The New GFE - A Line by Line Walk-Through · The New GFE - A Line by Line Walk-Through Webinar February 12, 2010 9-10:30 a.m. CST Presenter Ms. Christine Sisseck Dennis Schwartz &

The New GFE - A Line by Line Walk-Through

Webinar

February 12, 2010 9-10:30 a.m. CST

Presenter Ms. Christine Sisseck Dennis Schwartz & Assoc., Attorneys At Law 1446 Heritage Dr Mc Kinney, TX 75069-3286 972.562.1966 [email protected] Panelists Mr. Alan Jackson Dennis Schwartz & Assoc., Attorneys At Law 106 Blue Sky Court Georgetown, TX 78633 512.863.6845 [email protected] Ms. Charlotte M. Meyer Robertson & Anschutz 10333 Richmond Ave., Suite 550 Houston, TX 77042 713.980.9520 [email protected]

Ms. Janet S. Minke, CTIA Alliant National Title Insurance Company 7967 S FM 51 Boyd, TX 76023-3810 303.647.4047 [email protected] Mr. Charles H. Newman, III Beadles, Newman & Lawler 3500 Hulen Fort Worth, TX 76107 817.731.6469 [email protected] Mr. Dennis Schwartz Dennis Schwartz & Assoc., Attorneys At Law 1446 Heritage Dr Mc Kinney, TX 75069-3286 972.562.1966 [email protected]

Alan W. Jackson Compliance Administrator Schwartz and Associates Al has extensive experience in the residential mortgage business including loan production, loan servicing, regulatory compliance and government relations. Previously he served as Vice President of Government Relations at CitiMortgage, Inc. (St. Louis), and Vice President of Compliance and Government Issues at Principal Residential Mortgage, Inc. (Des Moines). Al has participated in various working groups of the Mortgage Bankers Association, Financial Services Roundtable, and the Consumer Mortgage Coalition, and is past chair of the Principal Financial Group Political Action Committee. Al obtained a Bachelor of Science degree in Mathematics & Business from Minnesota State University, and attended graduate school at the University of Colorado and Drake University Law School Christine Sisseck Operations Manager Schwartz and Associates Christine has been with Schwartz & Associates, a real estate document preparation Texas law firm, for 20 years. Employed in the mortgage industry since 1985, she has a broad and detail knowledge of residential real estate regulations and compliance matters, as well as experience in all phases of loan production, closing and operations. Prior to Schwartz & Associates, she worked at Merrill Lynch Mortgage, First Union Mortgage and Gregory Gregg & Associates. Christine attended Missouri Southern State College in Joplin, Missouri. Her expertise, attention to detail and commitment to accuracy in document preparation have been instrumental in taking Schwartz & Associates from a start-up operation to a national document preparation firm with a reputation for knowledge and quality.

CHARLOTTE M. MEYER Attorney at Law

Robertson & Anschutz 10333 Richmond Avenue

Suite 550 Houston, Texas 77042

713-980-9520 [email protected]

EDUCATION B.A. in Journalism, South West Texas State University - 1980 J.D., South Texas College of Law - 1986

PROFESSIONAL ACTIVITIES Texas Land Title Association – Education Committee Certification Committee Legal Issues Committee Texas Mortgage Bankers Association The College of the State Bar of Texas Texas Association of Mortgage Attorneys

LICENSURES AND CERTIFICATIONS State Bar of Texas United States – Southern, Eastern, Western and Northern Districts Courts of Texas Texas Board of Legal Specialization – Residential Real Estate Texas Board of Legal Specialization – Farm and Ranch Real Estate Certified Title Insurance Associate

PUBLICATIONS AND ARTICLES Tierra Grande Magazine – “Recognizing Mortgage Fraud” (January 2006) Co-Author State Bar of Texas 28th Annual Advanced Real Estate Law Course – “The Non-Borrowing Spouse in

Real Estate Transactions” (2006) Co-Author Texas Mortgage Lending Law & Practices Deskbook – Contributing Author Texas Mortgage Bankers Association Annual Education Seminars – “Fraud, Closing and Disclosing”

(2006) Author and Lecturer Texas Mortgage Bankers Association/Texas Land Title Association – “The New RESPA Road: Where

Lenders and Title Intersect” (2009) Panelist Texas Land Title Association Regional Seminars –

“The Legal Perspective – Deceased Real Property” (2004) Author and Lecturer “Advanced Title Examinations and Underwriting – Easements” (2006) Author and Lecturer “Liabilities and Responsibilities of a Notary Public” (2006) Author and Lecturer “Lost in Translation –Lender Lingo” (2007) Author and Lecturer “Ad Valorem Taxation” (2008) Lecturer “Foreclosure and Its Various Alternatives” (2009) Author and Lecturer “RESPA and the New HUD-1 – Hands On, How To Workshops” (2009) Lecturer

JANET S. MINKE Vice President, Underwriting Support Services

Alliant National Title Insurance Company Toll-free: 877-788-9800 x440

Direct: 303-647-4047 Mobile: 817-832-5656

[email protected]

EDUCATION • BA in Social Science from University of North Texas, 1970 • Texas Secondary Teaching Certificate

TITLE INSURANCE EXPERIENCE Ms. Minke entered the title insurance industry as an escrow assistant and conveyancer in a fee attorney office in Fort Worth, Texas, in 1970. Shortly thereafter, the attorney retired, selling his closing offices to Guardian Title Company, where Ms. Minke remained until 1994, progressing from escrow assistant to commercial escrow officer and eventually to Executive Vice President. Since that time, she has held various regional and national roles with major national title insurance companies where for the past 10 years she was a Business Process Manager and Corporate Trainer. She has recently moved into her current position with Alliant National, where she is available to respond to underwriting questions, as well as providing training and education for the company’s partner agents.

