RESPA links
Posted in RESPA reform By Matt Carter, Tuesday, April 1, 2008.Here's a list of links for those interested in learning more about RESPA reform. Feel free to add your own in the comments section.
Getting started:
HUD's RESPA home page.
Read HUD's proposed RESPA rule change as published in the Federal Register.
Download a copy of the proposed Good Faith Estimate (GFE).
Read HUD's 590-page impact analysis of the rule change.
Legal analysis by attorneys at K&L Gates (a good overview of potential impacts for mortgage originators, settlement services providers).
Comments submitted by industry attorney Howard Lax to HUD (another good legal analysis of rule's potential impacts).
Submit your comments on proposed RESPA rule changes to HUD until until June 12 at the Federal eRulemaking Portal.
Read comments submitted to HUD through the eRulemaking Portal.
See materials provided by industry lobbyists in meetings with HUD officials before publication of proposed rule changes.
Inman.com resources:
RESPA reform special report (paid download, free to Inman members).
March 14 story on the publication of proposed rule change (focus is on new disclosures).
March 14 blog post: Let's play Bargain Hunt (updated to include comments submitted to eRulemaking Portal through March 26).
March 26 blog post: Packaging is dead! Long live packaging! (details on incentives for packaging).
Other sites that cover RESPA issues:
Mortgage Industry Blog from lenderama
Radical Title Talk (blog by title agent Diane Cipa)
Title-opoly (blog by consultant Ed Rybczynski)
Appraisal Scoop (blog, various authors)
Rain City Guide (blog -- link is to posts authored by consultant Jillayne Schlicke)
Industry groups, associations:
RESPRO (Real Estate Services Providers Council Inc. - represents AfBAs)
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Submitted by Diane Cipa on April 1, 2008 - 3:56pm.
Diane Cipa
Hi, Matt: Thanks for creating this group. What's the protocol. Do you want to lead a dscussion or just go free flow?
Submitted by Matt Carter on April 1, 2008 - 4:11pm.
Thanks for joining Diane.
Free flow!
I've posted some topics for discussion but any member of the group is welcome to start their own. I'm hoping that we'll get into more real life examples of how the proposed RESPA rule changes might help consumers, or the problems they might create for particular industry players (loan originators, title insurers, appraisers, etc).
The way these Community groups work is sort of a combination of a forum and a blog. You can think of it as a specialized blog to which anyone can contribute a post that other members can comment on, or as a forum in which anyone can create a topic for discussion.
Submitted by Matt Carter on April 1, 2008 - 4:13pm.
I might add that for this particular post, if folks want to contribute their own RESPA links we'll keep updating the list.
Submitted by Diane Cipa on April 1, 2008 - 4:29pm.
OK, great!
This weekend I took three similarly priced transactions we were closing on Saturday and moved figures from the HUD-1s onto the new GFEs. I posted them on Radical and Lenderama....and anywhere else I could. LOL
Anyway, one was originated by a mortgage broker with a YSP. One was originated by a local bank under a correspondent program in which the bank had delegated underwriting for the lender. The third was originated by one of the top five national lenders.
Two were purchases and one was a refinance.
Despite my forgetting to move the interim interest into the column on one GFE, I found them very easy forms to use. I think the front page layout of the loan terms would be easy for a consumer to understand AND I think the origination charge - which is a sum of all lender fees including discounts or YSP - would be easily compared to other offers. What I found missing is a summary section so that a borrower would know their cash to close.
I believe the summary should be a part of the GFE so that the language and format is standard. I intend to suggest a model in my comments.
Submitted by Diane Cipa on April 2, 2008 - 6:17am.
I have a question for real estate agents.
The GFE has no place for buyer paid commissions, brokerage/administrative fees, etc.
I know these fees are disclosed to the consumer in buyer agency agreements, but how do you suggest we get them into a GFE summary so the buyer is reasonably prepared for cash to close?
Submitted by Matt Carter on April 2, 2008 - 7:30am.
Good question Diane ... I made your comment its own topic.
This hybrid forum/blog format takes a little getting used to.
When you've got a new topic, folks, you can go to the main page for the group:
http://www.inman.com/community/groups/respa-reform
and hit the blue "Start a new discussion topic" button up at the top.
