HUD Passes RESPA Reform, New GFE Coming in 2010

Now I know that true miracles happen. We have all been waiting for RESPA reform for as long as I’ve been in the industry, which has been over 25 years.  Here’s what the new Good Faith Estimate will look like.  Everyone has all of 2009 to get their systems ready because the new form won’t go into effect until Jan of 2010.  The winds of change are blowing in favor of more consumer protection and more duties owed to the consumer by retail mortgage lenders.  Didn’t I just say this was going to happen? From HUD:

Brian Montgomery, HUD’s Assistant Secretary of Housing, Federal Housing Commissioner, said, “We have carefully considered the concerns expressed from every corner of the mortgage market in developing this rule. I am convinced that we successfully balanced the needs of consumers with those in the business of homeownership. None of us can lose sight of the fact that millions of Americans simply don’t understand all the fine print of their mortgages and this, in many respects, is at the heart of today’s mortgage crisis.”

Since 1974, little has changed about the process Americans endure when they buy and refinance their homes. Now, HUD’s final reform will improve disclosure of the key loan terms and closing costs consumers pay when they buy or refinance their home.

What I like about the new three page Good Faith Estimate (GFE):

Page 1:
Important Dates: “your interest rate may change” notice
Loan Summmary: Easy, plain language, Yes or No explanations
Page 2:
Understanding Estimate Charges: explains credits better than most verbal explanations I’ve heard over the past year.
Breaks down other charges that the homeowner can shop for, in order to receive a lower fee
Page 3:
Further explains pages one and two and makes it crystal clear what charges can and cannot change at closing. 

What I do not like about the new GFE:

Where’s the Yield Spread Premium (YSP)? 

Some state laws may not comport with this new federal law and will have to be revised, hence the year waiting period before we begin using the new form.

Housing Wire HUD Revises RESPA Rules
HUD Press Release

138 thoughts on “HUD Passes RESPA Reform, New GFE Coming in 2010

  1. I’d love to hear what Escrow Officers think about the HUD. I’m still absorbing the final product before I comment. Right off the bat it seems very similar to the form the State of WA requires LOs to complete (mortgage brokers and correspondent lenders): the loan application disclosure form.

    What I think would really help consumers would be if they received a copy of the estimated HUD at least 48 hours before signing.

  2. Hi Rhonda,

    As it now stands, they can ask for an estimated HUD 24 hours prior to signing, and the lender must comply, however, there’s nothing in the existing law that mandates that lenders advise the client of this 24 hour rule. 48 hours would be great….as long as consumers are told.

  3. OK, I am so out of touch, but impatiently curious.

    GFE=Girl Friend Experience….

    Whoa…I don’t remember any ex GF’s like THAT! Senility will do that to ya 🙂

    I wonder what a TIL is, in their world?

  4. Now that I have veered completely off topic, I just had to share this amusing misprint from the Seattle Times last week.

    Thought you all might enjoy this one…

    “…Rather than search for mechanisms that would raise national productivity and improve the legitimacy of American’s claim to the world’s resources, we engaged in an orgy of consummation.

  5. Jillayne, do you have any idea how HUD came up with that consumers will save approx. $700 at the closing table based on the new GFE? Do you think it’s because they feel this is a stronger loan-shopping tool?

  6. Roger,

    GFE equals they will act as if they might get a big diamond engagement ring at the end of the evening, and conduct themselves accordingly. It’s all about attitude vs. services rendered.

  7. Jillayne, I’m just getting a chance to sit down and absorb the new forms…what would you recommend when a person has received a GFE for merely a rate quote with regards to important dates [vs how I’ve filled in the blanks].

    1)The interest rate is available through [this moment–it’s not locked! And rates change throughout the day].
    2)The…charges is available through [this is just a quote until we know you qualify for the program, title and escrow charges may vary and we won’t know who the parties are or what their charges are until we have an agreed contract].
    3) what do they mean by “go to settlement”. Is the the signing date or the funding date? I’m thinking they must mean funding.
    4) this must mean this is the end of the period for “floating” or having an unlocked rate.

    I’m reading this GFE and it’s seems like more terminology is being created–we all ready have issues with this in our industry with words like “escrow” and “reserves”.

    Scrolling down to page 2 of 3 under Settlment Services, it states that there are required services that the consumer can shop for (#6). The only items I can think of from a lenders standpoint would be title and escrow? Am I missing something?

