What is the difference between origination FEE and origination CHARGE?
o The origination fee is a percentage of the loan amount (usually 1%) charged to originate the loan. On the new GFE, origination CHARGES are ALL fees charged by the lender which may include application fee, lender fee, processing/underwriting fee, and origination fee.
How are seller paid fees addressed on the GFE’s?
o Under new Reg X requirements, lenders are to disclose all fees, title insurance, taxes and recording fees regardless of what may be customary in a market or who typically pays these fees. The GFE may reflect total closing costs higher than you are accustomed to because it does not distinguish between buyer, seller, or lender paid fees.
How does the customer get paid for any out of tolerance fees?
o A RESPA credit will be calculated in our system and added to the HUD1 prior to close.
If the aggregate fees subject to the 10% tolerance increase more than 10%, will the bank be responsible for paying the amount above 10% or the entire amount including the 10%? (For example: if fees increased by 15% in the aggregate, will the bank pay the full 15% that exceeds the amount disclosed or only the 5% that is in excess of the 10% tolerance?)
o The bank is required to refund only the amount in excess of the 10% tolerance. In the above example, the Bank would refund the 5%.
Which GFE is used for the tolerance calculation?
o The HUD1 will be compared to the last GFE provided to the borrower.
For services ordered by Realtor/Builder, should the lender leave the fee off the GFE?
o No. All services required by the lender regardless of who orders them must be shown on the GFE.
Does the GFE have to be redisclosed if fees are decreased?
o No. If fees decrease there is no obligation under the regulation to redisclose the GFE.
If seller paid costs are inaccurate, do we need to redisclose?
o There is no designation of Builder or Seller costs on the new GFE. If the information that the Bank relied on at the time the GFE was issued and that information was later found to be inaccurate, it could be a valid changed circumstance.
What is a valid changed circumstance?
o Acts of God, war, or disaster, changes or inaccuracies in information relating to the borrower or the transaction that was relied upon in providing the GFE, changes to the loan amount or estimated value of the property, new information regarding the borrower or transaction not relied upon when the initial disclosure was provided, a lock event
(locking the rate or expiration of the lock), or a change in the deal structure requested by the borrower.
Is there a requirement to provide a waiting period when redisclosing the GFE before the loan can close? For example do we have to wait 3 days after the GFE is redisclosed before closing the loan?
o No. Reg X changes do not have required delays when the GFE is reissued. However, the Reg Z changes implemented earlier this year did incorporate delays if the APR increases by more than1/8 of 1%.
If a floating loan is locked after the initial disclosers, does it have to be redisclosed?
o Yes. Locking the rate is a valid changed circumstance and requires redisclosure of the GFE within 3 business days of the lock event.
If a fee is overlooked in the purchase contract and is not disclosed in the GFE, but is detected by the underwriter, does it qualify as a “changed circumstance”?
o No. The fee was available on the contract and no new information was received. However, if the service is not a lender required service, the fee is not subject to a tolerance.
If the borrower neglects to provide information required for closing and the rate must be extended, who will pay the extension fee?
o If the customer is responsible for the delay, they will be charged the extension.
If a loan application date is prior to December 31, 2009, and the borrower has received an old GFE, can the loan be closed with a new 2010 formatted HUD1?
o No. If a GFE was issued prior to January 1, 2010, then the old HUD1 form must be used.
How long is the interest rate on the GFE good for?
o The interest rate is good until the date and time indicated on the GFE. For a floating loan, the rate may be available for 1 day. For a locked loan, the interest rate will be available for the entire locked period.
If an appraisal is received and an additional inspection is now required by the lender but a third party is going to pay for it, do we need to redisclose?
o Yes. If an inspection is required by the lender the GFE and SSP list must be redisclosed.
What happens if Borrower does not notify us of their provider choices within the 10 days after receipt and acceptance of disclosures?
o The Bank will proceed with the ordering of services to avoid delays in processing.
If the Borrower selects an off list provider how will the lender obtain those fees to redisclose the GFE?
o The lender processing department will contact the service provider chosen, review fees, and make the necessary changes to the GFE.
The Worker, Homeownership, and Business Assistance Act of 2009 has extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence. It also authorized a tax credit of up to $6,500 for qualified repeat home buyers. http://www.federalhousingtaxcredit.com/index.html
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