RESP RE A SP A & & Good Good Fa F ith ith Estima tima e R quir quir d e d Disclosure Disclosur s Corresponden Corr esponden t Lending July 22, 2013

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1 RESPA & Good Faith Estimate Required Disclosures Correspondent Lending July 22, 2013

2 What s Different and When is it Effective? January 1, 2010 (1003 dated on or after) New GFE form: does not indicate the loan program, type, or loan purpose; does not contain a field for cash to close ; does not include a field for a total payment that includes escrowed amounts; cannot be issued on a TBD ; cannot be handwritten or corrected/initialed.

3 What s Different and When is it Effective? (Cont.) FHA has removed the 1% cap on origination fees; VA origination fee continues to be capped at 1%. VA non allowable fees still cannot be charged dto the Veteran. The fees will be lumped together in the Origination Charge on the GFE. At closing, a separate itemization list will be prepared of those fees that are lumped together in the Origination Charge. A seller or lender credit will be issued dto the Veteran on the first page of the HUD to offset those non allowable fees.

4 GFE Notice Requirements Must be provided no later than 3 business days after application. Not required if application is denied or withdrawn by borrower within 3 business days.

5 When do I have an Application under RESPA Rules? Must have these items: Borrower s name Social Security number Property address (no TBDs) Monthly income House value or best estimate Amount of loan Any other information i deemed necessary by the loan originator

6 Now. the GOOD FAITH ESTIMATE

7 Good Faith Estimate Page 1

8 Important Dates If lock is floating, this date will be the same date as the GFE with an expired time. If locked, it will be the date of the lock expiration and we suggest 4:00 p.m. This should be 10 business days from the date of the GFE. If the loan is locked, this date should be the lock expiration date on purchases and 5 days prior to rate lock expiration on refinances (to allow for rescission). 30 days for loans that are not locked. We suggest loan officer allow 5 days if not yet locked. If the loan has been locked, no date is necessary.

9 Summary of your loan P&I and MI Only! This box must be filled out according the to terms of the loan. If these terms change ( Changed Circumstance ) ), the GFE will need to be redisclosed. NOTE: There must be an acceptable Changed Circumstance.

10 Escrow Account Information Mark the appropriate p box if the loan is being escrowed or not. The amount in this box is Principal and Interest and Mortgage Insurance only it is not the entire payment amount.

11 Summary of your settlement charges These amounts will carry over from the subtotals on page 2 of the GFE.

12 Good Faith Estimate Page 2

13 Our Origination Charge Zero Tolerance THIS BOX IS VERY IMPORTANT! This charge should include all of the fees charged by the lender. This amount CANNOT increase at closing. However, the lender can This amount CANNOT increase at closing. However, the lender can choose to lower this amount due to a rate lock occurrence or revision.

14 Fees that must be included in the Origination i Charge Origination Fees/Points Processing Fee (including third party contract processing fees) Commitment Fee Underwriting Admin Fee Application Delivery/Courier Any other Miscellaneous Lender Fee

15 Your Credit or Charge Check this box if there will be no amount entered in the charge/credit box. Zero Tolerance Check this box if paying a credit. The amount will be a negative number resulting in a credit to the Borrower. Does not have to match lock confirmation on a Correspondent transaction. Check this box if a Discount is charged. Does not have to match lock confirmation on a Correspondent transaction.

16 Your Credit or Charge (Continued) Important things to remember: If lender is floating the lock, they must enter their best guess in this section. The amounts can change with an acceptable tbl Changed Circumstance. This box can only be revised for a rate lock or revision occurrence and the GFE must be redisclosed within 3 business days. If the GFE is not redisclosed within 3 business, it can no longer be redisclosed and the charges will be calculated on the prior GFE. Only one box can be checked.