TEXAS LAND TITLE ASSOCIATION ACTIVITIES AND HONORS • Honors: Title Woman of the Year – 2006

Professional Excellence Award – Outstanding Underwriter Support, 2005 Peggy Hayes Teaching Excellence Award, 1995 President’s Award for Outstanding and Exemplary Contribution, 1992-93 Outstanding Young Title Person, 1985-86

• Current Chair: Education Committee • Current Member: Certification Task Force, Regulatory Committee

TEACHING AND TRAINING ACTIVITIES • TLTA and NMLTA Land Title School and Texas Land Title Institute • State Bar of Texas: Advanced R E Law Course – 2006; Agricultural Law Course – 2009 • TLTA, OLTA, NMLTA and NAPMW Conferences and Seminars • Underwriter Agency Seminars and Training in Texas, New Mexico and Oklahoma

PUBLICATIONS - Articles in TLTA News • Money-Saving Ideas That Everyone Can Use, 1988 • Proper Time Management Ensures Efficient Closings, 1989 • Tips Help Clarify Procedural Rules, 1991 • Training Today’s Workforce: Educating for Excellence, 1997

Charles H. Newman Biography Charles H. Newman is a founding partner and Chairman of the Board of Beadles, Newman & Lawler, P.C. Beadles, Newman & Lawler is a real estate law firm whose primary focus is the preparation of residential and commercial closing documents and is located in Fort Worth, Texas. The firm clients include national and regional banks, mortgage companies as well as title companies.

Mr. Newman’s career started in the title industry. From 1978 to 1999, he was Chairman of the Board and Chief Executive Officer for Trinity Western Title. Trinity Western Title was purchased by Alamo Title and ultimately by Fidelity National Title. He was honored as Title Man of the Year by the Texas Land Title Association in 1981 and he served as President of the Texas Land Title Association from 1982 to 1983. Mr. Newman is Board Certified in Commercial and Residential Real Estate Law by the Texas Board of Legal Specialization. He is a member of the State Bar of Texas, the Texas College of Real Estate Attorneys, the National Mortgage Bankers Association and the Texas Mortgage Bankers Association. He received his Bachelor of Arts from Washington & Lee University in Lexington, Virginia and his Juris Doctorate from the University of Texas School of Law in Austin, Texas. Charles is in high demand as a speaker. His presentations combine an informal style with humor and real world examples. His topics include Federal Regulatory Compliance, real estate and title related issues.

Executive Biography: Dennis P. Schwartz

Founder

DocsDirect (Schwartz & Associates)

Dennis P. Schwartz is founder of McKinney, Texas-

based Schwartz & Associates real estate law. Since 1989,

Schwartz & Associates has specialized in residential loan

document preparation for mortgage lenders of all sizes.

Under Schwartz’s leadership, Schwartz & Associates has developed DocsDirect

Online, a Web-based mortgage document solution that offers the flexibility

needed to handle the array of lender channels and loan programs offered by their

clients.

From 1996 to 2001, Mr. Schwartz was general counsel for the Texas

Mortgage Broker Association and is currently general counsel to the Tarrant

County Mortgage Broker Association and Dallas Association of Mortgage

Brokers. He was a member of the Board of Directors for the Texas Association of

Mortgage Brokers from 2002 - 2008.

Mr. Schwartz was a key participant in drafting legislation and

communicating with state political figures for the passage of the Texas mortgage

broker licensing and home equity constitutional amendment. He is an active

member of many other associations, including the State Bar of Texas, National

Mortgage Brokers Association and the Independent Bankers Association of

Texas.

Mr. Schwartz began practicing law in 1976 with the Tarrant County District

Attorney’s office. From 1977 until 1983, he was a litigator in a general practice

law firm. He began his focus on real estate law in 1983 representing numerous

savings and loan associations. Since 1989, he has limited his practice to

residential real estate lending document preparation representing banks,

mortgage brokers and wholesale lenders nationwide.

After receiving his Bachelor’s degree from Sarah Lawrence College in

1973, Mr. Schwartz received his Juris Doctor from Southern Methodist University

in 1976.

Line by Line ‐ The New GFE

PresenterChristine Sisseck, Schwartz & Associates, McKinney

PanelistsAlan Jackson, Schwartz & Associates, McKinney

Charlotte M. Meyer, CTIA, Robertson & Anschutz, HoustonJanet S. Minke, CTIA, Alliant National Title Insurance Company, Dallas

Charles H. Newman, III, Beadles, Newman & Lawler, DallasDennis Schwartz, Schwartz & Associates, McKinney

‐

Welcome to Today’s WebinarPresented by

Independent Bankers Association of Texas and

Texas Land Title AssociationFebruary 12, 2010

Purpose of this presentation is to provide a detailed line by line instruction on how to

complete the GFE.

Whether you are a loan originator, processor, underwriter, closer, doc prep attorney or closing agent, everyone needs to have an understanding of the GFE and HUD1 as they now go

hand in hand.

It is truly a collaborative effort for all parties.


RESPAReal Estate Settlement Procedures Act

Introduced in 19741996 ReformAdditional Reform Process began in 2002Proposed New Rule released March 14, 2008Final New Rule published November 17, 2008Portions Final New Rule effective January 1, 2009Final New Rule effective January 1, 2010

RESPARESPA Reform impacts all parties in a real estate transaction

LendersTitle ProvidersSettlement AgentsMortgage BrokersRealtorsBuildersBuyers – BorrowersSellers


New RESPA Final RuleConsumer Protection Act

Greater Disclosure of Loan Terms and Settlement Fees

New standardized forms

Encourages consumer to shop for loan and service providers

Fees disclosed upfront must be closer to the actual fees collected at closing

Lender bound to settlement charges and terms disclosed in GFE, subject to certain tolerances

Goal was clarity, transparency and accuracy

New RESPA Final RuleNew Good Faith Estimate

New HUD‐1 Settlement Statement

Service Provider List


Good Faith EstimateGood Faith Estimate (GFE) lists the settlement charges that

Consumer is likely to incur with a federally related mortgage loan.

Originator must estimate charges based upon whatConsumer would normally pay or incur at or before settlement.

