SUMMARY OF NEWGOVERNMENT REGULATIONS

Home Valuation Code of Conduct (HVCC) – took eectin May 2009 to ensure thatborrowers have sucientnotice o appraisal contentand to promote the accuracyo appraisals by shieldingappraisers rom undueinuence.

Housing and EconomicRecovery Act (HERA) MortgageDisclosure Improvement Act –took eect in July 2009 to bettereducate borrowers regardingtheir home fnancing choices.HERA specifes timing inregard to initial disclosures, eecollection and fnal disclosures.

RESPA Reform – takes eect onor beore January 1, 2010 withthe intent to help borrowersavoid surprises at closing byrevising the Good Faith Estimate(GFE) and implementingtolerance levels on all chargesor services associated withobtaining the mortgage (wherethe vendor is not borrower-selected). THIS INCLUDES TITLEAND ESCROW SERVICES.

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RESPA REFORMAn update rom Pickord Escrow and The Escrow Firm

THREE IMPACTS YOU NEED TO KNOW:

1) NEw RESPA REFORM GOOd FAith EStiMAtE (GFE)

Changes should help your buyers avoid surprise charges at closing,have the ability to shop or the best loan, and ultimately eel moreinormed about the all-in cost o the transaction.

 The new GFE is required on any mortgage application taken on or aterJanuary 1, 2010 (with a property identifed).

Additionally, Escrow and Title Agents will be required to provideborrowers with the new RESPA Reorm HUD-1 settlement statementthat closely aligns with the new GFE, or any closing originated aterJanuary 1, 2010 or prior i the new GFE was used.

IMPACT – No signifcant impact on the way you do business

2) NEw RESPA REFORM hUd-1

 The new settlement statement has been increased rom two to threepages.

It includes a side-by-side comparison chart to help borrowers comparethe fnal loan terms disclosed on their latest GFE with the chargesshown on the HUD-1.

Buyer and Seller will now be required to sign an estimated HUD-1rather than or in addition to an estimated settlement statement

IMPACT - ALL charges are disclosed on the HUD-1 or the borrower toreview and compare to the GFE, i some o the charges dier by morethan 10% at settlement, this may cause delays in closing (See Page 3 o the New GFE or an explanation o what charges can change and whatcannot). Escrow will be sending ees to the Lender early in the process

to help ensure accurate GFE and HUD-1s.

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NOTE: TO BRING THE FEES WITHIN TOLERANCE it is AGAINST THE LAW  

 for a lender or agent to ask the ESCROW OR TITLE COMPANY to change

their fees – see FAQ on page 2.

At Pickord Escrow and The Escrow Firm our job is to be on top o all th e latest regulatory

changes so that we can close your deals smoot hly – We serve as the escrow experts in each

transaction AND there are things you need to know so that you can educate your clients an d

supply both the escrow company and the lender with th e proper inormation so we can avoid

undo delays at closing.

P I C K F O R DE S C R O W C O M P A N Y

 

RESPA REFORM, CONTINUED

FREQUENTLY ASKED QUESTIONSSeon 4 an 5 – Rg o ure an oerane voaonsHere are a selection of Questions taken from the HUD WEBSITE FAQ DOCUMENT as they pertain to the NEW HUD-1 and Curing Tolerance Violations.

Q: wo s responsbe or any oerane voaon?

A: The lender is responsible or curing tolerance violations.

Q: does e seemen agen ave o sop e osng a oerane oube voae?

A: No, the settlement agent does not need to stop the closing. While HUDrecommends that the lender cure the tolerance violation at closing, thelender has 30 calendar days to cure.

Q: i a arge on e hUd1 s ess an e arge on e GFE, s s aoerane voaon?

A: No. It is permissible or charges to the borrower to decrease. This is notconsidered a violation.

Q: i a oan orgnaor pressures a seemen agen o reue er argesor o ‘over e ferene‘ o brng e oss no ompane eoeranes, s a onsere a voaon o RESPA Seon 8a?

A: I a loan originator (or other settlement service provider) pressures asettlement agent (or other settlement service provider) to reduce theircharges or otherwise cover the dierence to bring the costs into compliancewith the tolerances as a condition o receiving uture reerrals o business, itmay be considered a potential violation o RESPA Section 8(a). Please contactthe Oce o RESPA and ILS to fle a complaint.

Key takeAays or youan your ens!

I the Borrower/Buyer choosesPickord Escrow Company or The Escrow Firm (when noton the written list providedby the loan originator) theamount paid or that serviceis not subject to a tolerance.Choose Pickord Escrow or TheEscrow Firm.

Getting Accurate GFEs arecritical and we need lenderinormation as early aspossible in the transaction tocommunicate accurate eesor services to be providedby Pickord Escrow and TheEscrow Firm.

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3) tiMEliNE iMPAct

In the event the estimated HUD-1 shows an increase o more than 10% to ees subject to 10% toleranceincreases, the closing may be delayed.

 The lender must work with the Escrow and/or Title Company to determine i the change requires a revised GFEto be issued to the borrower. (For an new GFE to be issued there much be a “Changed Circumstance” i.e. ratechange or loan product change)

I the charges result in an increase in the APR o more than .125%, there may be an additional timing impactsince a PreClosing TIL will need to be provided.

IMPACT – Two Potential closing delays: (1) A revised GFE must be provided to the borrower allowing at least1 business day or their review prior to closing. (2) I the APR increases more than .125%, the Truth in Lending(TIL) disclosure (we call it a PreClosing TIL) must be reissued at least 7 business days prior to closing. By law thisallows 3 business days or mailing and provides the customers with the time required to determine i they arecomortable with their loan choice.

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(Continued from page 1)

we ook orar o orkng on a ea you soon!

P I C K F O R DE S C R O W C O M P A N Y