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The Final RESPA Rule
- 1. The Final RESPARule
- 2. Principles of RESPAReform • Help consumers shop for the best loan • Shopping leads to greater competition & lower prices 2
- 3. Principles of RESPAReform • Key final terms of the loan disclosed to the borrower at closing • Preserve a competitive market for all settlement service providers 3
- 4. Effective Dates January16, 2009 January 1, 2010 • Servicing • new GFE Disclosure Statement • new HUD-1/1A • elimination of 1% • average charge cap on FHA • technical changes origination fees 4
- 5.
- 6. GFE 6
- 7. GFE Notice Requirements •provided no later than 3 business days by hand, mail, fax, email • not required if application denied or withdrawn by borrower • may be provided by mortgage broker, but lender is responsible 7
- 8. GFE Triggers • borrower’s name • Social Security number • property address • monthly income • house value or best estimate • amount of loan … & any other information 8
- 9.
- 10.
- 11. Summary of yourloan 11
- 12. Summary of yourloan 12
- 13. FHA Monthly Interest The monthly accrual of interest on an FHA loan is not considered a prepayment penalty. 13
- 14.
- 15. Summary of yoursettlement charges 15
- 16. GFE Page 2 16
- 17. Block 1, “OurOrigination Charge” Must contain ALL charges by ALL loan originators in the transaction 17
- 18. Old GFE vs.New GFE for Loan Origination Fees origination fee/point mortgage broker fee processing doc prep commitment application wire MERS registration underwriting delivery/courier admin doc review electronic miscellaneous “Our Origination Charge” 18
- 19. Block 2, YourCredit or Charge 19
- 20. Example 20
- 21. All Other SettlementServices 21
- 22. Written List If aloan originator permits a borrower to shop for services (Block 4, 5 & 6), the loan originator must provide a written list of providers that the estimates were based on. 22
- 23. Written List • Mustbe provided with GFE on a separate piece of paper • Must include at least one provider of each shoppable service. 23
- 24. Old GFE vs.New GFE for Title Services settlement fee abstract/title search title examination doc prep attorney fee commitment/binder notary wire fee lender’s title insurance endorsements courier/delivery copying electronic miscellaneous “Title services & lender’s title insurance” 24
- 25. All Other SettlementServices 25
- 26.
- 27. Which charges canincrease 27
- 28.
- 29.
- 30. Changed Circumstances • Actsof God, war, disaster or other emergency • changed or inaccurate information provided by borrower after issuance of GFE (e.g. credit quality, loan amount, property value, or other information) 30
- 31. Changed Circumstances If circumstanceschanged affecting settlement costs or loan: • provide revised GFE within 3 days • revised GFE may reflect only the increased charges 31
- 32. Borrower Requested Changes Loan originator may provide new GFE within 3 days 32
- 33. Interest Rate: notlocked If borrower does not lock interest rate within time period & the interest rate changes, a new GFE must be issued 33
- 34. Expired GFE If borrower does not express intent to proceed with the loan after 10 business days, or longer if specified by originator, the GFE is considered expired. 34
- 35. New Home Purchases If settlement is anticipated to be more than 60 days after GFE, originator may disclose on separate piece of paper that the GFE may be revised any time up to 60 days before settlement is anticipated. 35
- 37.
- 38. Lines 204 –209: principal amount of additional loans May also show 2nd loan proceeds 38
- 39. Seller (or other)Paid Items • all GFE charges; put in borrower’s column on the HUD-1 • credit to borrower from seller in Lines 206 – 209 &Lines 506 – 509 • credit from party other than seller, must identify party giving credit on HUD-1 39
- 40.
- 41. HUD-1 Page 2 41
- 42. 700s Example 42
- 43. Line 801 &802: listed outside column Line 803: listed inside column 43
- 44. IRS: Origination PointDisclosure May be disclosed in Line 801… or… 44
- 45. Place asterisk inLine 801 & reference on bottom of page 2 on the HUD-1. 45
- 46. Lines 804 thru807: charges in borrower’s column 46
- 47. Lines 901 –904: charges inside column 47
- 48. Line 1001: chargeslisted inside column Lines 1002 – 1007: charges listed outside column 48
- 49. 1100s - Titleservice: definition “Title services” Means any service involved in the provision of title insurance 49
- 50. 1100s - Titleservice Includes, but is not limited to… - title examination & evaluation - preparation & issuance of commitment - preparation & issuance of policies - all administrative services & processing services required to perform these functions 50
- 51.
