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Inmotion Respa0109 2010
- 1. New RESPA Regulations: What Every Agent Should Know InMotion Real Estate Institute Prepared by Juanita McDowell/Lead Trainer , IM RE I
- 4. â Millions of families go to the settlement table each year without clearly understanding what they are paying for. In many respects, itâs clear that the current way people buy and refinance their homes isnât serving us very well at all and has contributed to the current housing crisis.â Former HUD Secretary Steve Preston
- 5. www.hud.gov
- 6. HUDâs Settlement Cost Booklet
- 7. HUDâs Settlement Cost Booklet Highlights
- 8. Â
- 9. HUDâs Settlement Cost Booklet Highlights It is your responsibility to search for an agent who will represent your interests ⊠If you want someone to represent only your interests, consider hiring an âexclusive buyerâs agentâ, who will be working for you.
- 10. HUDâs Settlement Cost Booklet Highlights ⊠agent may also recommend that you deal with a particular lenderâŠattorney. You are not required to follow the recommendation, and you should compare the costs and services offered by other providers before making a decision.
- 12. New Good Faith Estimate
- 19. New Good Faith Estimate â P 1 1 ABC Mortgage/Joe Brown Kim Cooper 1/31/2010
- 20. New Good Faith Estimate - P 1 1
- 21. New Good Faith Estimate - P 1 1
- 22. New Good Faith Estimate - P 1 1 Attorneys will rely on this. Cash needed at closing?
- 24. 2 Majority of all fees here canNOT increase
- 25. 2
- 26. 2 #7 10% Tolerance #8 Cannot Increase # 9-11 Can Change
- 27. 2 Same amt shown on P1 of GFE
- 30. New Good Faith Estimate â P 3 3
- 32. 3
- 33. 3
- 36. Buried on page 68227 - a decision to dump limits on loan origination fees. Protect the Consumer?
- 40. New HUD1 â P 2 2 (Corresponding GFE Block #)
- 41. New HUD1 â P 2 11 (Commission percentage has been removed.) Line 704 for Buyerâs Earnest Money. Shown as P.O.C.
- 42. New HUD1 â P 2 2 (Lines 804-807 for fees such as appraisal fee, Credit report, etc.) Line 801 contains charges for lender fees
- 46. 3
- 69. Youâre now up to dateâŠcontinue to keep your eyes and ears open.
- 70. InMotion Real Estate Institute For more training opportunities, please visit: www.inmotionrei.com
Editor's Notes
- It should be noted that HUD is continuously updating this. I encourage you to stay alert. Be awareâas one atty pointed out to us, the rules and the answers to the questions donât always matchâŠsome of the changes donât necessarily make sense. There are several inconsistencies that I will point out. And for that reason I encouarge you to write HUD (as I have) at the Washington DC address. I often feel that people on the street like you and me â our ideas and opinions are not represented. So letâs jump inâŠ
- Help borrowers shop for a loan more with ease by simplifying and improving the disclosure requirements for mortgage settlement services Remove factors in lending that increase costs to consumers, such as kickbacks and unearned referral fees
- Disclaimerâbest we have available to us now. If there is a change, HUD is your only source, they are the regulating body for RESPA
- Very well done. Puts the power in the consumerâs hands. This is the RESPAâs committeeâs way of saying, âIf nobody tells you, we have you covered. Just read it. It contains everything you need to know.â I read it cover to cover and I have to tell you,âŠitâs not missing much.
- # 1 determine what you can affordâŠnot your LO, not your agent, in fact you havenât found an agent yet. Some subtle messaging done here. You can actually get a chuckle out of it if you read it closely.
- # 1 determine what you can affordâŠnot your LO, not your agent, in fact you havenât found an agent yet. Some subtle messaging done here. You can actually get a chuckle out of it if you read it closely.
- # 1 determine what you can affordâŠnot your LO, not your agent, in fact you havenât found an agent yet. Some subtle messaging done here. You can actually get a chuckle out of it if you read it closely.
- # 1 determine what you can affordâŠnot your LO, not your agent, in fact you havenât found an agent yet. Some subtle messaging done here. You can actually get a chuckle out of it if you read it closely.
- Information particular to the borrower â this may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property or any other information that was used in providing the GFE New information particular to the borower or transaction that was not relied on in providing the GFE Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance or enviromental problems. HUDâs FAQs contain many examples of what may be deemed a âchanged circumstanceâ If there is a changed circumstance and the LO intends to issue a new GFE, they must do so within 3 biz days of receiving the information sufficient to establish the CC Must retain docs for 3 years
- Centerpiece of the reform. Goal was greater clarity and transparency. Only HUD could simplify a GFE from 1 page to 3.
- Centerpiece of the reform. Goal was greater clarity and transparency. Only HUD could simplify a GFE from 1 page to 3.