    With title and escrow, it states on page 3 that the fees can increase by 10%. Does this mean that if on my preliminary GFE, I quote a title/escrow company with lower fees, and the P&S has another company w/higher fees, that someone has to drop their rate? Or am I, as I do currently, providing updated GFE’s throughout the transaction when we know who the parties involved are.

    Good Faith Estimates are going to take a long time to complete now. Especially since there is a tradeoff table and shopping chart. I wonder if these sections need to be completed every time the GFE is updated or just for the preliminary GFE?

  8. Hi Rhonda,

    I’ll answer your questions to the best of my ability, but I think we should wait until it’s published in the Federal Register this Friday. The Inman news story this afternoon mentioned that congress could still decide not to allow it through.

    1) I’m sure when they revised the form, they didn’t anticipate multiple rate changes throughout a day. So, GFE taken at 10:30 AM, rate may change after ______ fill in the time the interview ended, since I’m assuming the client elected not to lock, or fill in the lock expiration date if they decided to lock.

    2) Put a date where you’d anticipate receiving more info from the lender with regards to qualifying for that program.

    3) We’d need to look up HUD’s definition of RESPA in the federal register on Friday.

    The American Land Title Assoc fought very hard to have title and escrow set apart as services that a client can shop for. Think about other fees that a client might be able to shop for and receive a lower price. There are others.

    If you’re doing a prequal, and the homebuyer’s purchase and sales agreement comes back LATER with another title company name with higher rates, you would re-disclosed if the fees went over 10%.

    This is an important step for the consumer, according to HUD, so that the consumer can identify that yes, he/she IS paying a HIGHER fee for title and escrow and that the consumer knows these fees could be lower elsewhere. Consumer advocates fought hard for this change. (as a side note, I’m teaching a title class at Bellevue College this quarter and my students were amazed at how wide the title fees varied from company to company.)

  9. Rhonda, where is the YSP?????

    I am thinking that the YSP must be used as a credit. See section 2!! And that if there is any leftover, the consumer must give permission for the leftover YSP to go to the broker, or else it is credited to the consumer.

    Am I reading this right?

    Oh boy.

  10. I’ve re-read this over and over again–including the HUD News Release/Fact Sheet which states that YSP must be “disclosed in a more meaningful way”. What the heck is that? It must be the credit referred to in section 2 of origination fees. However, consumers have heard the term YSP so much that you’d better add that term to the GFE as well…otherwise, they’ll all be asking “where’s the GSE?”.

    I do like that finally, all GFE’s will be uniform. Sometimes when I’m reviewing a GFE as a courtesy for a consumer, I get confused! They can vary from various companies which does make it a challenge for consumers who want to try shopping.

    Unfortunately, this does not resolve the issue of shopping for rates as we know they do change and one must shop LO’s (and have them provide rates) at the very same moment. Unless a rate is locked, it’s not their rate.

    By the time a LO completes the new GFE, odds are rates will have changed at least once! 😉

  11. There is a reason Hud spelled backwards is Duh. I am sorry, taking a one page document to three is not simplifying. Consumers are going to throw up all over the YSP/Credit thing… Why do we keep insisting that we confuse consumers more? More disclosure is not always a good thing.

    There are some sections I like on it though.

  12. Hi Russ,

    I agree with you. Sometimes too much information is confusing.

    Maybe the solution is to balance out all that information by putting higher duties onto the loan originator to make sure their client *understands* the information in the disclosures.

    What do you like about the new GFE?

  13. I like the front summary page regarding days the loan is locked for, prepay penalty, escrows, etc. The old form really glossed over this stuff and now the LO has no excuse to “accidently” leave this information off.

    I dislike the Adjusted Origination Charge section. it isn’t clear to me… is origination charge like origination point or is it YSP? Sometimes I don’t charge any origination fees but I earn YSP. Other times I charge origination and price at par. Just seems to overly complicate matters. If the origination charge is the YSP, I can see some consumers mistakenly choosing a higher priced loan because they freak out over the YSP not realizing that a higher YSP does not necessarily mean it is a more expensive loan. I would drop #2 in this section all together. It is simply TMI.

