Good Faith Estimate Training 2/3/14

Transcription

1 Good Faith Estimate Training 2/3/14

2 Objectives At the end of this training you will be able to: Understand RESPA Reform Recognize a complete Loan Application Understand GFE requirements Know requirements for the Service Provider List Understand Changed Circumstance Identify when a redisclosure is and is not required 2

3 RESPA Reform RESPA Reform was enacted by the U.S. Department of Housing and Urban Development (HUD). The final rule was published on 11/17/08 and applies to all loan applications taken 1/1/10 and later. The goal of RESPA Reform is to provide consumers greater protection surrounding the terms, fees and settlement charges of their mortgage loan. The new GFE is designed to create more transparency regarding key loan terms, fees and charges to encourage borrowers to shop and compare terms offered by different lenders. Loan Originators (Brokers and Lenders) are bound by the settlement charges and terms listed on the GFE initially provided to the borrower, subject to certain tolerances. 3

4 Loan Application A GFE is not required to be issued until a complete application is received HomeBridge considers the application complete for RESPA purposes once the Loan Originator has the following: Borrower s Name Borrower s Social Security Number Borrower s Monthly Income Property Address Estimated Value of the Property Loan Amount A Loan Originator must issue a GFE no later than 3 business days after the loan originator receives a complete application Saturdays and Sundays are not included since most Loan Originators are closed 4

5 Loan Application (continued) If all 6 pieces of information are not provided, the application is considered incomplete for RESPA purposes If a Loan Originator choses to issue a GFE with an incomplete application: Revise fees will not be allowed due to a changed circumstance relating to the missing piece(s) of information The initial GFE submitted by the loan originator is the binding GFE 5

6 GFE Initial Review The GFE will be tested for accuracy on every loan file Fee input based on Broker s Fee Worksheet Minimum thresholds are programmed into HomeBridge s Loan Origination System Missing information/inaccurate information on the GFE Broker and the AE will receive from Loan Set Up Broker must advise on how to proceed File will not be submitted to Underwriting until rectified 6

7 GFE Tips Page 1 The first page of the GFE acts as an overview of the transaction Broker contact information is shown on all GFE s prepared by the Loan Originator. Once the file is received by HomeBridge, redisclosures will reflect HomeBridge as the Originator The date of the GFE is the date the GFE is issued to the borrower The GFE must be within 3 business days of the application date to be compliant. The application date is determine by the date the LO signed and dated the application 7

8 Important Dates Tips Float/Lock The Important Dates Section notifies applicants of the timeframe the terms quoted at application are available to them. When a loan is locked the GFE must be reissued and this section will be updated to provide the borrower with accurate information. Important Date #1 Floating -This must be the date of the GFE or later Locked - This must be the lock expiration date Important Date #2 Floating - For the initial GFE, this is 10 business days (excludes Sundays and federal holidays) from the date of the GFE AND does not change on any redisclosed GFE Locked -This must be the same date as it was on the initial GFE Important Date #3 Floating -This box cannot be blank, you must enter a number or N/A Locked - Must be the lock period (15, 30, 45 or 60 days) Important Date #4 Floating -This box cannot be blank, a number must be entered Locked -This box should show N/A, it cannot be left blank 8

9 Summary of Your Loan Tips This section of the GFE highlights critical terms of the loan to the Borrower Line 1: The amount applied for Line 2: The loan term Line 3: The interest rate Line 4: The monthly payment including principle, interest and mortgage insurance (taxes and insurance are not included in this section) Line 5: If the loan is fixed, check No. If the loan is an ARM, check Yes and enter the maximum interest rate over the life of the life of the loan and the first change date Line 6: Negative Amortization loans are not offered, check No Line 7: If the loan is fixed, check No. If the loan is an ARM, enter the month of the first increase and the maximum payment over the life of the loan Line 8: Prepayment penalties are not offered, check No Line 9: Balloon payment options are not offered, check No 9

10 Escrow Account Information Tips This section lets the Borrower know if their loan will be impounded and if their payment will include taxes and insurance The payment amount in this section is only Principle, Interest and Mortgage Insurance The appropriate box must be marked depending on if the escrows will be impounded The option chosen must be consistent with box #9 on page 2 of the GFE 10

11 GFE Tips Block 1 (Borrower Paid) The amount show in this block represents all compensation paid to the Broker and lender. The fees charged will depend on the transaction type Borrower Paid or Lender Paid. Dual compensation is not allowed, the loan must be designated as either Borrower Paid or Lender Paid compensation. On Borrower Paid compensation loans, the Broker will negotiate fee s directly with the Borrower. Examples: Loan Origination Broker Fee Loan Processing Fee Application Fee Administration Fee Underwriting Fee Commitment Fee Appraisal Waiver Fee Texas Attorney Fee Note: Once a fee is reduced, it can t be raised unless there is a qualified Changed Circumstance 11

12 GFE Tips Block 1 (Lender Paid) On Lender Paid transactions, the Broker MUST make the pre-selected compensation in effect at the time the loan is submitted Examples: Broker Compensation (Lender Paid) Underwriting Fee Commitment Fee Appraisal Waiver Fee Texas Attorney Fee Note: Once a fee is reduced, it can t be raised again unless there is a qualified Changed Circumstance. 12

13 GFE Tips Block 2 Block 2 represents the credit/discount to the Borrower for the interest rate Par Pricing Check this box if the rate the loan is locked at yields a credit to the borrower Check this box if the rate the loan is locked at results in a Discount charge Only one box may be checked, there cannot be both a credit and a charge On a floating loan this box should reflect an estimated credit based on the LPC amount 13

