Changes in the HUD Part 3

This is the 3^rd installment of text taken from the Federal Register about changes to the settlement process.  This section deals with requirements for the “Good Faith Estimate”.   It’s a lot longer – 4 pages now. 

 

The next post will have comments by the public about the proposed changes.

 

III. GFE and GFE Requirements—

Discussion of Public Comments

A. Overall Comments on the Proposed Required GFE Form

Proposed Rule. HUD proposed a four page GFE form. The first page of the GFE included a summary chart with key terms and information about the loan for which the GFE was provided, including initial loan balance; loan term; initial interest rate; initial amount owed for principal, interest, and any mortgage insurance; rate lock period; whether the interest rate can rise; whether the loan balance can rise; whether the monthly amount owed for principal, interest, and any mortgage insurance can rise; whether the loan has a prepayment penalty; whether the loan has a balloon payment; and whether the loan includes a monthly escrow payment for property taxes and possibly other obligations. The first page of the form also included information regarding the length of time the interest rate for the GFE was valid; the length of time the other settlement charges were valid; information about when settlement must occur if the borrower proceeds with the loan; and information concerning how many days the interest rate must be locked before settlement. At the bottom of the first page, the GFE included a summary of the settlement charges. The adjusted origination charges listed on the second page, along with the charges for all other settlement charges listed on the second page, would have been totaled and listed on this page.

 

The second page of the GFE included a listing of estimated settlement charges. The loan originator’s service charge would have been required to be listed at the top of page two, and the credit or charge (points) for the specific interest rate chosen would have been required to be subtracted or added to the service charge to arrive at the adjusted origination charge, which would have been shown on the top of page two. Page two of the GFE also would have required an estimate for all other settlement services. The GFE included categories for other settlement services including: Required services that the loan originator selected; title services and lender’s title insurance; required services that the borrower would have been able to shop for; government recording and transfer charges; reserves or escrow; daily interest charges; homeowner’s insurance; and optional owner’s title insurance. The GFE would have required these charges to be subtotaled at the bottom of page two. The sum of the adjusted origination charges and the charges for all other settlement services would have been required to be listed on the bottom of page 2.

 

The third page of the GFE would have required information concerning shopping for a loan offer. In addition, page three would have included information about which settlement charges could change at settlement, and by how much such charges could change. Page 3 also would have required the loan originator to include information about loans for which a borrower would have qualified that would increase or decrease settlement charges, with a corresponding change in the interest rate of the loan.

 

The fourth page of the GFE included a discussion of financial responsibilities of a homeowner. The loan originator would have been required to state the annual property taxes and annual homeowner’s flood, and other required property protection insurance, but would not have been required to state estimates for other charges such as annual homeowner’s association or condominium fees. The GFE included a section that advised borrowers that the type of loan chosen could affect current and future monthly payments. The proposed GFE also indicated that the borrower could ask the loan originator for more information about loan types and could look at several government publications, including HUD’s Special Information Booklet on settlement charges, Truth in Lending Act (TILA) disclosures, and consumer information publications of the Federal Reserve Board. The March 2008 proposed rule invited comments on possible additional ways to increase consumer understanding of adjustable rate mortgages.

 

Page 4 also would have included information about possible lender compensation after settlement. In addition, page 4 would have included a shopping chart to assist the borrower in comparing GFEs from different loan originators and information about how to apply for the loan for which the GFE had been provided.

 

 

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Another form to sign at closing

The name Countrywide Financial has been retired and Bank of America Home Loans has taken its place.

Bank of America Home Loans has renamed its one-page loan summary presented to borrowers the Clarity Commitment. The bank said it will contain interest rate, terms and other details of the loan in plain language similar to the Good Faith Estimate.

Provided both at application and at closing, the Clarity Commitment document, says Bank of America, is available on most new purchase and refinance transactions, including traditional and government-backed loans.

In addition, the company said it has introduced the Bank of America Home Loan Guide as part of the new Bank of America home loans Web site.

By explaining key data inputs, highlighting "rules of thumb" and tips with each step, and providing context around the results, the guide is supposed to give consumers relevant, personalized information that helps them understand their options and make informed decisions.

Considering RESPA changes to the Good Faith Estimate and changes to the HUD-1 if this Clarity Commitment is really necessary.  I know I would appreciate one less form to sign at a closing.

 

 

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New HUD rule

This section of the report describes how HUD received comments.  New rules are required to go through a comment period and this section explains how HUD complied with that requirement.

