NEW FORM: GOOD FAITH ESTIMATE (GFE)
As we are now aware, the new RESPA reform is requiring the use of a revised GFE (sample: http://www.hud.gov/content/releases/goodfaithestimate.pdf). The main focus in the revision was the consumer/borrower. The revisions and it's regulations are to assist the consumer in making it easier to find the best loan that fits what they are looking for. RESPA anticipates that this reform will save the consumer approximately $700.00 at time of settlement.
The new Good Faith Estimate will disclose to the borrower important dates pertaining to their loan, a summary of the loan terms, disclosure of escrow account information and summary of estimated settlement charges. The document is set up to allow the consumer to review the settlement charges in a more detailed view. The final page of the GFE will describe what is or is not permitted in regards to variances between the new HUD settlement statement and the GFE. Finally, it allows for the consumer to enter information from multiple GFEs to help the borrower determine which loan is best for them.
Some guidelines pertaining to the new GFE are highlighted below. I wanted to point out some key items regarding the GFE to help you realize the magnitude of what we are dealing with. You can also click the following link that will redirect you to a printable 43 page Q&A document that provided by Ramquest. http://www.hud.gov/offices/hsg/ramh/res/resparulefaqs.pdf :
The lender is responsible for curing tolerance violations. If a violation is found, the settlement agent does not have to stop the closing to resolve. However the lender has 30 days to cure the violation if not corrected at closing. You can refer to page 3 of the new GFE to see what constitutes a violation. To cure the violation, the lender would reimburse the borrower on the HUD or 30 days after closing for the difference that is required to cure the violation.
A loan originator must issue a GFE no later than 3 business days after the loan originator receives an application or information sufficient to complete an application.
Prior to issuance of the GFE, a mortgage broker is limited to only charging the consumer for the cost of the credit report. Only AFTER a GFE is provided and the borrower clearly indicates an intention to proceed, can additional charges be charged by the mtg. broker/lender (for origination-related services).
Items can no longer be reflected as POC on the GFE.
The lender is responsible for ascertaining whether or not the GFE has been provided. If the GFE has not been provided by the mortgage broker, the lender must provide the GFE. The failure to provide a GFE to a borrower within 3 business days of receipt of the borrower's application is a violation of Section 5 of RESPA.
All charges typically paid by the borrower must be disclosed on the GFE regardless of
whether the charges will be paid for by the borrower, the seller, or other party. If a borrower does not express an intent to continue with an application within ten business days after the GFE is provided (or such longer time period specified by the loan originator), the loan originator is no longer bound by the GFE.
When a loan originator permits a borrower to shop for third-party settlement services, the loan originator must provide the borrower with a written list of settlement services providers at the time of the GFE, on a separate sheet of paper. If the loan originator permits a borrower to shop for a settlement service provider, the borrower may choose a qualified provider that is not on the originator‘s written list.
Loan originators must provide an estimate of the charge for an Owner‘s title insurance policy in Block 5 of the GFE, on the GFE on all purchase transactions.
I HOPE YOU FIND THIS OF SOME ASSISTANCE AND I LOOK FORWARD TO POSTING SOME NEW INFORMATION REGARDING THE NEW HUD-1, AVERAGE PRICING AND REQUIRED USE (which can also be found in the link provided above).
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