17 ces All Other Settlement Services 3. This box contains all 3 rd party fees selected by Lender (example: appraisal, credit report, flood cert, VA Funding Fee, UPMIP, tax service, USDA Guarantee Fee, AHFA Commitment fee, etc.) 4. This box includes the Closing Agent s fees and the Lender s Title Policy. 5. This is for Owner s Title Policies only. We suggest that this amount be disclosed on a purchase whether or not the Borrower is purchasing an OTP. 6. This is for third party fees that the Borrower can shop for (example: survey, termite inspection). 10% Tolerance

18 All Other Settlement Services (Continued) Important things to remember: Any fees that are not initially disclosed on the GFE cannot be added by redisclosure. This includes UPMIP and VA Funding Fee. These amounts can only be revised (not added) with an acceptable Changed Circumstance and can only be adjusted accordingly. An Owner s Title Policy amount must be entered whether or not the Borrower is obtaining one. It cannot be added with a redisclosure at a later time. The fees in this section are subject to a 10% tolerance.

19 List of Service Providers If a lender permits a borrower to shop for services in Blocks 4, 5 & 6, the loan officer must provide a written list of providers that the estimates were based on. Must be issued with the GFE on a separate sheet of paper Must include at least one provider of each shoppable service.

20 Fees that must be included in the Title Services & Lender s Title Insurance Charge Settlement/Closing Fee Title Examination Attorney s Fee Abstract/Title Search Doc Prep Commitment/binder Lender s Title Insurance Wire fee Attorney Courier/Delivery Fee Electronic Fee Notary Fees Endorsements Copying Miscellaneous

21 All Other Settlement Services 7. Per page Recording Fees. 10% Tolerance (7 only) 8. Transfer Tax - this is Zero Tolerance calculated by the individual (8 only) state/counties. It cannot be combined with Recording Fees and CANNOT increase at closing. Can Change at Closing 9. Must contain an amount. This (9, 10 and 11 only) can change at closing, but must have an amount disclosed d and all appropriate boxes checked, if any escrow account is required. 10. Must contain the per diem, and the number of days until the settlement date. This can be an estimated date, but all boxes must be completed. This amount can change at closing. 11. Must contain an amount. This can be an estimated amount, but all boxes must be completed. This amount can change at closing.

22 All Other Settlement Services (Continued) Important things to remember: ANY AND ALL BOXES LEFT BLANK AT THE INITIAL DISCLOSURE WILL BE CONSIDERED A ZERO CHARGE TO THE BORROWER AND CANNOT BE REVISED OR CHANGED AT CLOSING. Exception: Boxes 9, 10, and 11 While we allow the initial GFE to leave these boxes blank, we strongly recommend an amount be included in those boxes.

23 Good Faith Estimate Page 3

24 Which charges can increase

25 When to Redisclose? Changed Circumstance. Lock Event. Borrower requested change.

26 Changed Circumstances Acts of God, war, disaster or other emergency. Changed or inaccurate information provided by the borrower after issuance of the GFE. (e.g. credit quality, loanamount, amount, property value, need for flood insurance or other information)

27 What can Change Only those fees impacted by the changed circumstance. If pricing ii changes dues to a changed circumstance, or a borrower requested change, only the interest rate dependent charges and terms may change. If pricing changed when going from a float to a lock, only the interest rate dependent charges and terms may change. Block 1 Origination Charges CANNOT change, even with a changed circumstance. The Important Dates section must be updated to reflect any new information.

28 Re disclosure dates This date will remain the same as the initially disclosed date If the loan is locked, this box can include N/A. If the loan is not locked, we suggest the loan officer allow 5 days. If the loan is locked, this box can include N/A. 30 days for loans that are not locked.

29 How to Redisclose? A redisclosure of the GFE MUST occur within 3 business days of the Changed Circumstance. If the redisclosure is not sent within the 3 day period, the original GFE charges will apply. A completed Revised Good Faith Estimate completed by the loan officer.

30 Certification of Intent to Proceed Must be completely and accurately filled out. This can be signed by either the loan officer OR the Borrower.

