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NEW HUD RULES AND RESPA REFORM. January 22, 2010 Julie M. Palmaccio, Esquire Cushing & Dolan, P.C. Attorneys At Law 375 Totten Pond Road, Suite 200 Waltham, MA 02451 (P) 617-523-1555 (F) 617-523-5653. EFFECTIVE DATE. January 1, 2010 New GFE and HUD-1. NEW GFE.

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new hud rules and respa reform

NEW HUD RULES AND RESPA REFORM

January 22, 2010

Julie M. Palmaccio, Esquire

Cushing & Dolan, P.C.

Attorneys At Law

375 Totten Pond Road, Suite 200

Waltham, MA 02451

(P) 617-523-1555

(F) 617-523-5653

effective date
EFFECTIVE DATE
  • January 1, 2010
  • New GFE and HUD-1
new gfe
NEW GFE
  • Lender or Mortgage Broker
  • Must provide New 3 Page GFE
  • To all Potential Borrowers
  • Within 3 Days of Application
  • Without cost to Borrower
    • Except the cost of the credit report
new gfe cont d
NEW GFE cont’d
  • To Include
    • Name
    • Social Security Number
    • Loan Amount
    • Estimated Property Value
    • Monthly Income
    • Property Address
      • Without an address it is simply a pre-qualification
new gfe cont d2
NEW GFE cont’d
  • Page 1
    • Loan Amount
    • Loan Terms
    • Rate and Lock Date
new gfe cont d3
NEW GFE cont’d
  • Requirements for
    • Escrows
    • Prepayment Penalties
    • Balloons
    • Adjustments
new gfe cont d4
NEW GFE cont’d
  • Dates:
    • Rate Quote
    • Rate Lock
    • Fees Quote
new gfe cont d5
NEW GFE cont’d
  • Loan Amount
    • Term
    • Rate
    • Payment
    • Features
    • Escrows
new gfe cont d7
NEW GFE cont’d
  • Page 2
    • Origination Fee
    • 3rd Party Loan Fees
    • Title Fees
    • Owners Title Insurance (separate)
    • Other Services
    • Recording Fee
    • Transfer Tax (if on GFE buyer must pay with front page credit)
    • Escrows
    • Interest
    • Homeowners Insurance
new gfe cont d8
NEW GFE cont’d
  • Availability
    • Prices and terms quoted must be good for 10 business days after issuance of the GFE
    • If no further action by potential borrower after 10 business days lender/broker no longer bound by GFE
new gfe cont d10
NEW GFE cont’d
  • Page 3
    • Tolerances
    • Three Categories
      • Zero Tolerance
      • 10% Tolerance
      • Unlimited Tolerance
new gfe cont d11
NEW GFE cont’d
  • Zero Tolerance
    • Lender Charges for “doing” the loan
    • Points or Origination Fees
    • Transfer Tax
new gfe cont d12
NEW GFE cont’d
  • 10% Tolerance
    • Aggregate of all charges
    • Lender required settlement services where lender selects or borrower selects from a lender provided list
    • Title Services and Title Insurance
    • Recording Fees
new gfe cont d13
NEW GFE cont’d
  • Unlimited Tolerance
    • Services where borrower selects the provider
    • Escrows
    • Per diem
    • Homeowners Insurance
new gfe cont d14
NEW GFE cont’d
  • Page 3 also contains a chart for comparing different loans
new hud 1
NEW HUD-1
  • First Page unchanged
    • Except space added for Settlement Agent’s phone number
new hud 12
NEW HUD-1
  • Second Page
    • Made to look like the GFE
    • Fees divided by “Box” Number
    • 801 & 802 “Outside the Column” (in text area only)
    • 803 “In the Column” (what is charged to the borrower)
    • 804-808 “In the Column”
    • 901-904 “In the Column”
    • 1001 “In the Column
    • 1002-1007 “Outside the Column”
    • 1100 Series “Title Charges”/Box 4 Charges
      • Title Exam
      • Document Preparation
      • Attorney Fee
      • Lender’s Title Insurance
    • Owners Title Insurance Premium Disclosed Separately
new hud 14
NEW HUD-1
  • Page 3
    • Completely New
    • GFE Estimates
      • Left column
    • HUD1 Actual
      • Right column
    • Grouped by Tolerance
    • Bottom of the Page
      • Recap of loan terms
gfe hud 1
GFE/HUD-1
  • Inadvertent of Technical Error
    • Not a violation if revised HUD1/1A is provided to borrower and /or seller with 30 calendar days
  • Variation on the Tolerances
    • Not a violation if the lender reimburses the borrower any amount by which the tolerances were exceeded at settlement or within 30 days thereafter.
  • Change of Circumstances
    • Acts of God
    • Inaccurate Info used to prepare GFE
    • New Information not relied on to prepare GFE
    • Particular Information regarding the transaction
gfe hud 11
GFE/HUD-1
  • Many aspects of the new GFE and HUD-1 remain untested and unclear
  • HUD offers some guidance via Frequently Asked Questions (FAQs) posted on their website at

http://www.hud.gov/utilities/intercept.cfm?/offices/hsg/ramh/res/resparulefaqs.pdf

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