New RESPA, New HUD, New EVERYTHING!!

Here's the problem with what's typed below. I guarantee you that it will not be uniform, smooth or easy to figure out. Not all banks will do implement this the same way causing loans to take even longer to close than they do now. And they can take pretty long these days. I have been saying all along that there is no common sense in the lending industry. Like it or not this will be the new rules in two months. We have to know it as well as possible before it comes to us so it doesn't slow down settlements and cost the borrower and the loan officer money in burnt locks and increased fees. Banks are out of control with the way they implement rules. HVCC was designed to standardize the appraisal process. If a loan is denied now though it's almost impossible to take that appraisal and deliver it to another lender even though the old lender will certify that it is conforms to HVCC. Why do they do that? Because they own pieces of the appraisal management companies!! Fannie Mae will agree to buy loans with a CLTV over 80% and a loan balance over 625,500. To my knowledge not one lender will do this loan. I have some that will if it's the new DU refi plus but not otherwise. All the rules have changed basically and below is a new major one. Please let me know if I can help you sort thru this disaster.


Effective January 1, 2010 the U.S. Department of Housing and Urban Development (HUD) will implement mortgage reforms under the Real Estate Settlement Procedures Act (RESPA). Revised regulations will standardize the Good Faith Estimate (GFE) providing borrowers with a useful comparison tool when shopping for mortgage financing. Originators will also be required to ensure the accuracy of the anticipated settlement costs they quote to clients and to eliminate unjustified increases in costs between the GFE and the HUD-1 settlement statement.
General Overview
• Requires all lenders to use new GFE forms and HUD-1 Settlement Statements (HUD-1A for refinance transactions)
• Establishes a new definition of "application" for the purposes of determining when a GFE is required to be provided to the borrower
• Restricts revisions to the GFE and permits them only upon "changed circumstances" as defined by the ruling
• Establishes tolerances restricting changes in settlement costs between issuance of the GFE at application and final costs on the HUD-1 at closing
• Grants lenders a cure period of 30 days from settlement to resolve differences in costs occurring between the GFE and the HUD-1
• Changes the way the Yield Spread Premium (YSP) is disclosed on the GFE, yet still permits a lender to offer a YSP for use as a credit towards broker compensation or to offset other borrower settlement costs

Changes to the GFE
• Page 1: identifies originator, including contact information; discloses expiration dates for the lock and settlement cost estimates; provides a summary of the loan terms
• Page 2: details settlement and origination charges; consolidates closing costs into major categories
• Page 3: provides instructions to help borrowers understand and compare the terms of the offer

Changes to the HUD-1
• Page 1: shows settlement charges paid for by third parties, such as the lender or seller, as a credit to the borrower (and debit to the seller as applicable)
• Page 2: omits the line-by-line itemization of lender and settlement agent fees; modifies fee lines to include references to relevant lines on the GFE; modifies terminology to mirror the terminology used on the GFE
• Page 3: compares the costs on the GFE and the HUD-1; summarizes costs that cannot increase, those that cannot increase by more than 10% in aggregate, and those that can change
I will be providing you in the weeks to come with more details on how this new rule will impact the way Choice Finance conducts it's business. In the meantime, I encourage you to visit the HUD web site at www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm for more details, including FAQs.