 

From: Federal Register / Vol. 73, No. 222 / Monday, November 17, 2008 / Rules and Regulations

 

II. Overview of Commenters

The public comment period on the March 2008 proposed rule was originally scheduled to close on May 13, 2008. In response to numerous requests, including congressional requests, to extend the comment period, and HUD’s desire to develop a better rule, HUD announced an extension of the comment period. This announcement was made on both HUD’s Web site and by publication of a notice in the Federal Register on May 12, 2008 (73 FR 26953). At the close of the extended public comment period on June 12, 2008, HUD had received approximately 12,000 comments. Approximately two-thirds of the comments received were duplicative or repeat comments; i.e., individuals or organizations who submitted identical or virtually identical comments. For example, members of certain trade organizations, or employees of certain companies, frequently submitted identical comments.

 

HUD received comments from homeowners, prospective homeowners, organizations representative of consumers, and numerous industry organizations involved in the settlement process, including lending institutions, mortgage brokers, real estate agents, lawyers, title agents, escrow agents, closing agents and notaries, community development corporations, and major organizations representative of key industry areas such as bankers, mortgage bankers, mortgage brokers, realtors, and title and escrow agents, as well as from state and federal regulators. HUD appreciates all those who took the time to review the March 2008 proposed rule and submit comments.

In addition to submission of comments, HUD representatives accepted invitations to participate in public forums and panel discussions about RESPA and HUD’s March 2008 proposed rule. HUD also met, at HUD Headquarters or at the offices of the Office of Management and Budget (OMB), with interested parties, requesting meetings as provided by Executive Order 12866 (Regulatory Planning and Review), who highlighted for HUD and OMB areas of concern and support for various aspects of the rule. All of this input contributed to HUD’s decisions that resulted in this final rule. HUD also received approximately 100 public comments that were submitted after the deadline. To the extent feasible, HUD reviewed late comments to determine if issues were raised that were not addressed in comments submitted by the deadline.

Subsequently, I will be posting comments submitted to HUD concerning the new rule so you will be able to see how your organization related to HUD in the development of the new HUD.

 

 

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Another Title Agent Caught in Fraud

The Orlando Sentinel reports on Michelle Worley of Preferred Alliance Title and their scheme to defraud Stewart title of $4 million.

Read the Story Here




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Title-ed.com has new Announcement List

Florida Title Insurance Continuing Education Provider, Title-ed.com, has instituted an Announcement List so that when there is a new course approved by the Florida Department of Financial Services, who ever is on the list will be notified. This will make it easier for list members to know when courses are available so that they can keep their continuing education requirements up to date. Title-ed will not clog up your email with useless emails neither will it use your information for anything other than the announcement list. Your privacy is important to us. So go to the sign up page now. Click Here



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changes to the HUD

The following is the first in a series taken from the Federal Register about changes to the HUD-1

 

Federal Register / Vol. 73, No. 222 / Monday, November 17, 2008 / Rules and Regulations 68205

2008 Proposed Rule

RESPA is a consumer protection statute, and, as further described in this preamble, consumer groups were, in general, very supportive of the basic goals and key components of the March 2008 proposed rule. For example, the National Consumer Law Center, in a joint comment with Consumer Action, the Consumer Federation of America, and the National Association of Consumer Advocates, stated, ‘‘HUD has done an excellent job in moving the ball toward greater protection for consumers in the settlement process.’’ In addition, the Center for Responsible Lending, in its comment concluded: ‘‘[W]e applaud HUD for addressing the challenge of reforming RESPA. We believe HUD’s proposed GFE provides important improvements over existing requirements.’’

 

HUD received adverse comments about many aspects of the proposed rule, primarily from mortgage industry representatives, including requests that HUD withdraw its proposal entirely or that HUD postpone its current efforts in order to work with the Federal Reserve Board to arrive at a joint regulatory approach. HUD takes these comments very seriously and appreciates the concerns raised by these commenters. HUD’s view continues to be, however, that improvements in disclosures to consumers about critical information relating to the costs of obtaining a home mortgage, often the most significant financial transaction a consumer will enter into, are needed, and that such disclosures are a central purpose of RESPA.(emphasis added) Most commenters—including consumers, industry representatives, and federal and state regulatory agencies—supported the concept of better disclosures in general, and commended both HUD’s efforts and particular provisions in the proposed rule.

 

Moreover, given the current mortgage crisis, the foreclosure situation many homeowners are now facing because they entered into mortgage transactions that they did not fully understand, and the prospect that future homeowners may find themselves in this same situation, HUD believes that it is very important that the improvements in mortgage disclosures made by this final rule move forward immediately. Nevertheless, as noted in the preamble to the March 2008 proposed rule, HUD will continue to work with the Federal Reserve Board to achieve coordination and consistency between the Board’s current regulatory efforts and HUD’s requirements.