New Standardized GFE form – 3 pages

Ten (10) business day shopping period

Tolerance Restrictions0% Bucket10% BucketUnlimited Bucket

Changed Circumstances

GFE – Page OneSummary of Loan Terms

“Red Flag” ItemsAdjustments in rate and paymentNegative AmortizationPrepayment PenaltiesBalloon Payments

B0ttom Line Shopping NumbersTotal Adjusted Origination ChargesTotal Charges for other Settlement ServicesTotal Estimate Settlement Charges


GFE – Page One

GFE – Page TwoSimplifies fees by categorizing and combining

Lender’s Origination ChargesRequired Services

Lender SelectsBorrower Shops

Title Services

All normal Borrower costs must be reflected on GFENo matter who ultimately pays the fee at closingWill be reflected in Borrower column on HUD1 Page 2If paid by Seller, Lender or Third Party will be offset by credit on HUD1 Page 1


GFE – Page Two

GFE – Page ThreeInstructions and Information

Tolerance DescriptionsZero Percent Tolerance Ten Percent ToleranceUnlimited Tolerance

Trade‐off TableSummary of Rate and Charges for loan disclosed in GFESummary of Rate and Charges for a higher rate/lower costsSummary of Rate and Charges for a lower rate/higher costs

Shopping Chart


GFE – Page Three

Good Faith Estimate DisclosureMust be disclosed within 3 business days from Application (GFE‐General FAQ 25)

Application is defined as submission of Borrower’s financial information in anticipation of a credit decision (RESPA Final Rule Title 24, Section 3500.2(b)

Borrower NameMonthly IncomeSocial Security Number/Tax Identification Number (GFE‐General FAQ 14)Property AddressEstimated Value of PropertyLoan Amount“Any other information deemed necessary by the Loan Originator”

If GFE is issued, it is presumed that Loan Originator received an “application” and all information deemed necessary to issue GFE (GFE‐General FAQ 23 & 24)


GFE – Page OneOriginator Identifying Information

GFE – Page OneOriginator Identifying Information

Originating Company Name, whomever is issuing the GFE (GFE‐Page 1, GFE‐ Name of originator, FAQ 2)

Individual Originator/Loan Officer Name (optional)(GFE‐Page 1, GFE‐ Name of originator, FAQ 1)

Originating Company Address

Originating Company Phone Number

Individual Originator/Loan Officer Email


GFE – Page OneBorrower and Property InformationDate of GFE

GFE – Page One

Borrower and Property InformationAll Borrower’s NamesSubject Property Address

Date of GFEDate GFE is issuedIf GFE is re‐disclosed, this date should reflect the date the Revised GFE was issued


GFE – Page OneExplanation of Purpose and Shopping for Loan

GFE – Page OneImportant Dates – Item 1Expiration Date for interest rate and items affected by rate


GFE – Page OneImportant Dates – Item 1Expiration Date for interest rate and items affected by rate

No restriction on amount of time interest rate must remain available (GFE‐Important Dates FAQ 1)

Interest rate can be available for any period of time Originatorchooses, including for example, a period of time within one day or for several days (GFE‐Important Dates FAQ 1)

When interest rate is locked, date disclosed should be interest rate lock expiration date (GFE‐Important Dates FAQ 4)

If rate lock not offered at all, Originator should reflect N/A or Not Available (GFE‐Important Dates FAQ 5)

GFE – Page OneImportant Dates – Item 2Expiration date of shopping period


GFE – Page OneImportant Dates – Item 2Expiration date of shopping period (GFE‐Expiration FAQ 1)

Must be available for at least ten (10) business days (GFE – Important Dates FAQ 2)

If revised GFE is provided due to changed circumstances or borrower requested changes, shopping period of previous GFE has ended and borrower has already expressed an intent to proceed, complete this date with the same date reflected in the previous GFE (GFE – Important Dates FAQ 12)

Line 1 and Line 2 are independent of each of other (GFE – Important

Dates FAQ 14)

GFE – Page OneImportant Dates – Item 3Rate Lock Period – this does not mean rate is locked


GFE – Page OneImportant Dates – Item 3Rate Lock Period – this does not mean rate is locked

Number of days the interest rate lock period is good through (GFE – Important Dates FAQ 4)

If rate lock not offered at all, Originator should reflect N/A or Not Available (GFE‐Important Dates FAQ 6)

If revised GFE is provided due to changed circumstances or borrower requested changes, Line 3 must be completed with information that was on the preceding GFE, unless rate lock was basis of issuance of revised GFE (GFE‐Important Dates FAQ 7)

May not enter range of rate lock options (GFE‐Important Dates FAQ 11)

GFE – Page OneImportant Dates – Item 4Lock required prior to settlement


GFE – Page OneImportant Dates – Item 4Lock required prior to settlement

Originator must state how many calendar days prior to settlementthe interest rate would have to be locked, if applicable (RESPA Final Rule Appendix C)

If revised GFE is provided due to changed circumstances or borrower requested changes, Line 3 must be completed with information that was on the preceding GFE, unless rate lock was basis of issuance of revised GFE (GFE‐Important Dates FAQ 7)

If interest rate is locked, then Originator should complete thisitem with “Not applicable” or “N/A” (GFE‐General FAQ 30)

GFE – Page OneSummary of Your Loan


GFE – Page OneSummary of Your LoanInitial Loan Terms

GFE – Page OneSummary of Your LoanRed Flag Items


GFE – Page OneEscrow Account Information

GFE – Page OneEscrow Account Information

If escrows are waived, mark box labeled “NO” (GFE‐Escrow account information FAQ 1)

If escrows are not required or held by Lender, mark box labeled “NO” (GFE‐Escrow account information FAQ 1)

If escrows are required and will be collected, mark box labeled “YES” (GFE‐Escrow account information FAQ 1)

Payment reflected should match amount shown in Summary of Loan for initial monthly payment with mortgage insurance – does not include tax and homeowner’s insurance (GFE‐Escrow account information FAQ 1 & 2)