- Centerpiece of the reform. Goal was greater clarity and transparency. Only HUD could simplify a GFE from 1 page to 3.
- Centerpiece of the reform. Goal was greater clarity and transparency. Only HUD could simplify a GFE from 1 page to 3.
- Information particular to the borrower â this may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property or any other information that was used in providing the GFE New information particular to the borrower or transaction that was not relied on in providing the GFE Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance or environmental problems. HUDâs FAQs contain many examples of what may be deemed a âchanged circumstanceâ If there is a changed circumstance and the LO intends to issue a new GFE, they must do so within 3 biz days of receiving the information sufficient to establish the CC Must retain docs for 3 years
- Information particular to the borrower â this may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property or any other information that was used in providing the GFE New information particular to the borrower or transaction that was not relied on in providing the GFE Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance or environmental problems. HUDâs FAQs contain many examples of what may be deemed a âchanged circumstanceâ If there is a changed circumstance and the LO intends to issue a new GFE, they must do so within 3 biz days of receiving the information sufficient to establish the CC Must retain docs for 3 years
- Information particular to the borrower â this may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property or any other information that was used in providing the GFE New information particular to the borower or transaction that was not relied on in providing the GFE Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance or enviromental problems. HUDâs FAQs contain many examples of what may be deemed a âchanged circumstanceâ If there is a changed circumstance and the LO intends to issue a new GFE, they must do so within 3 biz days of receiving the information sufficient to establish the CC Must retain docs for 3 years
- Important dates: This section sets out the deadliines after which the loan terms set forth in the GFE may not be available to the borrower. Box 1: There are no restrictions on the amount of time the interest rate may be availabe; it is up to the LO; if the interst rate is not available for any period of time, this line should read âNot Available, N/Aâ. Box 2 MOST Important. The estimate for âall other settlement charges is available for at least 10 business days from when the GFE is provided to the borrower (i.e. if mailed, it would be from the date the GFE is placed in the mail to the borrower); if revisaed GFE is issued, the 10 business days runs from the time the revised GFE is provided to the borrower. If a change in circumstance â reissueâthen add 10 days. It canNOT change. Box 3: this box must be completed with the number of calendar days in which the borrower must go to settlement after the rate is locked; A range of days is not permitted; if the Lender does not offer a rate lock, then NA should be stated.
- Your initial Loan amount is the amount of the principal loan balance on the date of closing Loan term is the # of years (15, 20, 30) Initial interest rate â day of closing Even if you make payments on time, can your loan rise? Negative amortization. Repayment of any assistance from federal or state housing programs should be excluded from consideration. Prepayment. FHA loans do not have pre-payment penalty but some conv loans are out there and still have this.
- The first box is for the monthly pamount of the principal, interest and mortgage insurance (if applicable); this should be the same number entered above under âYour initial monthly amount owedâ This amount does NOT include what the monthly amount will be with escrows; Escrow account amounts will be entered on Page 2 of the GFE, Block 9. BTW, weâre still on PAGE 1 of the GFE. Do we require you to have an escrow account for you loan? Y or N? Summary of your settlement charges. This section cannot be filled in until Page 2 on the GFE is completed
- One bundled fee. All orig charges for lenders and mortgage brokers, including fees for admin and processing, underwriting, doc prep, application fee, wire, lender inspection, loan handling, other LO miscellaneous -- are included in the charge in Block 1 of GFE, âour orig chargeâ and should not be itemized separately. Block 2. For transactions without a mortgage broker, check the first box if the credit or charge for the interest rate is included in âour origination charge.â You Receive a credit. For transactions with a mortgage broker, check the second box if there is a credit to the borrower for the interest rate chosen You Pay a charge. W/ a mortgage broker. If there is a charge for the interest rate chosen (discount points). Charges cannot increase, Credits can increase. Block A. In this section, add block 1 and block 2 and enter total in block A. This number could be a negative # if the credit in Block 2 is larger than the charge in Block 1. This # could also be 0. YOUR CHARGES FOR ALL OTHER SETTLEMENT SERVICES. This includes charges for Block 3 through Block 11. Weâll dig into those blocks in just a moment. First letâs get a feel for these blocks using a real time scenario.
- Block 3. Required services that we select. This block contains the total charge for all 3 rd party settlement services (except title services) for which the loan orginator requires and selects the provider of the service. Borrower cannot select. Services include Appraisal, credit report, tax service, flood certification, up-front MI, VA funding fee Each required service provider and their charge must be listed on a separate line The total charges for all services must be entered in the far right hand column in Block 3 These fees can change by 10%. Bucket Matching HUD line Block 4 ALL lumped together. Title Insurance Fees (Title Exam, Title Search, Binder Fee, post-closing feesâŠ.) Plus Lenderâs Title. Attys are concerned about this line because itâs hard to estimate title insurance. Not cut and dry. Block 5. Ownerâs Title Insurance. Los will definitely need a fee sheet here. This block must be completed on all purchase transactions regardless of whether or not the borrower intends to purchase an Ownerâs Policy and regardless of whether the seller is paying for it. Refi na BLOCK 6 Required services that you can shop for (HUD Line 1301). Service provided by the loan originator where the borrower is permitted to shop. Survey, Pest inspection, etc. Each provider and their charge must be listed on a separate line. Remember the goal here. No changes.