Submitted by Matt Carter on April 2, 2008 - 7:49am.
Diane, the comparisons you did were interesting -- would you say they validate HUD's claims that in the consumer testing they did, their proposed GFE helped people select the best loan something like 90 percent of the time -- no matter who was offering it (mortgage broker, bank lender, etc)?
Here are the links to the GFEs Diane prepared.
Lender GFE
http://radicaltitletalk.blogspot.com/2008/03/lender-gfe.html
Bank correspondent GFE
http://radicaltitletalk.blogspot.com/2008/03/bank-correspondent-gfe-prep...
Mortgage broker GFE
http://radicaltitletalk.blogspot.com/2008/03/mortgage-broker-gfe.html
As far as cash to close, the Federal Trade Commission proposed a GFE that would show that number, but HUD seemed to think it was too complex an issue to tackle at the "shopping stage" of the process.
From page 313 (4-14 and 4-15 in printed document) of HUD's impact analysis:
"The Department does not have as a goal to produce on the GFE the set of calculations needed to determine the cash needed at settlement to close the loan. The example the FTC used is uncomplicated compared to what can happen on the HUD-1. In fact, much of the first page of the actual HUD-1 received at settlement is used to arrive at these figures. It might be asking a lot for the loan originator to produce these figures at the loan application stage, the shopping stage.
The costs of determining all the figures that lead to the required amount to be brought to closing would ultimately be borne by borrowers. Since we expect to stimulate shopping with the new GFE, we can expect multiple loan originators to incur these costs per each applicant. On average, then, we can expect loan originators to have to cover multiple sets of these determinations per closed loan. Given the potential cost of determining these figures, the multiple applications per closed loan, and the fact that borrowers ultimately incur these costs as higher fees, this requirement could prove very costly to borrowers if required at the application stage. They are unnecessary at the shopping stage."
Submitted by Diane Cipa on April 2, 2008 - 8:20am.
Great. Thanks, Matt. All this connectivity....it's wonderful.
Submitted by Kathy Glor on April 2, 2008 - 12:15pm.
Greetings to all,
At what point do most of you see the GFE? Typically I do not see one at the table, unless of course the borrower did not sign one prior to closing. If we, the closing agents, are to police the broker-lender/lender, are we not just asking for trouble? Had we said to the borrower's years ago, you are paying way to much for this loan, we would all have been out of business. I have thrown broker's out of my office because of their shady practices, hopefully this will eliminate the need for that. I am all for the enforcement of RESPA, but feel it should have been happenign all along.
Kathy
PS Diane I love your insight!
Submitted by Matt Carter on April 2, 2008 - 1:01pm.
Thanks Kathy good question -- I'm going to repost it as a new topic for discussion.
If anybody wants to start a new topic for discussion, go to the main page for the group:
http://www.inman.com/community/groups/respa-reform
and hit the blue "Start a new discussion topic" button.
On this post, we're primarily looking for people to contribute their RESPA-related links.
Submitted by Diane Cipa on April 2, 2008 - 1:08pm.
Hi, Kathy. Thank you. ;)
We often get a copy of the GFE with the title order and sometimes we never see it. Every lender is different under the present procedures.
I am hopeful that as they already do with predatory pricing, the lending community will be motivated to self-police and resolve discrepancies for the consumer's benefit before the transaction goes into the hands of settlement agents. That means that we'll likely only have to catch those cases that slip through the cracks. If we consider ourselves fiduciaries of the mortgage lender - which I do - then we are an extension of the lender at the table.
Submitted by Diane Cipa on April 4, 2008 - 1:23pm.
Matt: Sorry, I didn't notice your comment about the summary.
I think it's a mistake to not have a summary in the GFE process and will make that clear in my comments. The pre-qualification process includes an evaluation of the consumer's ability to purchase the property. You can't make that evaluation without making some sort of estimate of cash needed.
I'd far rather that HUD place a simple summary near the end of the GFE so that methodology is uniform than have every loan originator draft their own.
Also, since the GFE doesn't seem to cover real estate brokerage fees charged to the buyer, a summary could give the loan originator a chance to consider those costs.