GFE – Page OneSummary of Your Settlement ChargesTotals for Block A & B are brought forward from GFE Page 2

GFE – Page TwoYour Adjusted Origination Charges


GFE – Page TwoBlock 1 – Our Origination Charge

All Charges that Originator will receive for compensation(GFE‐Block 1 FAQ 2, 4, 7 & 9)

Administrative FeeApplication FeeBroker FeeCommitment FeeCourier/Delivery FeeDocument Preparation Fee (even if paid to third party) (GFE‐Block 1 FAQ 5 & 6)In‐house AppraisalLender Inspection FeeMERS FeeOrigination FeeProcessing FeeUnderwriting FeeVerification FeeWire FeeService Fees paid directly to OriginatorMiscellaneous FeesYield Spread Premium (for mortgage brokers)


Originator is defined to include:Loan Officer/Loan OriginatorMortgage BankerMortgage BrokerWarehouse CorrespondentWholesale InvestorAny creditor involved in the new loan transaction(GFE‐General FAQ 5 & GFE‐Block 1 FAQ 1)



Equals Line 801 on HUD‐1Zero Tolerance BucketAmount cannot increase absent changed circumstances (GFE‐Block 1 FAQ 3 & 8)

GFE Block 1 = HUD Line 801 = 0% Tolerance Bucket

GFE – Page TwoBlock 2 – Your credit or charge (points) for the specific interest rate chosen



Three Box OptionsBox 1 – No Credit and No ChargeBox 2 – CreditBox 3 – Charge

Must complete interest rateMust complete dollar figure, if applicableOnly One Box Option can be marked at a time

A credit and charge cannot occur together in same transaction

(GFE‐Block 2 FAQ 2)


Box 1 – No credit and no chargePar for Mortgage Bankers, Warehouse CorrespondentsNo credit and no charge for Mortgage Bankers, Warehouse CorrespondentsMortgage Brokers not allowed to mark this box



Box 2 – CreditYield Spread Premium for Mortgage Brokers (GFE‐Block 2 FAQ 6 & 7)Par for Mortgage Brokers

May check either credit or chargeMust enter zero (0)

“No cost” Loan (GFE‐Block 2 FAQ 1)Fees being paid through interest rateCredit given by Originator used to offset all feesMay result in a negative number in Block A to cover third party fees listed in GFE Blocks 3–11 as appropriate


Box 3 – ChargeDiscountPar for Mortgage Brokers

May check either credit or chargeMust enter zero (0)

Buydown (GFE‐Block 2 FAQ 3)

Escrow Waiver Fee (GFE‐Block 2 FAQ 8 & 9)



Equals Line 802 on HUD‐1Zero Tolerance BucketAmount cannot change absent changed circumstances while interest rate is locked

Any credit for rate chosen cannot decrease (GFE‐Block 2 FAQ 4)Credit can increase since it would benefit borrower

Any charge for rate chosen cannot increaseCharge can decrease since it would benefit borrower


GFE – Page TwoBlock A – Your Adjusted Origination Charges

Block 1 +/‐ Block 2 = Block AMay be a negative number if Credit in Block 2 that exceeds Charge in Block 1



Equals Line 803 on HUD‐1Zero Tolerance BucketAmount cannot change absent changed circumstances while interest rate is lockedAmount is carried forward to Block A on GFE Page 1

GFE Block A = HUD Line 803 = 0% Tolerance Bucket


Block 1 +/‐ Block 2 = Block AMay be a negative number if Credit in Block 2 that exceeds Charge in Block 1


Par Example – Block 2, Box 1

Credit Example – Block 2, Box 2


Charge Example – Block 2, Box 3

GFE – Page TwoYour Charges for All Other Settlement Services


GFE – Page TwoBlock 3 – Required Services that We Select


All Charges for services that Originator requires use of a particular provider (GFE‐Block 3 FAQ 1, 2, 3 & 4)

Appraisal FeeConventional Upfront PMICredit Report FeeFinal Inspection FeeFlood Certification FeeFHA Upfront MIPMCC FeeTax Service FeeUSDA Guarantee FeeVA Funding Fee (GFE‐Block 3 FAQ 1)



Equals Line 804, 805, 806, 807, 800s on HUD‐110% Tolerance Bucket – aggregate totalAmount cannot increase absent changed circumstancesFees payable to third party other than Originator

Does not include Title Service FeesIf individual service listed

Must have dollar amount of fee disclosed orMust have zero (0) or N/A disclosed

GFE Block 3 = HUD Line 804, 805, 806, 807, 800s = 10% Tolerance Bucket

GFE – Page TwoBlock 4 – Title Services and Lender’s Title Insurance

All Charges for services that Title/Settlement Agent requires and Title Insurance Costs to protect the Lender

Attorney FeeClosing FeeCourier Fee (GFE‐Block 4 FAQ 2)E‐Doc FeeEscrow FeeHandling FeeLender’s Title Insurance Premium (GFE‐Block 4 FAQ 1)Lender’s Title Endorsement PremiumNotary Fee (GFE‐Block 4 FAQ 3)Settlement Fee (GFE‐Block 4 FAQ 4, 5 & 7)Tax Certificate FeeTexas Guaranty FeeTitle Binder/Commitment Fee (GFE Block 4 FAQ 6)Title Examination/Search FeeWire Fee


GFE – Page TwoBlock 4 – Title Services and Lender’s Title Insurance

Equals Line 1101, 1102, 1104, 1100s* on HUD‐110% Tolerance Bucket – aggregate totalUnlimited Tolerance Bucket – if Borrower chooses a title/settlement agent not on the list

Amount cannot increase absent changed circumstancesFees payable to third party other than OriginatorShould reflect one title/settlement agent on service provider list if Originator allows borrower to shop for service

GFE Block 4 = HUD Line 1101, 1102, 1104, 1100s= 10% Tolerance Bucket

*1100s – any third party fees that are a part of GFE Block 4 may be itemized “outside the columns” in the 1100series of HUD1 Page 2

