Carolyn Hubbard taught a class last week on the New HUD-1 and the New GFE. Thre were 15 very important questions asked and we have transcribed the answers for those of you who could not attend.
A special thanks to Carolyn for all her knowledge and willingness to help us figure this out.
Thanks again for attending the New HUD (Pre Audit) Basics class on Tuesday. As promised I have researched some answers to questions that were asked.
Please remember this is "not bad, just different”.
• The Lender creates the GFE and the Settlement Agent creates the HUD-1
• The GFE needs to be provided to the borrower within 3 days of application
• The GFE is available for 30 days
• The borrower must be provided the TIL (as well as the appraisal) 7 days prior to COE
• The Escrow Officer must have the GFE to provide the initial HUD
• The HUD and GFE have to balance
1) How will HUD enforce the GFE?
On November 13, 2009 the US Department of Housing and Urban Development (HUD) announced that for the first four months of 2010, the staff of the Mortgagee Review Board (MRB) will exercise restraint in enforcing the new regulatory requirements under the RESPA act, due to take full effect on January 1. The MRB instructed its staff to exercise such restraint in considering an action against FHA-approved lenders who have demonstrated that they are making a good faith effort to comply with RESPA ’s new requirements. (http://www.help.freehomeownershiphelp.org/?p=453)
2) Has it always been 3 days in order to conform with the GFE?
Past history the GFE has been provided at the time of application
3) Does the new GFE affect the pre-qualifying period?
Not really, the new GFE needs to be good for 30 days, a buyer may get one or more during a buying process. (So if a buyer takes 6 months looking they could have multiple GFE’s, if they talk to 12 different lenders, they could have 12 GFE’s)
4) If it’s less than 30 days and interest rate goes down can we change the GFE?
Remember any fees may decrease and only some may increase (check out page 3 of the GFE)
5) Where on the GFE does the buyer sign?
RESPA does not require that borrowers sign the GFE. It only requires that lenders and brokers send the GFE out to the borrowers within 3 business days of receipt of application. http://mortgageprocessor.org/loan-processing/comments.php?DiscussionID=74
6) If your EO has a problem with the GFE who will they call first?
Our staff is trained if there is a problem with any document/fee regardless of the document, they are to call the person initiating the document, so in this case it would be the lender. They may not necessarily be the individual loan officer, could be a processor, or the document drawer, we would look to the lender instructions for direction.
7) What are the things HUD doesn’t have answers for?
There are many things that will need to be worked out, again remember this is not bad, just different.
8) When you are doing a short sale how will GFE affect the short sale?
Personally, I do not believe this will affect the short sale lender. There may be a need for a new GFE during the process, however, it may actually help the short sale lender to know the new buyer has a limited time to COE. Again, I believe we are going to have to see how this plays out. At our office, everyone is trained to prepare a pre audit for a short sale, so we are able to get it back out often within an hour of the request. Remember the phrase “time is of the essence” it’s key.
9) Where are the title fees disclosed in the HUD?
Page 2 line 1101 is the Buyer Title Services and lender’s title insurance
10) Where are the buyer and seller acknowledgements to the HUD?
They will be on a separate page, I simply did not print them for the class. Sorry.
11) When title fees are lumped is there going to be any way to tell what the total fee is for?
Again, this is like comparing “apples” and “oranges” --- a lump sum means there are no breakdowns. A lump sum will be an “all inclusive fee”.
12) Are the bundled fees going to be jacked way up?
Right now, all the Arizona title/escrow companies in the area are working on this “lump sum”. The biggest question seems to be what will be included, notary or not? If there is an allowance for a mobile signer, what would the lump sum be? As escrow, we don’t know when loan docs will hit escrow, or where/when the borrower believes they are signing. Although it could be paid by borrower in the #1300 section, many times we’re asked to absorb the cost, making it difficult to project our expenses. For now, we like our counterparts are using our rates filed with DFI. Need a specific cost, call the office, again the entire staff is trained to help out with this.
13) Who can bridge the gap when fees are too high?
We will no longer be able to waive fees at COE in order to “help out” as our fees are disclosed in the GFE, so we should not see surprises after docs arrive.
14) When are the rates going to change in the MLS?
That question would need to be posed to ARMLS.
15) How will this affect foreign investors?
Remember RESPA only affects borrower applying for a loan, so a foreign investor would need to comply with the lender requirements. CASH BUYERS ARE NOT AFFECTED. By the way, here’s the link to: “HUD’s Settlement Cost Booklet”, released December 17, 2009 http://portal.hud.gov/portal/page/portal/HUD/documents/Settlement%20Booklet%20December%2015%20REVISED.pdf
Thanks again for attending the class, if you have any questions, please call one of us.
We’re here to help. So, help me help you---Open the escrow with Great American Title East Valley, we understand “time is of the essence”.
Carolyn Hubbard, Vice President Great American Title Agency, Inc.
1630 S Stapley Dr., #131 Mesa, AZ 85204
Phone: (602) 324-2080 Fax: (480) 483-0724