Real Estate Blog - Know Your Forms - New RESPA Closing Documents On The Way!!!

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Know Your Forms - New RESPA Closing Documents On The Way!!!

Come January 1st, 2010, as a REALTOR or a consumer at the closing table things are about to change as far as the Good Faith Estimate (GFE) and Settlement Statement (HUD-1). Links below will allow you to print these out to familiarize yourself with them. Both now are three pages in length. The highlights:

Revised Good Faith Estimate (GFE)
GFE tolerances on settlement costs (1/8 point allowed to be in error)
Revised Settlement Statement (HUD-1)
Revised definitions for application, Good Faith Estimate, and Mortgage Broker
Additional definitions for changed circumstances, origination services, loan originator, prepayment penalty, third party, title service and tolerance
Elimination of 1% origination fee cap on FHA loans

RESPA (Real Estate Settlement Procedures Act) forms apply to federally insured or backed loans such as FHA/VA/Conventional and NOT cash deals. There is also a 30 day cure period to give lenders after closing the ability to meet the tolerance. The closing script is eliminated as it is contained in the revised HUD-1. Average charges can be used by service providers and is not limited to loan originators.

Bottom line is it looks like the new GFE and HUD-1 want the borrower to be as crystal clear on everything related to the loan. It looks like the fastest you could go from app to close is about three weeks. On page three of the new HUD-1 boxes compare GFE and HUD-1 costs. On page 3 of the GFE they clearly in the instructions state what charges CANNOT increase past the GFE, can increase up to 10%, and what charges can change. It is VERY clear. The only thing weird I saw on both the new HUD-1 and GFE is it never clearly says the PITI monthly payment but just principal, interest, and mortgage insurance in the loan terms.

It looks a lot different for most of us, but print yourself out a copy and take a look. January is NOT that far off.

Revised Good Faith Estimate (GFE)

Revised Settlement Statement (HUD-1)

With closings averaging 130 pieces of paperwork both the REALTOR and the consumer need to know about these documents ahead of time. One last tip for both groups in this area, be sure to show up at the table with a U.S. government issued ID with a picture and your signature. This is mandatory for identification purposes. Good luck and happy closings!!!

Posted by Gary Woltal - Associate Broker REALTOR® Dallas Ft. Worth on 11/03/2009 06:46 PM

Comments (69)

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69 Comments on Know Your Forms - New RESPA Closing Documents On The Way!!!

NOV

It's all for the better, I think, Gary. Especially when there is a realtor out there who will watch for his/ her clients. You're right. We need to familiarize with these new changes.

Gary..I am taking Risk management course in the morning ..continuing ed..required in Pa..I wonder if this will be in the course..thanks for the info

Gary - Thanks for this info and sharing the documents. I have downloaded them to share with others...and printed a set for me to absorb into my brain.

Gary:

This is going to interesting for the first couple of closing after the 1st of the year.

Thanks Mr. W.

I love this post....will reblog in a few days for my sellers and buyers in Ann Arbor.

yes we need to know how to read one and what to expect.

Thanks for being forward thinking.

Thanks Gary...I new these were coming out, and now I have the links.

Thank you sir for the links. It is good to see that things are moving along in a right direction.

I think that Missy is on to something, this does need to be reblogged.

Thanks for the preview. These docs are consumer friendly.

Congrats on the feature!!!!!!!!!!!!!!!!!!!!!!!!!!!

Gary, This is the first time I have seen the new forms. I think they are MUCH improved. I'm thrilled and the buyers will have a clear picture of the transaction, don't you think? Thanks so much for sharing this! Have a great week my friend :)

Gary,

What a great resource..and you are right we need to familiarize ourselves...congrats on your feature...!!!!

Thanks for sharing. it will be a big change to see all these new docs after having the old ones for years.

I just saved them to file so I can go over them....thanks Gary!

3 weeks would be fantastic! haha. Gone are the days of fairly easy 2 week closings from start to finish. But in the name of buyer safety everything gets more expensive takes longer.!

Agents can no longer tell clients to bring the amount on the Good Faith Estimate to settlement because the form does not have a space for that number. Go figure!

GAry...

I knew the changes were coming but thanks for this well written explanation and the links. Very, very helpful!

Thanks Gary for the heads up. I've heard about this, but you are right, the time is getting near. I'm going to check out the links next.

Thank you Gary!! Will definitely pass it on.

Gary, we talked about this in our sales meeting this am. Thanks for the links, definitely want to check these out.

Some lenders are implementing the new GFE in early December - not waiting for the first of the year. It's a huge technology and training challenge for the bigger institutions. Hopefully the smaller title companies and title attorney firms (Delaware requires an attorney conduct real estate settlements) will be ready.

Some of these changes/forms are very confusing. I must admit, it will take a while until everyone understands all of the changes.

Thanks for the heads up Gary and congrats on the feature!

Gary thanks for the update. It is not a surprise that these changes would enacted after the recent mess.

Gary, Thanks for posting these forms. I do want to take a look at them and familiarize myself with these.

valerie oseterhoudt

Gary - I really appreciate you posting these. I had heard about the GFE changes, but I didn't even realize that the HUD was also changing. Much appreciated!

Imagine that Gary, changes in the business. Thanks for taking time to share with us.

I have been hearing about this.. Thanks for the update. Everyone should know this in advance.

