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RESPA Reform Illustration of the 2010 GFE and HUD-1 Provided as a courtesy by Southern Abstract Company www.southernabstract.com www.southernabstract.com Slide 2 Notice: This information has been provided by Southern Abstract Company for your convenience and is not a substitute for knowledge of the current federal regulations regarding the Real Estate Settlement Procedures Act. For additional information or instructions, please consult your attorney or other appropriate professional advisor or the Office of RESPA at the Department of Housing and Urban Development (202-708-0502). Slide 3 New Forms New 3-page GFE Grouping of fees Tolerance levels Shopping Revised HUD-1 with new Page 3 Grouping of fees Specific references to GFE Comparison of GFE fees to HUD fees Loan terms Slide 4 New GFE SummaryDetails Tolerances, Comparisons Slide 5 New GFE Page 1 Slide 6 Must be at least 10 business days from the date of the GFE 1/19/2010 1/4/2010 1/4/2010 at 5:00 pm 30 15 Slide 7 New GFE Page 1 108,000.00 30 5.125 588.05 X X X X X X Slide 8 New GFE Page 2 Eleven categorie s All fees traditionally charged to the borrower, regardless of who pays, must be listed on the GFE. Slide 9 Definitions Our origination charge (Block 1) Origination service means any service involved in the creation of a mortgage loan, including but not limited to the taking of the loan application, loan processing, and the underwriting and funding of the loan, and the processing and administrative services required to perform these functions. Administrative services can include document preparation, document delivery, copying, notarization, wiring, lender inspection, loan handling, courier/overnight delivery fees and other miscellaneous fees. Slide 10 Definitions Title services and lenders title insurance (Block 4) Title service means any service involved in the provision of title insurance (lender's or owner's policy), including but not limited to: title examination and evaluation; preparation and issuance of title commitment; clearance of underwriting objections; preparation and issuance of a title insurance policy or policies; and the processing and administrative services required to perform these functions. The term also includes the service of conducting a settlement. Slide 11 New GFE Zero Tolerance 10% Tolerance Can Change Tolerance means the maximum amount by which the charge for a category or categories of settlement costs may exceed the amount of the estimate for such category or categories on a GFE. A lender must cure a tolerance violation by refunding the overage to the borrower at closing or within 30 calendar days. Fees disclosed, but paid by others, are still bound by the tolerances. Slide 12 New GFE Zero Tolerance Block 1 Origination Charge Block 2 Credit or charge for the interest rate Block A Your adjusted origination charge Block 8 Transfer taxes Slide 13 New GFE Block 3 Required services that we select Block 7 Government recording charges Block 4 Title services and lenders title insurance Block 5 Owners title insurance Block 6 Required services you can shop for 10% Tolerance Blocks 4, 5 and 6 will be subject to the 10% tolerance when the borrower uses a settlement service provider identified by the loan originator. Slide 14 New GFE Block 9 Initial deposit for escrow account Block 10 Daily interest charges Block 11 Homeowners Insurance Block 4 Title services and lenders title insurance Block 5 Owners title insurance Block 6 Required services you can shop for Can Change Blocks 4, 5 and 6 will not be subject to the 10% tolerance when the borrower chooses a settlement service provider not identified by the loan originator. Slide 15 New GFE Page 3 Slide 16 Can a revised GFE be issued? Slide 17 Revised GFE Changed circumstances Borrower requested changes Expiration of original GFE Interest rate dependent changes and terms (until the rate is locked) New home purchases Slide 18 Revised GFE Changed circumstance Acts of God, war, disaster, or other emergency Inaccurate information particular to the borrower or transaction New information particular to the borrower or transaction Other circumstances particular to the borrower or transaction A revised GFE must be issued within 3 business days of receiving the information sufficient to establish changed circumstance. The loan originator may ONLY change those charges and terms affected by the specific changed circumstance. Slide 19 Revised GFE NOT a changed circumstance Any of 6 pieces of