Archive for the ‘GFE (Good Faith Estimate)’ Category

Round 2- New Settlement Statements (HUDs) Released for Comment.

Monday, December 19th, 2011

As discussed in our last blog entry the Consumer Financial Protection Bureau (CFPB) is moving rapidly to revamp the HUDs and TIL into one combined form.  The two newest versions are Mimosa and Sassafras.  Check them out.

The first page Mimosa is essential the same as Sassafras, but then the forms take dramatically different approaches in laying out the fees and costs associated with the closing.  Another major change is the increasing number of legal disclosures towards the end of both versions of the forms.

Vote on your favorite (between these two) and provide comments to help them improve the final product.  Based on what we have seen since the last round, consumers and industry comments are having an impact on the changes being made to the forms.

Settlement Statements (HUDs) to Change

Friday, December 2nd, 2011

 The Consumer Financial Protection Bureau (CFPB) has taken over regulation of the Settlement Statements (commonly known as HUDs), Good Faith Estimates, and Truth in Lending Disclosures (TIL) and other various mortgage disclosures.  (The CFPB’s explanation on why they are combining disclosures).

The CFPB is currently working on combining the HUD and the TIL into one document.  Many real estate agents, lenders, and title companies have complaints and problems with our current forms and now is time to have your voice heard.  Here are the CFPB’s first two drafts:  Hornbeam and Ironwood.  See what you think. 

It is our understanding that there will be 3 to 4 rounds of sample forms followed up with the final forms being presented in the summer of 2012 for final comment.  Our hope is these forms will ultimately remove the RESPA required disclosure of certain closing fees in a confusing manner; such as lump sum fees, fees being shifted from the seller to the buyer, and credits for shifted fees.  Check back with our blog as we will keep you updated on the release of future sample forms.

Does $775 = Loan Fraud?, by Inwest Title a Utah Title Company

Friday, October 29th, 2010

Despite being provided HUD settlement statements three days prior to a scheduled settlement, the buyers’ agent did not review those statements until two hours prior to the appointment. He immediately called to inform the escrow officer that the purchase price was low by $775. Asked if he had sent an addendum showing the new sales price, he replied that he didn’t know he was supposed to.

He was then informed that because the lender also was not given a copy of the addendum with the new sales price that the file would have to go back through underwriting. He was mortified. He explained that his clients had to settle that afternoon or lose the house. Then he called back to say that he was told it was ok for the buyer to pay the seller $775 outside of closing.

Hmmm… Why is this loan fraud?

Somewhere, behind the scenes of a loan transaction is a person or entity who is actually loaning the money for the purchase of the property. It’s their money and to protect themselves from making a bad loan, they hire an underwriter to delve into the ins and outs of the transaction. The borrower needs to be scrutinized and the property needs to be scrutinized.

Once the underwriter gathers all the facts, they are presented to the lender. Based on the purchase price, the loan amount, the appraised amount, the borrowers’ ability to repay the loan, etc. the lender makes a decision. If any of those details presented to the lender are actually false, the loan is then made on false pretense and therefore is consider loan fraud. All details of the transaction must be presented to the lender in a truthful manner. So, yes, $775 can equal loan fraud.

In this case, how could the problem have been avoided?

1- Real estate agents should send every addendum to the title company and to the lender immediately upon execution.

2- Real estate agents and loan officers must carefully review the HUD settlement statements with their clients immediately upon receipt. It’s why those statements are sent to them ahead of time in the first place.

FYI, in this case, the underwriter reviewed the file quickly and because the $775 didn’t put the loan-to-value ratio outside of acceptable limits, the settlement took place as scheduled. However, keep in mind, that on a very tight loan-to-value situation, a mere $775 could have cancelled the deal creating a mess for everyone involved.

New Instant Fee Quote to aid with RESPA Compliance, by Inwest Title a Utah Title Company

Saturday, March 27th, 2010

Inwest Title Services has unveiled a brand new “Instant Fee Quote” feature that will allow mortgage and real estate professionals to accurately calculate RESPA-compliant quotes for title and escrow fees in relation to their GFE (Good Faith Estimate).  When a user runs through a calculation it tells the user exactly what lines to fill in on the standard HUD-1 Form.  Due to changes to the RESPA legislation, it is more important than ever to accurately estimate title and escrow fees.   This calculator is available for customers of Inwest that sign up for on an online account.  You can click here to sign up.