Mortgage Talking Points

LO’s are again asking about the RESPA rules — about when you can legally pay an affiliated party a referral fee.  Dr. Gary Lacefield, RESPA Expert, has provided a RESPA REFERRAL FEE MATRIX and you can find it in the Charts & Checklist section of www.MortgageCurrentcy.com

Here’s the link to download the January 28, 2010 RESPA FAQ.

34 questions/clarifications - changes are in BOLD LETTERS - Answered some questions that were hangin’ out there! 

www.hud.gov/respa

The 49 page consumer booklet has just been released on HUD’s site.  You’ll need to start using it on Jan 1, 2010. 

 It’s the best I’ve seen–and recommend that you use as YOUR tool to explain the process to your clients.  Suggest you start on Page 11, called “Your GFE Step-By-Step”.  Hold a sales meeting with Real Estate Agents and review the booklet with them as they will be getting questions about it too.  (Pages 4-8 apply to them)

On the same page link, you’ll also find a 29 page ”power point presentation” by HUD called ” RESPA Training - Dec 2009″  No audio but suggest you print and review. 

http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm

I just read the August 13 “New RESPA Rule FAQ’s” interpretations–and now it’s been updated on August 19. The way I see it, it creates MORE Questions than answers–so much for making things clearer.

The main reason to read the FAQ is for the INSTRUCTIONS on how to fill out the new Good Faith Estimate that is mandatory on January 1, 2010. 

After reading it, it seems like there is LESS disclosure because it is mandatory that costs (by line item) be lumped together.  For example, Page 2 under the heading “Our Origination Charge”,  you only need to enter ONE NUMBER to include processing, applicaiton. admin fess, underwriting, doc prep, wire transfer fee, lender inspections, loan handling and other misc. fees…

…and the fun just keeps right on coming–as you go line-by-line to figure out what costs go where! If you’ve downloaded the August 13th one, throw it away! 

http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm (link to the 8-19-09 RESPA FAQ)

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? 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.