GFE – Page TwoBlock 5 – Owner’s Title Insurance

All Charges for Title Insurance Costs to protect the Borrower (GFE‐Block 5 FAQ 3 & 4)

Owner’s Title Insurance Premium Owner’s Title Endorsement PremiumTexas Policy Guaranty Fee for Owner’s Policy

Required on all Purchase transactions (GFE‐Block 5 FAQ 1)No matter what is common and customary for your areaNo matter who ultimately pays for the policy at closing (GFE‐Block 5 FAQ 2)

If non‐purchase transaction, Originator should reflect N/A


GFE – Page TwoBlock 5 – Owner’s Title Insurance

Equals Line 1103 on HUD‐110% Tolerance Bucket – aggregate totalUnlimited Tolerance Bucket – if Borrower chooses a title/settlement agent not on the list

Amount cannot increase absent changed circumstancesFees payable to third party other than OriginatorShould reflect one title/settlement agent on service provider list if Originator allows borrower to shop for service


GFE – Page TwoBlock 6 – Required Services that You Can Shop For



All Charges for services that Originator requires but that Borrower can chose the service provider (GFE‐Block 6 FAQ 1)

Pest InspectionSurvey


Equals Line 1301, 1300s on HUD‐110% Tolerance Bucket – aggregate totalAmount cannot increase absent changed circumstancesFees payable to third party other than Originator

Does not include Title Service FeesIf individual service listed


Should reflect one provider on service provider list if Originator allows borrower to shop for service

GFE Block 6 = HUD Line 1301, 1300s = 10% Tolerance Bucket


GFE – Page TwoBlock 7 – Government Recording Charges

All Charges for recording loan and title documents upon settlement that are normal borrower costs

Assignment Recording FeeCounty Recording FeeDeed Recording FeeGovernment RecordingDeed of Trust/Mortgage/Security Instrument Recording FeePower of Attorney Recording FeeRelease Recording FeeState Recording Fee

GFE – Page TwoBlock 7 – Government Recording Charges

Equals Line 1201, 1202, 1200s on HUD‐110% Tolerance Bucket – aggregate totalAmount cannot increase absent changed circumstancesFees payable to third party other than Originator

GFE Block 7 = HUD Line 1201, 1202, 1200s = 10% Tolerance Bucket


GFE – Page TwoBlock 8 – Transfer Taxes

All Charges for state and local fees on mortgages and home sales that are normal borrower costs

City/County Deed TaxCity/County Mortgage TaxState Deed TaxState Mortgage TaxState required fee paid to Government or Governmental Agency

GFE – Page TwoBlock 8 – Transfer Taxes

Equals Line 1203, 1204, 1205, 1200s on HUD‐10% Tolerance BucketAmount cannot increase absent changed circumstancesFees payable to third party other than Originator

GFE Block 8 = HUD Line 1203, 1204, 1205, 1200s = 0% Tolerance Bucket


GFE – Page TwoBlock 9 – Initial Deposit for Your Escrow Account


All Charges that lender requires borrower to place into a reserve or escrow account at settlement to be applied to recurring charges that lender pays on behalf of borrower

Earthquake InsuranceHomeowner’s InsuranceFlood InsuranceMortgage InsuranceProperty Taxes“Walls‐in” InsuranceWindstorm/Hail Insurance



Equals Line 1101 on HUD‐1Unlimited Tolerance BucketCheck appropriate boxes in Block 9 to indicate what items are included in the initial deposit for the escrow accountDoes not include amount to bring property taxes current at closing

GFE Block 9 = HUD Line 1001 = Unlimited Tolerance Bucket

GFE – Page TwoBlock 10 – Daily Interest Charges



The charge for the amount of interest on new loan due from date of settlement until first day of next month or first day of normal payment cycle

Total amount estimated due at closing*Must reflect Daily Per Diem AmountMust reflect Number of Days to be collected*Must reflect Estimated Date of Settlement

*If loan will be a short pay/interest credit then amount may be reflected as a credit


Equals Line 901 on HUD‐1Unlimited Tolerance Bucket

GFE Block 10 = HUD Line 901 = Unlimited Tolerance Bucket


GFE – Page TwoBlock 11 – Homeowner’s Insurance


All Charges for insurance borrower must purchase to protect the property from loss or damage (GFE‐Block 11 FAQ 1)

Earthquake Insurance PremiumHomeowner’s Insurance PremiumFlood Insurance Premium (GFE Block 11 FAQ 2)Mortgage Insurance PremiumProperty Taxes Premium“Walls‐In” Insurance PremiumWindstorm/Hail Insurance Premium



Equals Line 903, 900s on HUD‐1Unlimited Tolerance BucketFees payable to insurance agent/companyList each type of insurance required

Does not include title insuranceEach type of insurance listed


Purchase transactions – amount indicated is typically one year’s premium for each insurance typeRefinance transactions – may not be required unless policy does not have enough premium paid in advance to meet investor guidelines

GFE Block 11 = HUD Line 903, 900s = Unlimited Tolerance Bucket

GFE – Page TwoBlock B – Your Charges for All Other Settlement Services

Block 3 + Block 4 + Block 5 + Block 6 + Block 7 + Block 8 + Block 9 +/‐ Block 10 + Block 11 = Block B

Amount is carried forward to Block B on GFE Page 1


GFE – Page TwoBlock A+B – Total Estimated Settlement Charges

Equals Line Block A + B on GFE Page 2

Amount is carried forward to Block A+B on GFE Page 1

GFE – Page ThreeUnderstanding which Charges can Change at Settlement



O% ToleranceFees cannot increase at settlementGFE Block 1, 2, A and 8Individual Block tolerance, not an aggregate totalCure required if tolerance violation

Must be done within 30 calendar days of closingMust be reflected on HUD1 as cure


1O% ToleranceTotal of fees can increase up to 10%GFE Block 3, 4, 5, 6, and 7Aggregate Total toleranceCure for amount over 10% required if tolerance violation

