Almost daily we receive new updates and clarifications regarding the implementation of the new RESPA rules as they relate to the new GFE (Good Faith Estimate) and HUD-1 Settlement Statement. Of particular note are the following:
By: Cheri Hipenbecker, Agency Counsel
Almost daily we receive new updates and clarifications regarding the implementation of the new RESPA rules as they relate to the new GFE (Good Faith Estimate) and HUD-1 Settlement Statement. Of particular note are the following:
RESPA FAQ: The new "New RESPA Rule FAQs" were most recently updated January 28, 2010. Without going into detail, the updated FAQ addresses the questions being raised by lenders, mortgage brokers, and settlement service providers in the implementation stage of the new rules, including: sizing and shading of the GFE and HUD-1 forms, requiring documentation and fees from the borrower prior to issuance of a prequalification or preapproval, how to revise a GFE when there is a “changed circumstance”, showing payment of the yield spread premium on the GFE and HUD-1, and showing the escrow waiver fee on the GFE. Note that new items are bolded in the updated FAQ.
Included in the charges column, if an origination fee is charged, lenders may NOT assess veterans any other fees on VA-guaranteed loans, other than the allowable fees noted in subparagraph b of the circular (including appraisal and compliance inspections, Recording fees, Credit report, Prepaid items (taxes, assessments, and similar items), Hazard insurance, Flood determination, Survey, Title examination, Title insurance, etc…). Further, the lender may NOT charge the veteran for attorney’s fees associated with settlement.
Regarding the new documentation, because the new HUD-1 includes one line entitled “Our Origination Charge” that records a combination of the origination fee and the other items, and because the VA will continue to have a cap on the origination fee and limit the types of charges that may be paid by the veteran, lenders must itemize the fees included in the “Our Origination Charge” line on the HUD-1 Settlement Statement (itemization in the empty 800 lines of the HUD-1 to the left of the column) OR lenders must provide a separate origination statement. All loan applications taken on or after May 1, 2010 must have either the origination statement or a breakout of the origination fees on the HUD -1 as described in the circulation.
FHA insured loans: On December 30, 2009, the U.S. Department of Housing and Urban Development issued a Mortgagee Letter 2009-53 with the subject line “Real Estate Settlement Procedures Act (RESPA) and FHA Related Policies”. The purpose of the letter is to clarify how fees and charges for Federal Housing Administration (FHA)-insured loans must be disclosed on the new GFE and HUD-1 Settlement Statement, First, Mortgagees are instructed that the sum of all fees and charges from origination-related services must be included in Box 1 on Page 2 of the new Good Faith Estimate. As with the VA guaranteed home loan, above, if a government program or state law requires that lenders provide more detailed information to specify distinct origination fees and charges, lenders may itemize these charges in the empty 800 lines of the HUD-1, to the left of the column. The letter also addresses how to submit standard documentation for in insurance endorsement and seller credit on the HUD-1.
Knight-Barry will continue to post articles on its website when it becomes aware of new and updated letters and circulars on the revised RESPA rules – please stay tuned.
(NOTE: all previous parts of this series are located in the News Archive under the Customer Info tab above)