    I like the fact it says fees can’t change except for the services we don’t select. This shoudl prevent last minute bait & switch. You quote it, you honor it.

    however, what I dislike in general is that this continues to feed into the commoditization of mortgages and sets consumers up to rate shop themselves right into the hands of the boilerroom “phone officer”. The best thing the industry cuold do is to get consumers out of the bargain basement mentality. Not saying rates and fees aren’t important, but when you try to compress a multi-dimensional transaction into a one dimensional number you are going to be disappointed.

    Pickign professionals, whether realtors, attorneys, or lenders, on your largest financial transaction that easiyl goes into the hundreds of thousands of dollars that involves all kinds of legal risk, contract risk, long and short term financial consequences simply based on who is cheaper is the absolutel DUMBEST Thing consumers do… $500,000 dollar transaction and people are shopping over $50/month and $200 in fees when they could lose tens of thousands of it isn’t handled right.

  14. Hi Russ,

    We have done this to ourselves: We’ve taught the consumer to select us based on the lowest price. We need to slowly, over time, re-educate the consumer to select their LO based on different criteria.

    Surely there will always be consumers who will select their lender based on price alone. It will take time to transition away from this.

  15. I went back to the top to read Brian Montgomery’s statement as to why we needed to change. Misquoting points, fee’s and YSP’s is NOT “…at the heart of today’s mortgage crisis.

  16. @Dave,

    “they forgot to talk to the mortgage industry about the issues that came up and how they should be fixed.”

    Actually, HUD had a long comment period and then extended the time for comments. All together, there were over 12,000 comments. Yes, that’s twelve thousand comments received from all segments of the industry from non-profits to consumers. From mortgage brokers to mortgage bankers. From title and escrow companies large and small. From retired mortgage bankers to educators and trainers.

    • Jillayne! Did you read HUD’s rebuttal to the 12,000 comments? I did, and it was bureaucratic praddle at it’s worst backed only by opinions that supported HUD’s misguided idea that the American consumer needs to be told by government whats best for them. I spent several hours reading through this document and was very upset afterward. No matter what argument was made against their position supported by cold hard fact(s) by extremely reputable sources. The reply would twist the intended meaning then use far reaching excuses why HUD didn’t agree with the position.

  17. I know NAMB has been involved in this forever… the only surprise is that it’s actually out! Title and escrow companies were dreading the “script” they were going to have to read to each client.

  18. It’s surprising to me that if they spoke to our industry, they must not have been listening or they lost a few pages of notes.
    There shouldn’t be these kind of glaring holes in such an important form.

  19. Dave, imagine trying to satisfy 12,000 comments (as Jillayne referred to #25). No ones going to be happy and it’s my understaning that this is not the final copy. Jillayne, wasn’t something going to come out yesterday to finalize this form?

    If this is the final document, we’ll still need to prepare the current GFE’s in order to show clients cash to close and I think those who have bought homes are obviously more family with the ol’ standby.

  20. After nearly 5 years this is what they came up with? I’d really like to know how much the lame studies they ran ended up costing the taxpayers?

    It really surprises me everyone keeps missing the key point. Shopping and comparing home loans is both a science and an art and no one has addressed this issue properly. Like blindfolding someone, handing them a dart and telling them to hit the bullseye. Ain’t gonna happen.

    To even remotely imply this new 3 page form will save the borrower money and make shopping for a loan easier is pure folly.

  21. I understand that this is not the final version (at least let’s hope not). I saw a version last year that was 4 pages. After 12,000 comments some key items had to rise to the top; YSP, prepayment penalties, cash at closing, just to name a few.

  22. HUD has a 341 page report saying this is the final rule, however, my guess is there will be some revisions before January 2010 when the new GFE becomes mandatory to use.

    While there are several good points in theory to the new GFE, to cover all the problems with it would take quite a bit of space.

    The HUD report throws out assumptions why the new form will save both borrowers and originators time and money over the current GFE. I think in practice it will prove to do neither.

    I knew it was a futile endeavor as soon as I read the first field to be completed. “1. The interest rate for this GFE is guaranteed through ____”.

    Are you telling me after all the time and money spent on updating the GFE they still don’t know the only answer to this is “until the rate is locked”?

    Whatever ends up being the final version, I can guarantee it will not deliver what it promises.

  23. That brings up a good point Jim. How do you answer that question, “1. The interest rate for this GFE is guaranteed through ____

  24. It will be very surprising if this doesn’t get revised or even possibly scrapped altogether.

    There are way too many special interest groups that would rather see the current GFE and other related forms remain basically the same to let this slide by.