- 52. Line 1102: Itemized3rd Party Charge 3rd party borrower charge listed outside column 52
- 53. Line 1102: SellerCharge Separate seller charge in seller’s column. 53
- 54. Summary: Outside Column Line1102 – settlement/closing fee Line 1104 – lender’s title insurance premium & related endorsements Line 1105 – lender’s title policy limit Line 1106 – owner’s title policy limit 54
- 55. Summary: Outside Column Line1107 - $ of title insurance premium + endorsements retained by agent Line 1108 - $ of title insurance premium + endorsements retained by underwriter Line 1109 et seq - title charges paid to 3rd parties 55
- 56. 1200’s: Inside thecolumn charges 56
- 57. 1200s: Outside thecolumn charges 57
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- 60.
- 61. Charges That CannotIncrease 61
- 62.
- 63.
- 64.
- 65. Charges That CanChange 65
- 66. Right-to-cure: tolerance Charges exceeding tolerance not a violation of RESPA Section 5 IF cured within 30 days after settlement 66
- 67. Loan Terms 67
- 68. Loan Terms 68
- 69. Loan Terms 69
- 70. Right-to-cure: errors Inadvertent or technical errors not a violation of RESPA Section 4 IF revised HUD-1 is provided within 30 days after settlement 70
- 71.
- 72. Average Charge • maynot average on charges based on loan amount or property value (e.g. transfer taxes, interest charges, escrow reserves & all insurances including title insurance) 72
- 73.
- 74. FAQs Q: If aloan originator contracts loan document preparation to a third party, is this a separate charge on the GFE and the HUD-1? 74
- 75. FAQs A: No, loanloan document preparation is a processing and administrative service in the origination of a loan and is included in Block 1 of the GFE and should not be separately itemized. 75
- 76. FAQs Q: If thereis a “changed circumstances”, when does the loan originator issue a new GFE? 76
- 77. FAQs A: When thereis a “changed circumstances” and the loan originator intends to issue a revised GFE, the loan originator must do so within three business days of receiving information sufficient to establish changed circumstances. 77
- 78. FAQs Q: If aborrower pays some of the origination charge prior to closing, how should it be disclosed on the HUD-1? 78
- 79. FAQs A: The chargefor origination must be shown on Line 801 of the HUD-1 to the left of the borrower’s column in the 200 series. 79
- 80. FAQs Q: If acharge was calculated using average charge, may the charge be waived or discounted? 80
- 81. FAQs A: Yes. Discountingor waiving a charge calculated using average charge is permitted. 81
- 82. FAQs Q: If statelaw requires further itemization of title service, title insurance related fees, or title policy endorsements, how should these fees be listed on the HUD-1? 82
- 83. FAQs A: Those feesmay be itemized on blank lines in the 1100 series – charge outside the borrower’s column. Endorsements may be listed in Lines 1103 & 1104 – charge outside the borrower’s column. 83
- 84. FAQs Q: If borrowerpurchases a Lender's & Owner's title insurance policy & receives a simultaneous issue discount, is the discounted amount for the Lender's policy listed in Line 1104 on the HUD-1? 84
- 85. FAQs A: Yes, thesettlement agent must record the actual charge of the lender’s title insurance premium & related endorsements in Line 1104. 85
- 86. FAQs Q: If aborrower selects an attorney to represent the borrower‘s personal interests at settlement, where is this attorney‘s fee disclosed on the HUD-1? 86
- 87. FAQs A: May beseparately listed on a blank line in the 1100 series in borrower‘s column with the name of the attorney & the type of service provided. 87
- 88. FAQs Q: Should theloan originator quote the charge for a basic owner‘s title insurance policy or an enhanced owner‘s title insurance policy on the GFE? 88
- 89. FAQs A: Loan originatorshould quote rate for the basic owner‘s title insurance policy. If borrower chooses an enhanced owner‘s policy before GFE is issued, loan originator should quote the rate for an enhanced policy. 89
- 90. Department of Housingand Urban Development Office of RESPA & Interstate Land Sales 451 7th Street SW, Room 9154 Washington DC 20410 (202) 708-0502 hsg-respa@hud.gov www.hud.gov/respa 90