original info unless there are changes or they are found to be inaccurate Market price fluctuations Slide 20 New HUD-1 No changes Changed All New Slide 21 HUD-1 Page 2 Outside the column In (Inside) the column Slide 22 HUD-1 Page 2 Reference s back to specific blocks on GFE Slide 23 HUD-1 Page 2 700 Series 4,250.00 4,050.00 ABC Real Estate Company XYZ Real Estate Company 8,300.00 Slide 24 HUD-1 Page 2 800 Series 3,180.00 (1,000.00) 2,180.00 275.00 30.00 70.00 11.00 Appraisal Company Credit Report Company Best Mortgage Company Tax Service LLC Slide 25 HUD-1 Page 2 900 Series 01/1302/0115.164 272.96 719.00 The Insurance Company 1 Slide 26 HUD-1 Page 2 1000 Series 57.50 28.09 3 4 172.50 112.36 227.36 57.50 Slide 27 HUD-1 Page 2 1100 Series $50.00 $108,000.00 $135,000.00 312.60 $253.82 $108.78 250.00 $150.00 15.00 20.00 750.00 Information Only Slide 28 HUD-1 Page 2 1200 Series 13.00 15.00 45.00 58.00 202.50 108.00202.50 108.00 Slide 29 HUD-1 Page 2 1200 Series 13.00 15.00 45.00 58.00 202.50 108.00202.50 108.00 Mortgage Certification Fee $5.00 63.00 113.00 Slide 30 HUD-1 Page 2 1300 Series Pest Inspection 440.00 to Pest Control Company 150.00 Survey to Survey Company 225.00 Home Warranty to Home Warranty Company 150.00 Slide 31 HUD-1 Page 3 Zero Tolerance 10% Tolerance Can Change 108,000.00 30 5.125 588.05 x x x x x x x x 85.59 673.64 x x Slide 32 Putting it Together GFE Page 2 HUD-1 Page 3 HUD-1 Page 2 Slide 33 Putting it Together GFE Page 2 HUD-1 Page 3 HUD-1 Page 2 Slide 34 Putting it Together 3,180.00 (1,000.00) 2,180.00 275.00 30.00 70.00 11.00 ABC Appraisal Company Best Mortgage Company Tax Service LLC 2,180.00 3,180.00 (1,000.00) 3,180.00 2,180.00 1,000.00 -1,000.00 5.125 x GFE Page 2 HUD-1 Page 3 HUD-1 Page 2 2,180.00 Zero Toleranc e Slide 35 13.00 15.00 45.00 58.00 202.50 108.00202.50 108.00 Putting it Together 2,180.00 3,180.00 (1,000.00) GFE Page 2 HUD-1 Page 3 HUD-1 Page 2 2,180.00 108.00105.00 Zero Toleranc e 105.00 Slide 36 13.00 15.00 45.00 58.00 202.50 108.00202.50 108.00 Putting it Together GFE Page 2 HUD-1 Page 3 HUD-1 Page 2 10% Toleranc e 54.00 58.00 -4.00 Slide 37 3,180.00 (1,000.00) 2,180.00 275.00 30.00 70.00 11.00 Appraisal Company Credit Report Company Best Mortgage Company Tax Service LLC Putting it Together GFE Page 2 HUD-1 Page 3 HUD-1 Page 2 10% Toleranc e 386.00 54.0058.00 Tax Service LLC 806 70.00 Appraisal Company 804 275.00 Credit Report Company 805 30.00 Best Mortgage Company 807 11.00 275.00 30.00 11.00 70.00 - 4.00 00.00 Appraisal275.00 Credit Report30.00 Tax Service70.00 Flood Certification11.00 Slide 38 Pest Inspection 440.00 to Pest Control Company 150.00 Survey to Survey Company 225.00 Home Warranty to Home Warranty Company 150.00 Putting it Together GFE Page 2 HUD-1 Page 3 HUD-1 Page 2 10% Toleranc e 75.00 54.0058.00 Tax Service LLC 806 70.00 Appraisal Company 804 275.00 Credit Report Company 805 30.00 Best Mortgage Company 807 11.00 Pest Control Company 1301 150.00 275.00 30.00 11.00 75.00 70.00 - 4.00 00.00 -75.00 Pest Control Company 75.00 Slide 39 $50.00 $108,000.00 $135,000.00 312.60 $253.82 $108.78 250.00 $150.00 15.00 20.00 750.00 Putting it Together GFE Page 2 HUD-1 Page 3 HUD-1 Page 2 10% Toleranc e 800.00 54.0058.00 Tax Service LLC 806 70.00 Appraisal Company 804 275.00 Credit Report Company 805 30.00 Best Mortgage Company 807 11.00 Pest Control Company 1301 150.00 Southern Abstract Company 1101 750.00 Southern Abstract Company 1103 312.60 1,656.60 275.00 30.00 11.00 75.00 800.00 521.00 70.00 1,836.00 - 4.00 00.00 - 75.00 + 50.00 +208.40 +179.40 0.000 521.00 Slide 40 Putting it Together HUD-1 Page 3 10% Toleranc e 44.0058.00 Tax Service LLC 806 70.00 Appraisal Company 804 275.00 Credit Report Company 805 30.00 Best Mortgage Company 807 11.00 Pest Control Company 1301 150.00 Southern Abstract Company 1101 750.00 Southern Abstract Company 1103 312.60 1,656.60 175.00 30.00 11.00 75.00 800.00 350.00 70.00 1,555.00 - 14.00 -100.00 00.00 - 75.00 + 50.00 + 37.40 -101.60 101.606.5 Slide 41 57.50 28.09 3 4 172.50 112.36 227.36 57.50 01/1302/0115.164 272.96 719.00 The Insurance Company 1 Putting it Together 719.00 300.00227.36 106.15272.96 GFE Page 2 HUD-1 Page 3 HUD-1 Page 2 900.00 Can Change Property & Casualty 900.00 $15.164 1/25/2010 7 x x 300.00 106.15 Slide 42 Need more info? Please review the other information on our website www.southernabstract.com or contact us at 918-336-7528 or title@southernabtract.com www.southernabstract.com Slide 43 Slide 44 Overview FAQs GFE Fee Calculator SAC Fee Sheet Forms Other Links