    On top of that, the 3 page GFE is a total disaster if anyone really reads it and tries to figure out how it is supposed to work.

    Just get a load of the Adjusted Origination Charges where a loan originator is required to enter 3 different loan scenarios for the borrower to absorb. That would be challenging in itself but take it one step further.

    Here is what it says after the last option is completed under “Your Adjusted Origination Charges” :

    “The tradeoff table on page 3 shows that you can change your total
    settlement charges by choosing a different interest rate for this loan.”

    So now the borrower goes to page 3 and what do they find? A section to be filled in showing different settlement charges based on the 3 choices on page two to.

    Only problem is completing this section is optional and left to the discretion of the LO. How many will bother filling it out and how many won’t – who knows. All that is certain is the consumer is going to be more confused than ever as this simple form turns out to be not so simple anymore.

    I am afraid there is a common mentality that runs rampant throughout the various government agencies not to mention the powerful special interest groups that get a bigger say than the general public and this is what we end up with.

    The more I learn the more I am beginning to realize why this country is going into the tank. Unfortunately, I believe the worst is yet to come.

  25. For a while, Calyx actually had a 2 page Good Faith Estimate that really worked and my clients loved! Detail on one sheet.. summary statement on page 2 that did include PITI and total cash to close which is what the customer is really looking for… the bottom line.

    Plus, there was a direct correlation to what will appear on the HUD settlement statement so a client could compare the GFE and the HUD. It seems to me that we could have just incorporated page 1 on the proposed GFE and left the itemization the same.

    I think they imported some people over from the IRS to design this form. It certainly isn’t user friendly and is likely to cause more confusion than clarity.
    January 2010 is a long, long way off and I suspect there will be other changes in our industry that make this seem like a trival concern.

  26. I agree that for what the purpose of a GFE should be could have been done in 2 pages and made a lot clearer.

    HUD is also taking the approach that by bundling all the lender/broker fees under “origination fee” it is a better way to go rather than itemizing these costs. Their take is this will keep the borrower from questioning a list of “junk fees” that may be included in the quote. Does anyone else see anything wrong with this?

    While there will most assuredly be other changes in this industry going forward I hardly think this matter can be viewed a trivial concern. As mentioned in HUD’s own statements, the current GFE has been a hindrance and not a help for borrowers and has contributed to some extent with the problems we are now facing. This is one time I do agree with HUD.

  27. Looks like the originator that gets called on the best day gets the deal with this thing… rates change 5-7 times a day currently, and GFE’s at initial stage have very little to do with closing rates / fees/ etc… sometimes the consumer wins, sometimes they lose… forward rate locks are pretty unlikely these days. The only way this is really effective is if they turn over everything they have in the world to 4 different originators in the same minute and see what all 4 say.

    That aside, it’s very lopsided that the mortgage originators get stuck with the responsibility of disclosing with absolute firmness title and escrow fees. I have very good arrangements setup with several companies for one-rate pricing, usually around $1000 for title & escrow on a refinance. For purchases, I always get a better deal than the real estate agents do, usually by at least $1000 less (because we have more volume), but seems irrelevant to the system… we never get to voice an opinion. Agents tend to be prima donnas and like the freebies they get.

    I would really rather see title and escrow produce their own GFE and have to stick with it, rather than putting the obligation on the loan originators.

    Look at the REO business… I closed a file last week, where my rate card said $3300 for the deal, and the fees charged by the REO-banks “Required” title company were closer to $9,000… I was charging $3500 in fees, and the buyer looked at me like I was the bad guy.

  28. The new California MLDS produced by Encompass 3.5+ is pretty decent.. it breaks out costs paid by the buyer and / or seller according to the contract. We actually do our data entry on that and just print the HUD form separately (we need both signed).

    HUD should have just looked at California’s version… which is quite a bit better. The California MLDS requires us to present alternative loan programs (not quotes from other originators… which seems stupid… this is a relationship business – we don’t sell apples off a cart on the sidewalk).

    The MLDS requires “Your Loan” and a comparison of 3 other fixed and ARM products… for example, your 5/1 ARM compared to a 30 year fixed, 3/1, an Option ARM, etc… all with potential interest rate in 3 years, 5 years, loan balance then, etc.

