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The New RESPA. What does it mean for us?

Good morning all! Yesterday I sat through an afternoon session on the new RESPA which will be implemented on January 2, 2010. Not my idea of a fun afternoon!

Here are my thoughts. One, I've noticed a lot of people seem to overreact about the changes in our industry. Case in point: The HVCC laws that were implemented May 1 of this year. Yes, we could no longer choose our favorite appraiser and values are occasionally coming in lower. But I've also seen a majority of reports come in fine and actually much quicker than before.

So what about the new RESPA changes to the Good Faith Estimate? The GFE will now be three pages long and there are a number of tolerance levels that are allowed. The big one that has zero tolerance is the interest rate cannot change from the Good Faith Estimate unless a new GFE is provided (re-disclosed). My company already does this anyway. The other big thing I noticed is that YSP must not only be disclosed (this has been enforced by wholesale lenders for a while now) but the borrower is paid this and then needs to pay the loan officer.

I'm sure there will be complaints about these new guidelines. Personally, I started in the mortgage business 3 1/2 years ago and have seen it all. I know we'll weather this storm as well. For those mortgage brokers out there who rely on YSP and hiding their pay, changing terms, etc., the gig is up. My boss commented that this may mean the end of the broker. I'm not so sure but will say this. As with anything it pays to be upfront. Disclose to your clients how you do business and how you get paid and there shouldn't be a problem. Ultimately, we're in the trust business. Our clients believe what we say. Shame on those who abuse the privilege. Thanks for reading! For more information on the new RESPA changes you are welcome to contact me. Have a wonderful day!

Paul McFadden

Posted by Paul McFadden Mortgage Loan Officer Bellevue Washington Home Loans on 11/05/2009 08:41 AM

Comments (9)

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9 Comments on The New RESPA. What does it mean for us?

NOV

One thing you can always count on is change. I think people need to embrace the change and not fight it!

Lisa: Thanks for commenting-I appreciate it! I agree with you. The better we are at adapting, the further we will be ahead! Have a great day!

Paul - when I started in the business (that means before dirt) there was no Truth In Lending Disclosure. Now that implementation was change! I think the new rules will make it more difficult for unscrupulous lenders to pull a bait at switch at the last minute so it should prove to be a benefit to the consumer - and to all of us in the long run.

Hi Paul, I wonder if we sat in the same webinar (AEA) yesterday? It seems to me that the regulators are trying to recognize that the borrowers just need the bottom line in costs, otherwise they wouldn't be "bundling" up all the fees onto one line for the lender and one line for the title company. I have 2 main questions left unanswered and I am going to endevour to get some answers to them on my blog. I submitted the quesions to the Susan Reiman Group and she said she would add them to her list. Thanks for your blogs & great spirit!

Julie: My company taught something here. I expect it to benefit us greatly as we really don't have a lot of junk fees like some lenders do. I talked with my processor, Jen, yesterday as I think its important that everyone double check their entries before committing. Take care.

Jane: Yes, change will always be a part of our business. I choose to embrace it because I truly love what I do so far! Take care.

Hello Paul, sounds like we have more procedures, which perhaps should have been in place a while back. I agree that it is important to be up-front and disclose how we get paid. Thanks for the update. John

I keep hearing that people are saying that the new RESPA rules will mean the end for the broker. I am calling BS on all of it. I always disclose my YSP to my borrowers and I have never had anybody complain or not do a loan with me because I get paid YSP. If the rate and fees are competitive, my borrowers have not cared one bit about YSP. The new RESPA rules will definitely mean the end of bait and switching but I think any brokers or loan officers that did this are close to out of business anyway.

John: The difference is the broker will have to explain YSP and the credit will be paid to the borrower who has the choice to pay it to the broker. I agree with you in that if a person is straightforward with their borrower about how they get paid it shouldn't be a problem. I wish you well!

John: You're welcome! I believe if we can't be upfront we probably don't deserve our clients business. That sounds kind of harsh but I have very little room for snake oil salesmen! Take care.

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