Gary

a title company rep was telling me about these new items. As with most things I am sure they have to do with the troubles lenders and consumers have experienced over the last few years.

Thanks for the post Gary and for the links. Very helpful.

Denise

NOV

Thanks Gary. You're right, never too early!

Thanks Gary -- I knew about the GFE change but not that the HUD would be changing as well. I appreciate you keeping us informed and the links. I've downloaded the links.

Again, thanks.

Sue of Robin and Sue

Thanks Gary this is a great post and I am going to reblog it for the folks in my area... really good information... we know its coming and you are helping us get ready! thank you!

Gary,

Thanks for a very informative post. The links were helpful.

I know that the Big Banks in America got on this early and I don't expect any issues there, thank goodness.

I also saved a copy from your links to go over later and mark up...

Thanks so much!

Judi

as i unsderstand it if the APR changes 1/8 after the interest rate is locked you can not close for 3 days...if this is true Realtors beware...the buyers and kids and friend and moving van are are closing on a Friday of a long weekend and because the APR changed the deal has to wait 3 biz days to close

I could be incorrect,

Taking a three hour course on it today. Sounds like it will be helpful to the consumer.

Dana-

You are correct. If there is 1/8 change in the APR, which could mean as little as a $50.00 change, the GFE and Truth in Lending statment has to redisclosed and you cannot close for three business days. This is all a bunch of nonsense in the guise of consumer protection.

Gary:

Thank you for posting these new forms along with your thorough explanation. We all need to know about this.

Thank you for the postings and for making us aware of what these changes mean.

Someone just gave me copies of the two new forms , but I've yet to review them ! You're right Jan 1 is less than 60 days !

EXCELLENT POST, Gary! As always, thanks for keeping us in the industry up on the state of the art!

I'm glad pointing everyone to these new forms has been helpful. The GFE and HUD-1 comparison boxes are going to be the tricky parts for the lenders to fill out. Some Mortgage Brokers that skated by changing many charges at the last minute are not going to be able to get away with this anymore. Hopefully, the terms of the loan will also be much more self-evident to the borrower as they read the forms. That is the intent at least.

Thanks Gary,

Anything to help protect the consumer is welcome. Thanks for the heads up.

Gail

Gary - Just recently we had a class about this very same subject, unfortunately I could not attend but I'm so glad you updated and pointed us to the forms. Thanks a million!

I am printing them out right now. Thanks for the heads up. Wonder why we haven't heard about this sooner?

Gary--thanks so much for these links. I'm downloading them right away so I can really look them over in depth. Congrats on a well-deserved feature!

Let me join the chorus and say thanks. I will send these to my team. We will follow the six P's.

Paperwork. These are the good old days twenty years from now when we look back and say remember when you only had to kill three trees to produce the paperwork to have that real estate closing. It pays to stay sharp, in compliance with the rules, regulations, laws.

Gary - I just hope this change does some good:) Most of this, in my view, would be unnecessary had folks practiced that often foreign concept when it comes to a dead president - honesty.

Gary, Thanks for the head start with with the new changes - I'll print them out.

These are fantastic forms. They definitely are more consumer friendly than the current forms. There should be a lot less confusion on the buyers part. I know these forms have always been a question with buyers I have worked with. Thank you for sharing these Gary. I will share these!

Gary, thanks for the information and sharing the links. Very helpful to be ahead of the game.

Gary, great post. Some of the lenders here in Chicago have already been using the new RESPA. I think it is a great idea to let the consumer know now. Thank you for the links. Will share to Chicago. Congrats on the feature!

Gary, great information and thanks for sharing this. We have to have something new all the time to keep us on our toes.

Wonderful! Thank you for the links! We all need to keep up with the changes affecting our business.

Gary - January is just around the corner. Thank you for sharing this information.

Good information to know. It sure would be nice if they could stop messing with stuff.

Thanks for the information! From what I have heard recently, there is also a 3 day curing period if there is a glitch with the Truth in Lending. So look over your HUD-1's very closely as far before closing date as possible!

No January is just around the corner. Thanks for the links to the new pages.

Gary ~ Thank you for the links and the highlights we need to know. I printed to be studied so I will be prepared. I did take a free course on this some months ago but you know I can not remember everything.

good post and good heads up for everyone

This looks important to review before the turn of the new year!

Hi Gary,

Thank you for the information & the link. January will be here soon! Good post! Thanks for the heads up!

Chris

NOV

This is a great change. I will look over the new documents. Thanks for the info

I opened the file you so graciously posted, thank you. I like it. Simple to read, and helpful to the consumers.

Hi Gary,

We have been attending classes on the new forms and it will be a change! It is going to leave no doubt to the buyer what his obligation will be at closing. The process will feel overwhelmingto many. Thanks for your concise explanation.

From what I hear, this will be postponed at least 6 months. Neither the lenders nor the title companies are anywhere near ready to comply with this law. The form is flawed at best, and the RESPA and TIL requirements are conflicting.

Many of the major banks have already told HUD that if this takes effect 1/1/10, they may stop lending as they are unable to program their operations in time to comply.

It will be June before this goes into effect.

NOV

I sit through a three hour class on this today. I'm not sure if I understood it correctly. But it will be interesting to see how some things are handled! As I understood it, HUD is going forward with this anyway. Lenders need to get ready. They can loan, or not loan.

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