    It is much more beneficial to the customer than a narrative like this thing.

  29. Jim G, with regards to the title and escrow fees, Loan Originators often times do not know who the companies will be (or their fees) until after we have a purchase and sale agreement. On a refi–there’s little excuse for not knowing.

  30. Pingback: Two Flaws with the new Good Faith Estimate | Rain City Guide

  31. Rhonda that is fine and that is why there is wiggle room in there for one.

    Also, whoever fills out the GFE should have access to rates from various providers of these services. If not where are they getting the figures they now put on the form and have been doing for some time now?

    Are you telling me when it comes to 3rd party fees, many originators have just been grabbing figures out of the air with little concern to the consumer how far off they may be?

    I think the answer to that might be a yes and that is one reason why those in this business who desire to profit from it need to do a little more homework before approaching John and Jane Doe borrower.

  32. The 10% increase only comes into play if you “identify” the service provider.

    HUD wants to give the consumer control of the process, which is fine. The consumer needs to now take responsibility for their actions. As far as my business is concerned they are going to select their own services and be responsible for those fees. I will be merely estimating what those fees could be….(HUD says that if they select the services then my GFE estimate can change) The only fees I’m responsible for are my own.

    Currently I price all loans at par and have a set fee. The service providers fees are worst case scenario…and the borrower knows that up front. If the borrower balks at the closing costs, I let them know I can reduce their out of pocket fees by raising the rate. I ask them how much they want to pay. Depending on the borrowers circumstances, they go with the guaranteed fee. The only difference now is that I have to include the lender’s fees with mine. That will be no problem because I’ll just give an itemization that will show them what I’m getting paid.

    Been doing it this way for 11 years… is slower but still good….put in a pool over the summer…….finished the basement just last week…..buying my daughter a car for Christmas……I didn’t say “new” car….;)….and yes I still contribute to a 401k, IRA and two 529’s.

    These changes will not affect me. I think the way the new GFE is written takes some of the responsibility off me and puts it on the consumer.

  33. “As far as my business is concerned they are going to select their own services and be responsible for those fees.”

    I could be wrong but I think every loan originator has to either recommend or provide a list of service providers to the borrower. As long as the borrower then chooses from these then the loan originator is on the hook for the 10% variance in total sum of 3rd party fees. I don’t think you can simply tell the borrower it it up to them who they use.

    “Currently I price all loans at par and have a set fee.”

    I think that could a good way to do it. What is your set fee?

  34. Yeah- turning over all direction of 3rd party service providers to borrowers might in many cases be like turning loose addicts in a pharmacy. They probably wont make great choices –
    That been said, when a borrower is better informed they can make better decisions. I wonder, though, when will see reform of this sort when we want to buy a car for eample? I still have no idea where the money went and is going from my last auto purchase.

  35. Statement of the obvious is that this is a vast improvement over our current version. However, customers still need to read them and that can only be facilitated by mortgage consultants who make it a practice to review them in detail with the customer. More government is not the solution alone. Higher standards within mortgage companies is.

  36. What do I like of this GFE ?, sincelerly, the effort to control and disclose details to a prospect borrower. Although, I will consider this more as a paper work document to ensure that the Broker/LO is desclosing and informing the prospect Borrower to make an informed decision. I belive that one page with the same kind of easy presentation will work better for a prospect borrower who expects a simple way to understand the details of his/her future loan.

    Where’s the Yield Spread Premium (YSP)?, if I am not mistaken, the YSP will be disclosed on the second page bolet No. 2. first squere to be checked…. it reads: The “CREDIT” of charge for the interest rate of _____% is included in “Our origination charge”.

  37. This was a” close but no cigar” attempt to make what is nothing more than a futile consumer endeavor look more promising.

    Unless there are strict laws enforcing originator/lender behavior amont other things, the new GFE will end up being worth about what the cost of the paper it is written on.

    Let’s come clean here. First of all, the business of originating a home loan is not rocket science, so why should the consumer pay thousands of $$ to the person taking their application and/or the company they work for.

    I have heard every groundless reason for the excessive fees charged the borrower to get a loan. The truth is the cost should be fixed which would eliminate all the manipulation and deceptions that go on and will continue to go on this sordid business.