Must be done within 30 calendar days of closingMust be reflected on HUD1 as cure



Unlimited ToleranceFees can increase at settlementGFE Block 9, 10 and 11GFE Block 4, 5, and 6 – if Borrower chose service provider NOT on the listNo cure required

GFE – Tolerance BucketsUnderstanding which Charges can Change at Settlement

Estimated Feesdisclosed at application on GFE

vs.Actual Fees

collected at closing on HUD1



HUD1 Lines on Page 2 have a cross reference to GFE Block Number


HUD1 Page 3 contains a side‐by‐side comparison chart of Estimated Fees disclosed on GFE to Actual Fees collected at closing on HUD1 Page 2


The Bucket ListGFE BLOCK NUMBER HUD LINE NUMBER

or HUD SERIESTOLERANCE BUCKET

Block 1 801 0%

Block 2 802 0%

Block A 803 0%

Block 3 804, 805, 806, 807, 800s902, 900s

10%

Block 4* 1101, 1102, 1104, 1100s 10%

Block 5* 1103 10%

Block 6* 1301, 1300s 10%

Block 7 1201, 1202, 1200s 10%

Block 8 1203, 1204, 1205, 1200s 10%

Block 9 1001 Unlimited

Block 10 901 Unlimited

Block 11 903, 900s Unlimited*If provider not on the List *Unlimited


If Amount exceeds tolerance limitation, it is the responsibility of Originator to cure.(Section 4 & 5 – Right to cure and tolerance violations, FAQ 1‐ 15)

Cure can be made by:Offsetting any increase with a credit/reimbursementReducing Fee

Cure TimeframeAt closing and notated on HUD1Within 30 calendar days of closing and revised HUD1 issued


GFE – Page ThreeUsing the Tradeoff Table

GFE – Page ThreeUsing the Tradeoff Table

Trade‐off Table was designed to help Borrower understand relationship between interest rate and settlement charges.

3 ColumnsThis LoanSame Loan with Lower Settlement ChargesSame Loan with Lower Interest Rate


GFE – Page ThreeUsing the Tradeoff Table– Column 1This loan in this GFE

Must be completed by Originator (GFE‐Tradeoff table, FAQ 1)

GFE – Page ThreeUsing the Tradeoff Table– Column 2This same loan with lower settlement charges

Does not have to be completed


GFE – Page ThreeUsing the Tradeoff Table– Column 3This same loan with a lower interest rate

Does not have to be completed

GFE – Page ThreeUsing the Tradeoff Table – Columns 2 and 3

Not required to be completed (GFE‐Tradeoff table FAQ 1)Consumer testing suggested consumers were suspicious of Originators if these columns were not filled in

If completed by OriginatorMust have alternate loans reflected availableMust be able to issue GFE on alternate loans if requested by consumerMust use same loan amountMust be identical to loan terms disclosed in GFE except for interest rate and interest rate dependent charges (GFE‐Tradeoff table FAQ 2)


GFE – Page ThreeUsing the Shopping Chart


Shopping tool for consumer to use to compare GFEs from various mortgage loan providers

Originator not required to complete any of the columns

Some loan origination software may complete the “This loan”column automatically for the consumer



GFE – Page ThreeIf Your Loan is sold in the future

Final statement on GFENo signature linesNo date of receipt


Service Provider List

Service Provider ListMust be provided by Originator if they allow Borrower to shop for services (GFE‐Written list of providers FAQ 1 & 6)

Must be provided simultaneously with GFE (GFE‐Written list of providers FAQ 1)On separate sheet of paperMust contain enough identifying information for Borrower to contact service provider – name, address, phone numberMay add disclosure stating that Originator is not endorsing service providers (GFE‐Written list of providers FAQ 11)

Must contain at least one provider for any service for which Borrower can shop

Title/settlement agent in Blocks 4 and 5, if Originator allows Borrower to choose (GFE‐Written list of providers FAQ 10)

Any third‐party services listed in Block 6

May list an affiliate as service providerMust distribute AfBA disclosure along with list (GFE‐Written list of providers FAQ 9)NOT considered a violation of RESPA Section 8 per HUD


Service Provider ListIf Borrower chooses a Service Provider

On the List ‐ 10% Tolerance Bucket – aggregate totalNOT on the List – Unlimited Bucket (GFE‐Written list of providers FAQ 3)

If List not provided or no provider listed for services in Block 4, 5 or 6

Subject to 10% Tolerance Bucket – aggregate totalOriginator does not get benefit of Unlimited Bucket if they have not allowed Borrower to shop for services

Provider must beQualified service provider or Originator can rejectAble to provide service in Borrower’s area (GFE‐Written list of providers FAQ 7)

GFE – Items Not DisclosedCash to CloseCredits from Seller or Third PartiesDown PaymentLoan PayoffsLoan Type – FHA/VA/ConventionalLien Position – First or SecondPurchase/Sales PriceTotal PITI Monthly Mortgage Payment


GFE – Fees Not DisclosedHome Warranty Fee (HUD‐1 – 1300 series FAQ 1)

HOA Transfer Fee (HUD‐1 – 1300 series FAQ 5)

Current HOA Fees DueCurrent Property Taxes DuePOC DesignationReal Estate Agency Administrative FeeReal Estate Agent’s CommissionReal Estate Agency Transaction FeeNo longer refers to terms such as YSP or Discount

GFE – Items that cannot be Added to FormDate or Signature lines (GFE General – FAQ 28)

Intent to Proceed AcknowledgmentAdditional Pages (General – FAQ 14, GFE‐General FAQ 27)

Cannot change any text in the GFE form (General – FAQ 6)

No other form can be called Good Faith EstimateNo other form can be called Addendum to GFE

Note: Additional forms can be used but cannot be referred to as addendum to GFE or labelled GFE


GFE – Changed CircumstancesOnce GFE is issued, there are Circumstances

under which Loan Terms or Charges can changewhich may result in Re‐disclosure of GFE

(GFE‐”Changed Circumstances” FAQ 1 ‐14)

