Good Faith "Estimate" HUD’s been trying to revise RESPA, in particular the GFE, to no avail for over 30 years. Shockingly, it actually happened this time!And now, all kinds of questions are popping up. Such as:

  • Are the new GFE and HUD-1 Settlement Statements effective 1-1-09, as I’ve been hearing? 8-O
  • Must the YSP still (unfairly) be disclosed by brokers and not lenders?
  • Must the Originator guarantee that the costs on the GFE won’t change? Is there any leeway?

EFFECTIVE DATE

First off, hold your horses and don’t panic; the whole thing isn’t mandatory until 1-1-2010. Once again, that is 2010 - as in more than a full year away.

…As usual, I cannot believe the mis-information that’s out there about the effective date!

Even the #1 Blog (By: Bonnie Wilt-Hild, Senior DE Underwriter & NAMP Instructor) from the venerable National Association of Mortgage Processors (NAMP) has the date as 1-1-09. That’s right around the corner and the thought is enough to scare the crap out of anyone. I’m hoping she will read my e-mail and correct the date.

So anyway, it’s 2010, okay? But that doesn’t mean you can ignore the whole thing. A LOT has changed. And besides, it will take a full year to deal with software and training.

The NEW FORMS

Before I answer the other questions, here are the links to the new forms along with a Fact Sheet from HUD:

HUD Fact Sheet

HUD’s standard Good Faith Estimate
HUD-1 Settlement Statement

YSP

Are you ready for this? There’s absolutely NOTHING on the GFE or the HUD-1 Settlement Statement that directly addresses YSP. I’m flabbergasted, but Brokers seem to have won this battle. If so, the playing field between brokers and lenders has been leveled a great deal by the new GFE & HUD-1.

According to the actual RULE, however, there is some question as to whether the broker must give the borrower their YSP, if received, on the top of page 2 of the GFE. (I took a copy of Page 287 from the actual rule if you want to see how it reads.)

I am definitely not an attorney and I’m curious to see how this will play out.

TOLERENCE For CHANGES in LOAN COSTS

You can read the allowable tolerances for yourself on page 3 of the GFE. There are some costs that you must honor exactly once they are disclosed; for instance, the loan origination fee. Others fees have 10% tolerance, and there are some charges that you don’t have to guarantee.

In the end, the originators who are completing the GFE are going to have to be much more educated about the borrowers’ costs, along with other program details.

ALTOGETHER

Personally, I think that the new forms are a step in the right direction to increased professionalism in the industry. I can’t say that I agree with each and every detail, but overall, I really like the changes.

If you are an originator - I highly suggest you download the new GFE form and spend some time with it. It isn’t mandatory for an entire year, but I believe it’s worth your time to get a jump-start.

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