New hud rules and respa reform
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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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