Refer to RESPA Final RuleRefer to RESPA Frequent Asked Questions (FAQs)

www.HUD.gov/RESPA

GFE – Changed CircumstancesActs of God, war, disaster or other emergency

Information particular to Borrower or Transaction that was relied on in providing the GFE that changes or is found to be inaccurate after GFE was issued

Credit QualityLoan AmountProperty ValueOther information relied upon in providing the GFE

New Information particular to Borrower or Transaction that was notrelied on in providing the GFE

Boundary DisputesEnvironmental ProblemsFlood Zone Determination shows in Flood Zone


GFE – Changed CircumstancesIf GFE was issued, there is a presumption that Originator relied uponthe following information:

Borrower’s nameBorrower’s monthly incomeProperty AddressProperty ValueLoan Amount desired by consumerCredit Report Information obtained by Originator

Cannot use any information collected or presumed to have used (seeabove) prior to issuing GFE as basis for a “changed circumstance” tojustify re‐disclosure of GFE

Unless Originator can demonstrate that:There was a change in that particular informationThe particular information provided was inaccurateThey did not rely on that particular information when issuing GFE

GFE – Changed CircumstancesMay only re‐disclose changes directly related to the changed circumstance

Originator cannot increase charges unless directly related to changed circumstance, all other charges must remain the same

A changed circumstance does not justify changing the entire GFE


GFE – Changed CircumstancesRule of Three (3)

3 Business Days to RediscloseIf Originator chooses to re‐disclose, must do so within 3 business days of receiving information sufficient to establish changed circumstance

3 Years to RetainIf Originator chooses to re‐disclose, must retain documentation and justification proving changed circumstance for at least 3 years after settlement

GFE – Changed CircumstancesFloating GFE issued – Rate is not locked

When rate is locked, revised GFEmust be issuedAny “interest‐rate dependent” charges or loan terms may be changed

Borrower Requested ChangesEven if rate is locked, revised GFE may be issuedOnly terms or fees affected by requested changes may be changed


GFE – Changed Circumstances

Loan Level Price Adjustment (LLPA) may constitute a changed circumstance (GFE‐Block 2 FAQ 5)

Risk‐based adjustment derived from specific attributes to individual loan – LTV, FICO, Occupancy

Disclosed in Block 2 on Page 2 of GFE as credit (Box 2) or charge (Box 3) for specific interest rate chosen

Changed Circumstance may permit re‐disclosure of GFE changing fees affected by LLPA

GFE – Important Things to KnowCannot charge any fee except Credit Report Fee before providing GFE

Cannot require verification of information before providing GFE

Two loans – Two GFEs

May use separate form to evidence consumer’s intent to proceed

May use separate form to evidence consumer’s acknowledgment of receipt of GFE

Average Charges Option


GFE – Important Things to KnowNew Construction

New Home Purchase (GFE‐New construction FAQ 2)To Be ConstructedUnder ConstructionUse and occupancy permit has not been issued

If closing will not occur for more than 60 calendar days from time GFE is provided

Originator may provide disclosure to Borrower stating that at any time up until 60 calendar days prior to closing, the Originator is allowed to re‐disclose the GFE in the absence of changed circumstance (GFE‐New construction FAQ 1)

GFE – Important Things to KnowRevised GFE must be re‐issued when rate is locked within 3 days of locking in interest rate (GFE‐General FAQ 19)

“Broker Lock” or “Pocket Lock” is when a Mortgage Broker permits borrower to lock rate BUT does notlock rate with Investor/Lender (GFE‐General FAQ 17)

If Investor/Lender accepts GFE issued by Broker, then Investor/Lender is subject to Broker’s disclosed GFE (GFE‐General FAQ 17 & 29)

Loan Terms, including rateAll Settlement Service charges disclosed on GFE, including Block 1, 2 and AService Provider List


GFE – Important Things to Know“Seller Responsible Fees” (GFE‐Seller paid items FAQ 1, 2)

Fees that are typically Seller Costs or normally paid by Seller

Do not have to be disclosed on GFE

Will be reflected in Seller Column on HUD1 Page 2

Exception to above rule:Owner’s Title Policy must always be disclosed on GFE no matterif seller responsible fee

GFE – Important Things to Know“Borrower Responsible Fees” (GFE‐Seller paid items FAQ 1, 2)

Fees that are typically Borrower Costs or normally paid by Borrower*

Must be disclosed on GFE, no matter who ultimately pays for the fees at closing

Will be reflected in Borrower Column on HUD1 Page 2, no matter who ultimately pays for the fees at closing

If fee is being paid by seller, lender or third party, shown in Borrower Column on HUD1 Page 2 and a credit is shown on Page 1 of HUD

*Exception – Owner’s Title Policy must always be disclosed on Purchase transactions

Good Faith Estimate (GFE)

Good Faith Estimate (HUD-GFE) 1

This GFE gives you an estimate of your settlement charges and loan terms if you are approved for this loan. For more information, see HUD’s Special Information Booklet on settlement charges, your Truth-in-Lending Disclosures, and other consumer information at www.hud.gov/respa. If you decide you would like to proceed with this loan, contact us.

Purpose

Summary of your settlement charges A

Your Charges for All Other Settlement Services (See page 2.) $ B

Your Adjusted Origination Charges (See page 2.) $

Summary of your loan

Important dates

Total Estimated Settlement Charges $

OMB Approval No. 2502-0265

Only you can shop for the best loan for you. Compare this GFE with other loan offers, so you can find the best loan. Use the shopping chart on page 3 to compare all the offers you receive.

Shopping for your loan

Your initial loan amount is

Your loan term is

Your initial interest rate is

Your initial monthly amount owed for principal, interest, and any mortgage insurance is

$

years

%

$ per month

Can your interest rate rise?

Even if you make payments on time, can your loan balance rise?

Even if you make payments on time, can your monthly amount owed for principal, interest, and any mortgage insurance rise?

Does your loan have a prepayment penalty?