14 GFE Tips Block 2 (continued) On a locked Lender Paid Compensation transaction, Block 2 should reflect the TOTAL credit amount, including the credit for the rate AND the lender paid compensation amount Loan amount is $279,850 Credit on Rate Lock Confirmation: 1.625% Current Lender Paid Comp Plan: 3.000% Total credit as a percentage: 4.625% To calculate the credit as a dollar amount: $279,850 x 4.625% = $12,

15 GFE Tips Block 3 This section lists each third party settlement provider required and selected by the originator other than title. The description of the service and the charge must be included Examples: Credit Report Appraisal Fee Flood Certification FHA Upfront MIP VA Funding Fee Tax Service Fee 15

16 GFE Tips Block 4 All fees related to closing are included in Block 4. The fees are not itemized individually Examples: Lenders Title Insurance Settlement/Closing or Escrow Fee Document Preparation Fee Signing/Notary Fee Photocopies/Fax Fee/ /Courier Wire Fee Title Search/Exam Endorsements Loan Tie in Fee Sub-Escrow Fee IL State Mandatory Fee MD/VA Release Tracking Fee MD/VA Release Management Fee NY CEMA Fees or Title Closer Pick-up Fee 16

17 GFE Tips Block 5 Purchase transactions: the fee for Owner s title insurance is required An amount must on all Purchases, regardless of who pays for it On a refinance, this field should be blank or reflect N/A. 17

18 GFE Tips Block 6 All 3 rd party services that the Borrower can shop for are listed in this section Examples: Survey Pest Inspection Home Warranty Any fees included in this Block are required to be included on the Service Provider s list as well 18

19 GFE Tips Block 7 All state and local recording fee s are input in this section Examples: Recording Deed Recording Mortgage Recording Releases 19

20 GFE Tips Block 8 Examples: City/County/State Tax/Stamps Intangible Tax GA Residential Mortgage Fee NY York Lender Paid Mortgage Tax 20

21 GFE Tips Block 9 This box represents the estimate of the deposit required for the Borrower s escrow account. This box MUST be completed if the Escrow Account Information section on page 1 reflects loan will have an escrow account. HomeBridge does not allow for partial impounds. If the loan will be impounded, the property tax and insurance boxes must be marked. Examples: Property Taxes Hazard Insurance Flood Insurance Any other impounds 21

22 GFE Tips Block 10 This block represents estimated per diem interest collected at time of closing HomeBridge recommends 30 days interest disclosed on the GFE The estimated date of settlement must always be reflected 22

23 GFE Tips Block 11 This box includes any insurance premiums that will be required to be paid at settlement. Required to be collected on purchase transactions Required to be collected on refinances when closing with a new policy Examples: Hazard Insurance Flood Insurance Other types of Insurance 23

24 GFE Tolerances Zero Tolerance Loan Origination - can only increase if expressed as a percentage of the loan amount and the loan amount increases Transfer Tax This fee can t increase except in conjunction with a loan amount increase 10 % Tolerance The total of all charges in Blocks 3 7 can increase provided it does not increase more than 10% Dollar amount of tolerance is based on 10% of the total fee amount in Blocks 3-7 There is no tolerance limitation if the Borrower selects their own service provider in blocks 4-6 (provided the service was originally disclosed on the Service Provider List) 24

25 Understanding Charges That Can Change This part of the GFE is informational for the Borrower. It tells the Borrower which fees can and cannot change along with the tolerance amounts. 25

26 Using The Trade Off Table The Borrower can use the Trade Off Table to compare loan options from the same lender. 26

27 Using The Shopping Cart The shopping cart allows the Borrower to shop and compare offers from other lenders. 27

28 Service Provider List (SPL) The Broker is responsible for preparing a Service Provider List with the initial GFE The list must include at least a title company and each fee in Block 6 must have a provider listed The providers given must be in the Borrower s neighborhood or an 800 number must be provided The list of providers listed does not constitute an endorsement or recommendation of the provider The Borrower does not have to choose a provider, the Borrower can choose a qualified provider that is not on the originator s written list 28

29 Changed Circumstance The changing of fees and redisclosure of those fees cannot happen without a legitimate Changed Circumstance. Changed Circumstances include: Acts of God, war, disaster or other emergency A federal disaster declared by the president (fire, flood, tornado, earthquake, hurricane) Inaccurate information used in good faith to provide the GFE Loan amount, credit quality, property value, income New information obtained that was not relied on in providing the GFE Property type, change in occupancy, FICO, underwriting conditions require additional services Other circumstances that are particular to the Borrower or transaction Boundary disputes, the need for flood insurance or environmental problems or unique property characteristics not known to the originator 29

30 Changed Circumstance (continued) Some acceptable Change Circumstance examples are: Float to lock Changes in lock terms Rate lock expires PMI due to change in terms Change in property type Change in property value once appraisal is received Hazard/Flood Insurance Borrower requested changes (interest rate, loan amount or other terms) 30

31 Changed Circumstance (continued) Changed Circumstances do not include: Lender not accepting broker issued GFE GFE issued with no property information and the property information is provided later in the process GFE issued by the Broker for one lender which is later submitted to an alternative lender Market fluctuations on a locked loan Changes that should have been known at the time of the Good Faith Estimate 31

32 Training Resources Find this training presentation and more at under WORKING WITH US : 32

33 Questions? 33