- Block 3. Required services that we select. This block contains the total charge for all 3 rd party settlement services (except title services) for which the loan orginator requires and selects the provider of the service. Borrower cannot select. Services include Appraisal, credit report, tax service, flood certification, up-front MI, VA funding fee Each required service provider and their charge must be listed on a separate line The total charges for all services must be entered in the far right hand column in Block 3 These fees can change by 10%. Bucket Matching HUD line Block 4 ALL lumped together. Title Insurance Fees (Title Exam, Title Search, Binder Fee, post-closing feesâŠ.) Plus Lenderâs Title. Attys are concerned about this line because itâs hard to estimate title insurance. Not cut and dry. Block 5. Ownerâs Title Insurance. Los will definitely need a fee sheet here. This block must be completed on all purchase transactions regardless of whether or not the borrower intends to purchase an Ownerâs Policy and regardless of whether the seller is paying for it. Refi na BLOCK 6 Required services that you can shop for (HUD Line 1301). Service provided by the loan originator where the borrower is permitted to shop. Survey, Pest inspection, etc. Each provider and their charge must be listed on a separate line. Remember the goal here. No changes.
- Block 3. Required services that we select. This block contains the total charge for all 3 rd party settlement services (except title services) for which the loan orginator requires and selects the provider of the service. Borrower cannot select. Services include Appraisal, credit report, tax service, flood certification, up-front MI, VA funding fee Each required service provider and their charge must be listed on a separate line The total charges for all services must be entered in the far right hand column in Block 3 These fees can change by 10%. Bucket Matching HUD line Block 4 ALL lumped together. Title Insurance Fees (Title Exam, Title Search, Binder Fee, post-closing feesâŠ.) Plus Lenderâs Title. Attys are concerned about this line because itâs hard to estimate title insurance. Not cut and dry. Block 5. Ownerâs Title Insurance. Los will definitely need a fee sheet here. This block must be completed on all purchase transactions regardless of whether or not the borrower intends to purchase an Ownerâs Policy and regardless of whether the seller is paying for it. Refi na BLOCK 6 Required services that you can shop for (HUD Line 1301). Service provided by the loan originator where the borrower is permitted to shop. Survey, Pest inspection, etc. Each provider and their charge must be listed on a separate line. Remember the goal here. No changes.
- The meat. Truly the epicenter of the rule. Way HUD holds lenderâs feet to the fire Guts of the whole shindig Goal:simplicity, accuracy, clarity, and most of all, to encourage shopping
- The meat. Truly the epicenter of the rule. Way HUD holds lenderâs feet to the fire Guts of the whole shindig Goal:simplicity, accuracy, clarity, and most of all, to encourage shopping
- We are on page 7 in your handout. You may want to refer to it as the writing is very hard to read on this slide. At the bottom of this chart I have written out the three categories
- They are listed under each category. As an example. The charges which cannot increaseâOur origination charge..etc. On the top of page 8 I have written out the corresponding blocks for you that cannot increase. You also have a copy of the new GFE in your handout which you can read later.
- Purpose of this section is to show borrower how much their montly payment and settlement charges could adjust if a higher or lower rate was chosen. LO must complete the left column, not required to complete the middle and right hand column
- HUD envisions the borrower will shop lender to lender, then compare cost. This is strictly for the borrower.
- Today I want us to look at these changes with an open mind, however, as we review these changes, I want to identify the most complicated and troubling aspects of this ruleâŠall of which will enable you to respond to your clientâs questions and concerns. One of the concerns is actually buried on page 68,227âŠa decision to dump limits on loan origination fees.
- Purpose of this section is to show borrower how much their monthly payment and settlement charges could adjust if a higher or lower rate was chosen. LO must complete the left column, not required to complete the middle and right hand column
- Everyone will pick up their HUD-1 blank copy. Notice that on certain HUD-1 lines, the corresponding GFE Block # (i.e 31, #2, Block A is displayed off to the right on that line.
- It should be noted that HUD is continuously updating this. I encourage you to stay alert. Be awareâas one atty pointed out to us, the rules and the answers to the questions donât always matchâŠsome of the changes donât necessarily make sense. There are several inconsistencies that I will point out. And for that reason I encouarge you to write HUD (as I have) at the Washington DC address. I often feel that people on the street like you and me â our ideas and opinions are not represented. So letâs jump inâŠ