They say the most notable change to the new RESPA rule changes is the requirement to use a new Good Faith Estimate (GFE) form. It is said that the new form will clearly disclose loan terms and closing costs. MetFund has been using a Good Faith Estimate for over 10 years that disclosed both in a straight forward manner. Any originator using the Calyx software for origination and processing generated a GFE in the same format.
The difference is that some originators did not disclose all the costs associated with the particular transaction or changed the program and fees sometime during processing and did not redisclose to the borrower. The borrower thought they were getting one thing, but ended up getting another.
As we see it, here are the decisive changes and their ramifications:
Tolerances have been established for increases in certain categories of fees. (There are no restrictions on decreases).
The GFE and HUD-1 Settlement Statement must match exactly on lender and broker fees, any yield spread premium, points, and transfer taxes.
There will be a 10% tolerance which allows for an increase in the following: lender required settlement services, title services, lender and/or owner's title insurance, and government recording fees under the following circumstances: 1) lender selects provider; 2) borrower selects lender recommended provider; 3) borrower uses lender identified provider. The individual fees in this category as disclosed on the final HUD-1 may increase or decrease so long as the sum of the total does not increase more than 10%.
There is no restriction on reserves or escrow, daily interest charges, homeowner's insurance, and lender required settlement services where the borrower shops and elects their own non-referred service provider. In general, there are no restrictions on any borrower selected, non-referred service provider.
The new HUD-1 settlement statement will mirror the new GFE, with similar line items and groupings. On a new third page, there is a comparison of the GFE figures and the settlement statement figures, categorized by the allowable tolerance for each fee. A summary of the loan is provided telling you the loan amount, term, rates, initial monthly payment, prepayment penalties and other loan terms.
Two things struck me as I was going through training. Once again, the lenders have offloaded more responsibility for making good lending decisions and secondly, if we thought it took a long time to get a loan through the lender's pipeline before, "you ain't seen nothing yet".
• Returning from a brief holiday respite with my wife's family. It was good to get away and into warmer climes. Though, four consecutive days at Disney World with required travel to and from Pasco County each day was a bit too much.
• With interest rates having cycled down the last week of November, many of my existing clients and a few new ones took advantage and closed this past week with lower rates.
Some items of interest in the news:
• Fannie Relaxes REO Reimbursement Demands To expedite sales of foreclosed properties, Fannie Mae says it will accept a buyer's purchase offer without notifying the servicer and before it determines whether the lender has to reimburse the secondary market agency for any losses.
• Nearly 5% of Fannie Mae Single-Family Loans 90+ Days Late The serious delinquency rate of Fannie Mae's single-family loans nearly hit 5% at the end of October and its loan performance is deteriorating at a rate of 100 basis points per four-month period.
• Index Shows Home Prices Gains Leveling Out House prices were unchanged in October after a 0.4% increase in September, according to the Standard & Poor's/Case-Shiller 20-city house price index.
• Consumers More Confident, Except When It Comes to the Present The Conference Board's Consumer Confidence Index continued its upward climb in December but its Present Situation Index fell.
• Capital Commitment Puts Fixing GSEs On Hold By providing Fannie Mae and Freddie Mac with unlimited capital support over the next three years, the Obama administration can delay fixing the GSEs and use them to pursue more aggressive loan modification programs, according to Washington observers.
• Brokers Propose Alternative to YSP Ban Mortgage brokers are urging the Federal Reserve Board to withdraw a proposed rule that would regulate broker compensation (i.e. eliminate zero point loans) and delay any action until Congress finalizes pending consumer protection legislation.
"Too big to fail? Too big to fail! That's like being too fat to die."
Robin Williams' Weapons of Self Destruction
Things are not as well all over the country as they are here in Northern Virginia. And nothing could say this more than a builder trying to incentivize new home purchases in the following manner: An offer no serious buyer could refuse
Seriously, you didn't think we make this kind of stuff up did you?
Rates are especially attractive right now with the credit problem that arose in the Middle East last week. There was the flight to safety move of money into US debt causing yields (rates) to drop.
If you have credit scores above 740 and a low loan to value you can improve you rate substantially. This is especially true on loans amounts up to $729,750.
Call us today to see how you can save money.
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