Since the beginning of 2010 rwe have all been using the "new" HUD-1 settlement statement. The purpose of this revised HUD was supposed to enable consumers to make informed decisions relating to the cost of thier real estate transaction. The THEORY was sound, the end result though is that nothing has changed. EXCEPT that in some cases the consumer is actually paying MORE for settlement services than they may have been post 2010. Prior to the revised HUD an agent or lender would call our office, request a preliminary HUD and presumably would then share the ITEMIZED costs with the consumer. This same scenerio still plays out daily. But the revised HUD does not enable us to itemize the cost of title services, but rather shows title related fees as a lump sum. Because of the "new" rules relating to tolerances many lenders are quoting well over 50% more for title related fees on their GFE because if their estimates are off they, thhe lender, have to pay the difference. I see this day in and day out. And really, iI fully understand why the lenders overestimate. BUT as a result of these over estimtes, many consumers are paying far more for settlement services than they should be. Lets take a real life example: Lender calls our office for a quote. We submit a HUD to lender with title service fees LUMPED as is required by HUD. We also submit the non-required 3rd page of the HUD, our itemization of our fees. In many, if not most cases, the lender takes the HUD we submit to them, add a buffer (to account for overages on their estimate) and use the increased figure for their GFE. There is nothing wrong with the lender doing this, and if I were a lender, I would likely do the same. But because the consumer rarely sees the itemization in advance of closing, (if ever) they don't realize that the buffer has been added. Now on the date of closing we receive the closing package, which includes the final GFE. In many cases the final GFE reflects the original estimate of costs reating to settlement providers fees. Because the lender has quoted settlement service fees higher than what may have been originally submitted to the lender some settlement providers have taken to bumping their fees at closing to.meet the fees disclosed ON THE FINAL GFE. Thus the consumer ends up paying more for settlement services than they would have IF they had been able to see the itemization of fees. Thhere are no rules in place to preclude settlement service providers from making heir final fees the same as those disclosed to the consumer initially by the lender. I find this practice abhorent! When we offer a quote for settlement services it remains the same from day 1! We don't bump our fees last minute and take advantage of unsuspecting consumers. Please, whenever you are asking for a preliminary HUD make sure that your settlement service provider is giving you the itemization page and PLEASE share that page with your client. And then at closing make sure that the buyer is not being overcharged.
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