My Post yesterday focused on the the three categories of costs that may or may not change once the New Good Faith Estimate 2010 Form is issued. These three categories are costs that Cannot Change, cost that Can Change by 10%, and costs that can Change at Settlement.
The first category of Costs that Cannot Change on the New Good Faith Estimate 2010 Form is pretty self explanatory, but the other two categories can change so in this Post I want to go into what constitutes a reason for change, and some examples of what they might be.
HUD’s Definition For Changed Circumstances
- Acts of God, war, disaster or other emergency
- When information particular to the borrower or transaction is found to be different or inaccurate
- When new information particular to the borrower or the transaction is provided
- Borrower requested changes
- Or when other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problem
Some Common Examples Of A Changed Circumstance:
- Adding or removing mortgage insurance
- Adding or removing borrowers
- Property under appraises
- Credit score changes
- Addition of service like an additional inspection, additional appraisal or certification
- Property uses changes - owner occupied to investment
- Wrong property address
- Property type change - SF, condo, 2-4 Family
- Loan amount or down payment amount change
- Transaction purchase changes – purchase to refinance
- Changing the rate or points
- Rate extension
- Loan program change
- Documents signed by a Power of Attorney
- Borrower changing from standard to extended coverage owner’s title policy
- Borrower does not proceed to closing quickly
If a Change of Circumstance which require a change in the costs on the original New Good Faith Estimate 2010 Form, these changes MUST be redisclosed on a new Good Faith Estimate within 3 business days of LEARNING THE NEW INFO or BORROWER REQUESTED CHANGE
Links to the other blogs in this series:
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
We were talking in the office today about creating a laundry list of "changed circumstance". A good portion of this will be trial and error - learn as we go. Heck if HUD can issue explanations on 12-31-09 for things on 1-1-10 ... haha. I think they are learning it too!!
Another excellent post George. I love the series you do. I remember some of your older ones and how informative they were! Thank you.
Forms, forms, and more forms. I remember back in the day when you signed three pieces of paper and your closing was complete:)
George sounds like the system just helped to create jobs for the new people needed to keep up with re0doing the forms. Positive spin on government action.
George,
Solid info for all. The changed circumstances part regarding "new information" is rather vague and predictably will spur some debate over what is included and what isn't. Oh, well.
George,
Makes buying a home even more of stressful situation..... Everyone needs a lender who understands the issues...like you!
Ann Hayden in Wildwood, MO
Thanks again George. It will be a good thing if many of us to share the specifics of our deals as we all learn the nuances of the new rules.
As with HVCC, this new mandate has not been thought through for practicality purposes at all. And here's an example I came across yesterday.
Under the vendor section, we need to list the title/escrow companies for all transactions. And as mortgage brokers, we are held to a 10% tolerance. In CA, a great majority of REO properties don't have those assigned until some 7-10 days after the contract has been accepted. So how are we to be held to a tolerance of companies we have no control over, and have no way of contacting upon issuance of the GFE.
Ultimately, the 2010 GFE will lead to highly padded fees and distorted numbers. Quite frankly, given that we are on the hook for almost any mistake, made by any vendor, I can see why.
Steve, big learning curve for everyone.
Monika, thank you for saying that. You have been around for all of my series :)
Bill I would love to see those days again :)
Ed maybe that is why the numbers for new unemployment applications has gone down ...... LOL
Esko, that is one of the learning curves, and will be for a while.
Ann I am trying to do my best to stay on top of this, but it seems to be a moving target these days.
Rick I agree. The new GFE will be a source of blog for the foreseeable future.
Pat, good point. Even though Fidelity and Chicago are not the Title Companies that most Attorneys use around here, they are the two with the highest premiums (15% higher), so it is their rates that we are disclosing so that we do not go over the 10% tolerance. The Attorney than can choose who ever he wants, but doing it this way we are covered.
Very good George - bookmarked for when mind can digest... right now, i'm into the SNOW!
I understand changed circumstance. If the INITIAL GFE was issued on a loan amount of $200,000 with total origination costs/fees of $3000 and the BORROWER requests a new loan amount of $300,000. Can the loan originator increase his fees because the borrower wants a higher loan amount? Or is he held to his original GFE origination costs/fees of $3000?
I cannot get two answers the same. One investor said yes the fee can increase because the loan amount has increased. And several investors said NO, never more than the original GFE so be sure and disclose compensation carefully.
Thanks for your help!
George - Not only is this a great post i was directed here from your comments on my posts and specifically from Brad's post. Thanks for your comments in my learning here in the Rain. Cheers to your prowess and may 2010 be even better. Congratulations
George,
As long as you are not the moving target, you should be fine....
Ann Hayden in "I cannot believe it is this cold" Wildwood, MO
George, Great information on the Good Faith Estimate. I have it bookmarked too, so I can go over it step by step. Thanks!
Diane, well there is nothing more snowy than this .......... LOL
Konnie, the answer is yes and no. The figure on line #1 of section "A" cannot change, because they are the Lenders fixed origination fees. But line #2 of section "A" which is where the points that are being charged should be put, can change because they are now being figured off of different loan amount. Therefore, the Total Adjusted Origination Charges at the end of section "A" can change. I hope that makes sense.
Claude thank you for your kind words :)
Ann ........ LOL
Susan if you require any additional information let me know.
George I wanted to stop by and congratulate you on being named number 1 in your field. You are a valued member of the community, and I personally look forward to your comments and post as you are always educating or making me laugh.
George,
It seems there is a lot to explain since you got a third part of this good faith information to explain, thanks
George I just realized you had the triple header of features...nice work my friend!
George ~ Thanks for taking the time to do these posts. This is such important information. It is a bit overwhelming and these posts make the changes easier to understand.
George,
Congrats on winning the gold medal on Active Rain! You are an excellent contributor!
Ann Hayden in Wildwood, MO
Appreciate all your hard work to put this series together..it'll help many!
George,
More clarity provided on this. Thank you taking the time to write these posts in this series.
Wow outstanding George! Congratualtions on making your mortgage company #1 in the Rain as per Brad! Just wish you were in Canada eh?
Jennifer, thank you and I also always look forward to your blogs and comments as well.
Ray and I am sure that in the not to distant future there will be even more to share on this issue.
Bill they were nice enough to feature the first two, three in a row would have been a little to much to expect especially since I wrote them so close together. But the fact that you considered it a feature is good enough for me :)
Joan, you are right about some of the information being overwhelming, even some of us that deal with it everyday find it a little difficult at times.
Ann, that was a surprise, I was not expecting that :)
Sally even if it just helps one person, it will have been worth the time to me :)
Judi thank you, and thank you for having re-blogged it.
Al and Peggy I would love to be in Canada, but only when it is warn, Connecticut is cold enough for me ....... LOL
George,
A surprise maybe but you do keep us informed!
Thank you,
Ann Hayden in Wildwood, MO
Bookmarked for future reference. As i am not a lender my clients are very important to me. I should have a working knowledge of what's going on behind closed doors. Thank you.
George, I just visited my mortgage associate he wanted to go over the new GFE with me to make sure I understood the changes...that's service. I too have bookmarked the series for future reference.
Ann, thank you.
Robert it is always good to know how the process works, because that way you can at least advise your clients as to whether they need to talk to someone else or not.
Nick I do the same thing with the Realtors that I work with. I consider us a team, and a team works best when everyone is well informed.
George, I'm back. I decided to go through each of you GFE posts because I still wasn't clear on a couple of items...lots of reading but very helpful...thanks.