31 NOTICE OFCHANGED CIRCUMSTANCE FORM Must be completely and accurately filled outeach time there is a redisclosure of the GFE. Must check the appropriate cause for the redisclosure. The loan officer must complete the box of fees that are being changed due to the Changed Circumstance. Each and every fee that has changed must be disclosed on this form. Must submit this form along with the revised GFE.

32 Common Mistakes and Omissions Boxes are left blank. There should not be any fields left blank on the GFE. Date of the Good Faith Estimate must be accurate and within three days of application. The loan officer must review the GFE prior to presenting it to the Borrower for accuracy. Dates must be entered on 1 4, page 1 must be correct. If any of these dates are left blank, it is assumed that the charges disclosed are good indefinitely. If the loan has not yet been locked, these boxes can be y, revised/updated with the appropriate date of the lock expiration.

33 Common Mistakes and Omissions Origination Charge box (line 1 page 2). This amountcannot be changed. If this box is left blank, the lender cannot collect ANY fees at closing. If an amount was entered at initial disclosure, that amount can be decreased once the loan is locked or revised. However, the amount can increase with a program change or proportionate p loan amount change. Creditor Charge (line 2, page 2). If this box is left blank, it will be assumed that the Borrower is neither receiving a credit for the rate or paying a charge for the rate. However, if an amount was entered at initial disclosure, that amount can be increased/decreased once the loan is locked or revised.

34 Common Mistakes and Omissions Lender's Closing Fee and Title Policy Fee must be entered. This amount has a tolerance of 10%, so this fee must be correct. The closing attorney should provide this fee to processing. Owner's Title Policy Fee must be entered. This amount cannot be left blank on purchase transactions. It does not matter if the Borrower is getting an OTP or if the Seller is paying for it. IT MUST BE LISTED.

35 Common Mistakes and Omissions Government Recording Fees must be entered. Mortgage Builder defaults for the number of pages being recorded in the transaction and calculate the fees accordingly. These fees have a 10% tolerance. If the fee is not listed or is incorrect, the charge will come out of the loan officer s fees.

36 Common Mistakes and Omissions Transfer Tax must be entered. This is NOT the same and Recording Fees and cannot be included with the Recording Fees. This amount has ZERO TOLERANCE. The amount can be lowered, but cannot be added or increased.

37 Common Mistakes and Omissions Fees Chosen by the Lender must be completely filled out. This includes the correct UPMIP and VA Funding Fee. If the Lender does not include UPMIP or VA Funding Fee (or miscalculates the fee), it cannot be collected from the Borrower. It will have to come out of the Lender's fees. However, these amounts can be revised/updated at time of lock or lock revision. The appraisal fee must be included in thisbox as well. Itcannot be added or changed at a later time. Any other third party fees charged by the Lender must be disclosed. h f l f b l d d h l The final inspection is a separate fee, not to be included in the appraisal fee. If a final inspection is necessary, redisclosure is necessary to add it to the GFE.

38 Common Mistakes and Omissions Escrow type must be checked on page 2. Although h this amount in this box can change, the Lender is required to check the type of escrow that is included in the escrow payment. Homeowner's Insurance Premium must be disclosed on all purchase transaction.

39 PLEASE NOTE: **IMPORTANT** The Good Faith Estimate can ONLY change when an acceptable Change of Circumstances occurs. Some charges cannot increase at all AND some charges can only increase by 10% MAKE SURE THE DATES AND CHARGES ARE CORRECT BEFORE DISCLOSING TO THE BORROWER.

40 Disclosures Servicing Transfer Disclosure The second box must be checked on a Correspondent transaction.

41 Truth in Lending Must show MI expiration

42 Unnecessary Disclosures Mortgage Broker Fee Agreement (MBFA) Anti Steering Disclosure Binding Arbitration i Agreement

43

44 Questions???