Does your loan have a balloon payment?

c No c Yes, it can rise to a maximum of %. The first change will be in .

c No c Yes, it can rise to a maximum of $

c No c Yes, the first increase can be in and the monthly amount owed can rise to $ . The maximum it can ever rise to is $ . c No c Yes, your maximum prepayment penalty is $ .

c No c Yes, you have a balloon payment of $ due in years.

Some lenders require an escrow account to hold funds for paying property taxes or other property-related charges in addition to your monthly amount owed of $ . Do we require you to have an escrow account for your loan? c No, you do not have an escrow account. You must pay these charges directly when due. c Yes, you have an escrow account. It may or may not cover all of these charges. Ask us.

Escrow account information

Borrower

Property Address

Date of GFE

Name of Originator

Originator Address

Originator Phone Number

Originator Email

1. The interest rate for this GFE is available through . After this time, the interest rate, some of your loan Origination Charges, and the monthly payment shown below can change until you lock your interest rate.

2. This estimate for all other settlement charges is available through .

3. After you lock your interest rate, you must go to settlement within days (your rate lock period) to receive the locked interest rate.

4. You must lock the interest rate at least days before settlement.

A B+

Understanding your estimated settlement charges


Your Adjusted Origination Charges

Your Adjusted Origination Charges $

Total Estimated Settlement Charges $A B+

3. Required services that we selectThese charges are for services we require to complete your settlement. We will choose the providers of these services.Service Charge

4. Title services and lender’s title insuranceThis charge includes the services of a title or settlement agent, for example, and title insurance to protect the lender, if required.

5. Owner’s title insurance You may purchase an owner’s title insurance policy to protect your interest in the property.

6. Required services that you can shop forThese charges are for other services that are required to complete your settlement. We can identify providers of these services or you can shop for them yourself. Our estimates for providing these services are below.Service Charge

7. Government recording chargesThese charges are for state and local fees to record your loan and title documents.

8. Transfer taxes These charges are for state and local fees on mortgages and home sales.

9. Initial deposit for your escrow accountThis charge is held in an escrow account to pay future recurring charges on your property and includes c all property taxes, c all insurance, and c other .

10. Daily interest chargesThis charge is for the daily interest on your loan from the day of your settlement until the first day of the next month or the first day of your normal mortgage payment cycle. This amount is $ per day for days (if your settlement is ).

11. Homeowner’s insuranceThis charge is for the insurance you must buy for the property to protect from a loss, such as fire.Policy Charge

B Your Charges for All Other Settlement Services $

Your Charges for All Other Settlement Services

A

1. Our origination charge This charge is for getting this loan for you.

2. Your credit or charge (points) for the specific interest rate chosen c The credit or charge for the interest rate of % is included in

“Our origination charge.” (See item 1 above.) c You receive a credit of $ for this interest rate of %.

This credit reduces your settlement charges. c You pay a charge of $ for this interest rate of %.

This charge (points) increases your total settlement charges. The tradeoff table on page 3 shows that you can change your total settlement charges by choosing a different interest rate for this loan.

Some of these charges can change at settlement. See the top of page 3 for more information.

These charges cannot increase at settlement:

g Our origination charge

g Your credit or charge (points) for the specific interest rate chosen (after you lock in your interest rate)

g Your adjusted origination charges (after you lock in your interest rate)

g Transfer taxes

The total of these charges can increase up to 10% at settlement:

g Required services that we select

g Title services and lender’s title insurance (if we select them or you use companies we identify)

g Owner’s title insurance (if you use companies we identify)

g Required services that you can shop for (if you use companies we identify)

g Government recording charges

These charges can change at settlement:

g Required services that you can shop for (if you do not use companies we identify)

g Title services and lender’s title insurance (if you do not use companies we identify)

g Owner’s title insurance (if you do not use companies we identify)

g Initial deposit for your escrow account

g Daily interest charges

g Homeowner’s insurance

Using the tradeoff table


InstructionsThis GFE estimates your settlement charges. At your settlement, you will receive a HUD-1, a form that lists your actual costs. Compare the charges on the HUD-1 with the charges on this GFE. Charges can change if you select your own provider and do not use the companies we identify. (See below for details.)

Understanding which charges can change at settlement

In this GFE, we offered you this loan with a particular interest rate and estimated settlement charges. However:

g If you want to choose this same loan with lower settlement charges, then you will have a higher interest rate.g If you want to choose this same loan with a lower interest rate, then you will have higher settlement charges.

If you would like to choose an available option, you must ask us for a new GFE.

Loan originators have the option to complete this table. Please ask for additional information if the table is not completed.

Your initial loan amount

Your initial interest rate1

Your initial monthly amount owed

Change in the monthly amount owed from this GFE

Change in the amount you will pay at settlement with this interest rate

How much your total estimated settlement charges will be

The loan in this GFE

$

%

$

You will pay $ less every month

Your settlement charges will increase by $

$

$

%

$

You will pay $ more every month

Your settlement charges will be reduced by $

$

The same loan with lower settlement charges

The same loan with a lower interest rate

$

%

$

No change

No change

$

1 For an adjustable rate loan, the comparisons above are for the initial interest rate before adjustments are made.

Use this chart to compare GFEs from different loan originators. Fill in the information by using a different column for each GFE you receive. By comparing loan offers, you can shop for the best loan.

Using the shopping chart

This loan Loan 2 Loan 3 Loan 4

Loan originator name

Initial loan amount

Loan term

Initial interest rate

Initial monthly amount owed

Rate lock period

Can interest rate rise?

Can loan balance rise?

Can monthly amount owed rise?

Prepayment penalty?

Balloon payment?

Total Estimated Settlement Charges

Some lenders may sell your loan after settlement. Any fees lenders receive in the future cannot change the loan you receive or the charges you paid at settlement.

If your loan is sold in the future

The New GFE - A Line by Line Walk-Through · The New GFE - A Line by Line Walk-Through Webinar February 12, 2010 9-10:30 a.m. CST Presenter Ms. Christine Sisseck Dennis Schwartz &

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