with and have ready access to. 5
• 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/ 6
Why all the changes? Why all the changes? • The premise behind the change in the format of the form is 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. 7
When to disclose When to disclose You are not required to provide a GFE to your borrower until you • 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. (HUD FAQ page 6 #4 1 ‐ 28 ‐ 10) (Section 5 RESPA and 24 CFR 3500.7) 8
More about disclosing More about disclosing • Do not issue GFE for TBD properties p p • Provide separate GFE for each transaction involving more than one 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 (HUD FAQ page 7 #11 1 ‐ 28 ‐ 10) 9
2010 Good Faith Estimate 2010 Good Faith Estimate R Required on all applications taken on or after January 1, 2010. i d ll li ti t k ft J 1 2010 10
ABC Mortgage Inc. John Doe 123 Main St. 123 Oak Ave. Anywhere, USA 55555 Anywhere, USA 55555 (555) 555 ‐ 5555 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 Shopping for your loan (RESPA – table of contents, sec. Appendix C to part 3500. Instructions for Completing GFE) 11
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 3. Rate lock period (or N/A if floating). R t l k i d ( N/A if fl ti ) 4. Determined by your lender. 12
GFE Page 1 – Summary and Escrow Account I f Information i • Complete with information specific to loan Complete with information specific to loan 13
GFE Page 1 – Summary of Settlement Charges GFE Page 1 Summary of Settlement Charges • Calculations determined on page 2 of the GFE 14
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 15
GFE Page 2 – Block 1 GFE Page 2 Block 1 Subject to ZERO TOLERANCE • Fees may include, but are not limited to: F i l d b li i d • Administration fees Origination fee – – Application fee Processing fee – – Attorney fee Attorney fee Underwriting fee Underwriting fee – – Commitment fee Verification of employment – – Courier fee Wire fee – – Originator Document Preparation fee YSP – – Lender Inspection fee Lender Inspection fee – A loan originator may not separately charge any additional fees for • getting this loan other than those disclosed as part of the origination charge. g 16
GFE Page 2 – Block 2 GFE Page 2 Block 2 Credit or charge for interest rate chosen C dit h f i t t t h • Subject to ZERO TOLERANCE • ONLY ONE BOX MAY BE CHECKED ‐ a credit and charge may not occur • together on the same transaction. 17
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. 18
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. 19
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. 20
GFE Page 2 – Block 2 GFE Page 2 Block 2 • Adjusted Origination Charges = (Block 1 – Block 2) • Adjusted Origination Charges = (Block 1 – Block 2) 21
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 – 22
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 Title doc prep 23
GFE Page 2 – Block 5 GFE Page 2 Block 5 • Subject to a 10% tolerance • Owner’s Title Insurance may be marked as N/A on refinance O ’ Ti l I b k d N/A fi transactions. 24
GFE Page 2 – Block 6 GFE Page 2 Block 6 R Required services the borrower may shop for i d i th b h f • 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 – Survey S 25
List of settlement service providers List of settlement service providers • When the originator permits the borrower to shop for third ‐ 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. , 26
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 27
GFE Page 2 – Blocks 9, 10 & 11 GFE Page 2 Blocks 9, 10 & 11 No tolerance limit for these blocks • B = Total of blocks #3 through #11 • A + B = Total Estimated Settlement Service Charges • 28
GFE Page 3 – Instructions: Understanding which charges can change at settlement h h l 29
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 optional. 30
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 originator originator. 31
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