Topic: Good Faith Estimate (GFE)
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A consumer applied for a loan that is subject to the TILA-RESPA Integrated Disclosure (TRID) rules. The consumer indicated an intent to proceed with the loan, but we did not end up originating the loan. The consumer refuses to pay our appraisal fee. Can we pull the fee amount from the consumer’s checking account at our bank?
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Yes, we believe that your bank may exercise a valid right of setoff for the unpaid appraisal fee against the applicant’s checking account, provided that your bank properly disclosed the appraisal fee and that the applicant would be charged the fee to reimburse your bank for the cost of the appraisal (and the applicant had…
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We are funding the purchase of a mobile home not attached to dirt. We understand that because the mobile home is not attached to real property, the loan is not subject to the TILA-RESPA integrated disclosure (TRID) requirements, but do we have to send any early disclosures, such as a Good Faith Estimate?
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No, a mortgage secured by a mobile home not attached to real property is not subject early disclosures. However, under Regulation Z, you should provide an interest rate and payment summary, together with a specialized disclosure required for non-TRID mortgage loans prior to consummation of the loan. Additionally, other Regulation Z disclosures required for loans…
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How should we classify a rate-lock extension fee on a revised Loan Estimate? Is it considered an “origination charge”? We charge this fee when we extend the time period for a rate-lock.
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Yes, a rate-lock extension fee is an origination charge. Under Regulation Z, “origination charges” include each amount that the consumer will pay to the creditor for originating and extending the credit. Such items may include, for example, “application fee, origination fee, underwriting fee, processing fee, verification fee, and rate-lock fee.” As an extension of the…
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When filling out the new Loan Estimate form, where should we place the following fees? (1) FHA initial mortgage insurance premium, (2) VA initial funding fee, and (3) Conventional Single Premium Borrower/Lender Paid Mortgage Insurance.
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We believe that all three fees should be disclosed under “Services You Cannot Shop For.” The Regulation Z Official Interpretations state that “government funding fees” and “upfront mortgage insurance fees” should be listed on the Closing Disclosure under the heading “Services You Cannot Shop For.” The FHA and VA fees are government funding fees, since…
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We have a customer who did not share with the loan officer that he had a previous VA loan that was not disclosed before the loan closing. The VA funding fee that was disclosed on the borrower’s GFE was short by $4,500, as the fee goes up for each VA loan that is made. Is that a valid changed circumstance?
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We believe that the borrower’s failure to disclose the first Veterans Administration (VA) loan would constitute a valid changed circumstance, and as a result the RESPA rules permit you to provide the borrower with a revised good faith estimate (GFE) reflecting the resulting increase in the VA funding fee. The RESPA regulations define “changed circumstance”…
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For purposes of filling out the GFE and HUD-1 forms for a refinance, can we assume that the borrower has adequate homeowners insurance in place (and therefore list $0 on Block 11 of the GFE), even if we do not have confirmation of the placement of insurance from the bank that made the original loan before the end of the three business day deadline?
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We believe it would be a best practice to estimate the cost of homeowners insurance on the GFE for a refinance, unless the bank has confirmed that the borrower already has a homeowners insurance policy in place. The GFE instructions simply require you to estimate the “total amount of the premiums for any hazard insurance…
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On our list of “preferred providers,” we list a national title company, but use only one specific office location. Does the 10% tolerance limit apply if a customer selects a different office that is connected with the same national title company?
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Whether the 10% tolerance will apply to the charges of a title insurance company depends on whether the customer-selected title insurance company should be treated as the same company as the “settlement service provider identified by the loan originator.” 12 CFR 1024.7(e)(2)(ii). We presented this question to the CFPB, and their guidance was as follows:…
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Do we need customer signatures on GFEs that we redisclose due to changed circumstances? What about commitment letters and rate lock acknowledgments?
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Without the specific facts of each situation, we cannot give a specific answer to your question about obtaining a signature on redisclosed GFEs. We are not aware of any explicit legal requirement to have an applicant sign the GFE, though some investors may impose additional requirements on the loans they purchase. (Also note that an…
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Do we need to disclose loan release fees on the GFE and HUD-1 forms? How can we disclose the fee upfront, since it may have increased significantly by the time the loan is terminated?
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Yes, you should disclose a mortgage lien release fee in both the HUD-1 and in your TILA disclosures. The RESPA regulations require that you disclose all charges paid by the borrower on the HUD-1. 12 CFR 1024.8(b)(1). The HUD-1 instructions clarify that you must disclose “all charges imposed upon the Borrower and the Seller by…
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Do we need to issue a good faith estimate (GFE) if a customer completes a refinancing application but wants to delay the closing until interest rates drop?
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Due to the wording of the RESPA regulations, we believe it would be best to send such customers a GFE, even if customers say that they do not intend to move forward on an application. Under Section 3500.7, a lender must send a GFE after it “receives an application, or information sufficient to complete an…