    Pay an originator a flat fee of say $500 with another $300 to the company they are with. That would further limit the number of predators and incompetents out there and lead to a more productive system.

    With an easy entry, little regulation or enforcement and excessive payouts, what makes anyone think a new 2 page form is going to solve the problem?

  38. “Unless there are strict laws enforcing originator/lender behavior amont other things, the new GFE will end up being worth about what the cost of the paper it is written on.”

    Mortgage brokers and the loan originators licensed under a broker now owe fiduciary duties to their clients.

    LOs who work for a consumer loan company or a bank owe no such duties.

    Just exchanged an instant message from a friend trying to refi. Both banks who are competing for his business have not yet provided a GFE or TIL and it’s past the 3 day mark.

  39. Wow. I don’t think they could possibly break down the GFE (Good Faith Estimate – NOT – Girl Friend Experience) information any clearer. Add in an explaination and disclosure of YSP and I don’t think anyone could legitamitly claim they didn’t understand the terms of their loan.

  40. “Mortgage brokers and the loan originators licensed under a broker now owe fiduciary duties to their clients.”

    “LOs who work for a consumer loan company or a bank owe no such duties.”

    Owing something and delivering on it are obviously two different things.

    Saying you are going to protect the hens is meaningless if the fox keeps raiding the hen house and no one does anything about it.

    “Wow. I don’t think they could possibly break down the GFE (Good Faith Estimate – NOT – Girl Friend Experience) information any clearer. Add in an explaination and disclosure of YSP and I don’t think anyone could legitamitly claim they didn’t understand the terms of their loan.”

    Wow! So all that has been missing all this time was a simple 3 page (I mis- typed 2 pages earlier) GFE form and the world is now a better place.

    Maybe the poster is kidding on this one, as the comments are at best laughable and can’t be taken seriously.

    For one, I don’t think bundling all the different mortgage broker/mortgage banker/wholesale lender fees under “Our origination charge” makes sense. This doesn’t simplify matters, it complicates them (if you don’t know why you probably haven’t been in the business very long).

    Also, why is “Title services and lender’s title insurance” listed separately when it will need to be entered again in “6. Required services that you can shop for”?

    And why isn’t “Settlement/closing/escrow” fees listed on the form? Is that expected to be included in “4. Title services and lender’s title insurance” or will that go separately in “Required services that you can shop for”?

    Then we come to my favorite the Tradeoff Table. If this isn’t a monkey wrench, I don’t know what is.

    Can anyone explain to me, why in the world would a government required form like this include something that is an OPTION? This will only confound and confuse both borrow and lender alike.

    Some LOs will complete just the loan in this GFE, others might add one other loan for comparison and others will complete all three.

    If they do complete all three, how are they going to decide how much of a premium rate and how much of a discount rate they should use? What we now end up with is a standard form that is anything but standard.

    The shopping chart is completely useless and should be deleted. This is far from what someone needs when comparing loans. You might as well get a dartboard and a blindfold if you use their chart because either method has about the same merit.

  41. I agree with Rhonda, all this means nothing unless the real measurs are put in place. As a seasoned Mortgage officer I know there is so many ways a client could still be cheated out of their money. We all know these forms and when we look at them we know what to look for but imagine the first time you were buying a home, would you undrestand all this? This whole GFE business gives the people the wrong sense of security. A GFE should be followed by another form when the real deal is drawn that is called the GFS, Good Faith Statment which will change by one dime at the end and if there is more cost, the mortgage persond pays.

    • “OK” Sam, you have to extend the lock because the borrower decided to go on a last minute vacation. The title charge was more than what was qouted on the fee sheet because they discovered a possible lien that needed to be researched. The borrower couldn’t get time off from work to sign the documents potentially busting your extended lock so they hired a Notary to drive to the borrowers residence on a weekend to sign them. All of these things are going to increase the costs of the original Good Faith. I am not talking about the second one that would of had to be done to disclose these fee’s but the original one. You are saying that as a Loan Officer you would have no problem paying everyone of these fee’s, or did I misunderstand you.

  42. Nice form. I actually like that some of the line items are condensed. If LO’s know their business correctly this should be a great improvement for them to help explain to their clients. Most of my LO’s know the average cost of escrow fees from different companies based on refi or purchase. They don’t change drastically! Also, every LO should carry a title fee sheet and most title companies are usually within $50.00 to $100.00 from each other so the GFE should be pretty accurate. My Loan Officers always re-disclose if we find out that there is a fee different as the process moves along than when it was first initiated with the client.

  43. BLAH BLAH, Only HUD could spend this time, effort, and tax payer $$$$ to accomplish NOTHING.


  44. Here we are January 2010. We just got nailed with a $1600 mistake that the lender says we will have to fork over to the buyer.

    I am a 28 year veteran of Mortgage Brokering and Banking and I am floored. Reading this form and taking classes or “webinars” are one thing, but doing the form is another. We really thought we “got it”.

    Well in Southern California, buyers don’t pay documentay tax stamps or do the pay Owners Title Policy. Both of this are typically paid by the seller on a purchase. We didn’t show it, so we were told we had to pay it. SOOOOO we fork it over, but the seller pays it? So whaaaat? the seller gains??? Whaaaaa?

    We should be using a HUD 1 to disclose as our GFE. Add some stuff to that form about type of loan, PPP, etc, but at least everyone knows who is paying what, who is making what and they CAN actually compare it at the close.

    Just wait until you actually USE the form! Not liking it!

  45. Hi Notlikingit

    No sympathy here. Mortgage industry people have had a year to get ready for this new GFE. I like the idea of having the lender make you cover the cost. The only thing our industry responds to is monetary penalties.

    Ardell, yes, it’s true the old GFE was ‘suppose to’ match the HUD I, however, what became evident during the predatory lending days which gave way to the financial crisis is that if you give an untrained LO a form, they’re not going to fill it out correctly which means trying to compare it to the HUD is a joke.

    • Hi Jillayne,

      Yes we have had much time to get ready for the new disclosure, however why would we need to diclosure a cost that is a sellers cost ALWAYS… and always has been. How does that make sense? And where does HUD tell us that?

      I have never been off by more than a few bucks (usually my estimates are higher than actual) for 20+ years. If I didn’t disclose a fee that the buyer/borrower is going to pay, I understand a penalty, but one that is not a borrower fee? and the borrower won’t pay it? This not a “seller to pay for the buyer” fee, this is a customary seller fee.

      As far as the HUD 1, you give an untrained LO a form, they’re not going to fill it out correctly – isn’t that the same thing as giving out a NEW GFE form. The only difference is, a HUD 1 IS the standard and IS what we need to compare it to.

  46. Dear Ardell,

    If it was that simple HUD would find a reason to change it as they have.

    Dear Jillayne,

    That is a weak excuse! An untrained Loan Officer/Predatory lender? First off, if your still in the business your not an untrained Loan Officer. Secondly, the Predatory lender as they are called have long since moved on to easier pickings like loan modification specialist, and credit repair specialist, or save your home from foreclosure specialist.

    lastly I have a question that wasn’t covered in your excellent class in December on how to fill out these abomination’s that have been force fed to us by H.U.D, even though members of Congress asked them not to impose these ghastly things on the industry. My question is on Federal Excise Tax. Do we disclose it in Washington State? I have read adamant arguments for and against.

  47. Jillayne:

    Imagine you are teaching a class on mortgage lending. You are well qualified to do so, and experienced.

    You inadvertently omit a section dealing with grapefruit, that is required by the federal government, for reasons that are unclear, but at any rate have no effect on the subject matter.

    An alert, if overly conscientous student, reviews her notes, and reports the omission to whomever regulates what you do. As a consequence you are required to rebate all of the fees generated from that class to the Grapefruit Association. Your offer to personally contact every attendee, and review the grapefruit section, is denied.

    How do you feel when that day’s revenue disappears, along with all your expenses that you were required to spend to generate that revenue, and sent to an unaffected party?

    Notlikingit is right. It is unfair. However, I do remember this issue from training, just haven’t had the chance to put it into practice.

    Notlikiing it, isn’t it the lender’s (not the broker’s or the LO’s) responsibility to ensure that the new GFE is correct? That is what I have been experiencing with my first GFE of the year.

    This was so simple to fix. And they botched it. They ignored the comments and suggestions. And they harmed the very people they intended to help.

    It was so badly done, one is left to wonder if it was intentionally misdesigned.

    Steve, I liked your comments. Let us know what you find out about the Excise tax.

  48. Pingback: Staying Motivated in this ever changing market | The Wallace & Kelly Real Estate Blog

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