 

HUD has made many changes to the March 2008 proposed rule in response to public comment and further consideration of certain issues by HUD. Some of the provisions in the March 2008 proposed rule have been revised in this final rule and others have been withdrawn for further consideration. HUD believes that the result is a final rule that will give borrowers additional and more reliable information about their mortgage loans earlier in the application process, and will better assure that the mortgage loans to which they commit at settlement will be the loans of their choice. At the same time, in recognition of the concerns raised by industry commenters about the need for sufficient time for the industry to make systems and operational changes necessary to meet the requirements of the new rule, the final rule provides that the new GFE and HUD–1 will not be required until January 1, 2010. However, certain other provisions of the rule will take effect 60 days from the publication date of the final rule. The following are some of the most significant changes made at this final rule stage, and are discussed in more detail in the discussion of public comment.

• A GFE form that is shorter than had been proposed.

• Allowing originators the option not to fill out the tradeoff table on the GFE form.

• A revised definition of ‘‘application’’ to eliminate the separate GFE application process.

• Adoption of requirements for the GFE that are similar to recently revised Federal Reserve Board Truth-in-Lending regulations which limit fees charged in connection with early disclosures and defining timely provision of the disclosures.

• Clarification of terminology that describes the process applicable to, and the terms of, an applicant’s particular loan.

• Inclusion of a provision to allow lenders a short period of time in which to correct certain violations of the new disclosure requirements.

• A revised HUD–1/1A settlement statement form that includes a summary page of information that provides a comparison of the GFE and HUD–1/1A list of charges and a listing of final loan terms as a substitute for the proposed closing script addition.

• Elimination of the requirement for a closing script to be completed and read by the closing agent.

• A simplified process for utilizing an average charge mechanism.

• No regulatory change in this rulemaking regarding negotiated discounts, including volume based discounts.

 

 

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Lien Searches

Who does Lien Searches in Florida?


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Authors Needed

Still looking for authors.  The time will come soon when realtors will need continuing education credits.  I own the name RealtySchoolsite.com and I am looking for people who can provide content for online courses.  Online courses have become a very popular way to earn continuing education credits.  I have successfully set up courses for title insurance agents(Click Here) and am looking forward to expanding into Real Estate courses.  If you are interested in getting in on the ground floor -  let me know

 

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Title Agency E and O Insurance

Is your E and O coverage  written on a claims made and reported policy form?  Do you even know what that means?  Apparently a claims made and reported policy form covers you for errors or omissions which are first made and reported during the policy period, as long as the act leading to the claim took place AFTER your retroactive or prior acts date listed in your policy. The retroactive or prior acts date is the most important feature of any E&O policy. I didn’t know there was such a thing as a retroactive or prior acts date in my policy, did you?  I thought title insurance was complicated.  I figured if I made a mistake or even if I didn’t but somehow got caught up in a claim, my e and o would cover me.  Seems there is some important stuff in the fine print.

 

Nevemind, just call Robin and she will explain it to you and make sure you are covered for the best price.

 

 

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By Inman News, Tuesday, March 24, 2009.

The Federal Reserve's initiatives to keep mortgage rates down are spurring a rush to refinance that will test the operational capacity of lenders, but low rates won't translate into higher home sales unless unemployment stabilizes, the Mortgage Bankers Association said today.

The MBA has dramatically revised its forecast for 2009 mortgage refinancings, saying it expects lenders will fund $1.96 trillion in refinance loans this year.

That's an $824 billion increase from last month's forecast, when the MBA said it expected $1.13 trillion in refinancings in 2009. Last year, by comparison, lenders refinanced only $765 billion in loans.

Read more

 

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CFO SINK ANNOUNCES UPCOMING LAWYER/LENDER ROUNDTABLE TO HELP FLORIDIANS AVOID FORECLOSURE

Contact: Kyra Jennings or Kevin Cate
(850) 413-2842

TALLAHASSEE – Florida Chief Financial Officer Alex Sink today announced that she will bring together Florida lenders and attorneys with the Florida Attorneys Saving Homes program this month for a roundtable discussion on streamlining efforts to keep Floridians in their homes.

The roundtable, to be held April 20, 2009 in Tampa, will give lenders and pro bono lawyers the chance to discuss how to improve their communication and interaction, as they work together to help Floridians facing the threat of foreclosure. CFO Sink stood with Florida Legal Services attorneys who are part of the Florida Attorneys Saving Homes (FASH) program to announce the upcoming roundtable.

“As we are all aware, for a number of years Florida has been ground zero for the housing crisis faced by our country today,” said CFO Sink. “That’s why I have worked to find any avenue possible to provide real, tangible help to Floridians facing the threat of foreclosure.”

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The copy machine is not just a copy machine

We recently started using our copy machine's scanning feature and it has made a significant difference in the way we deliver our product.  We have software to produce a title commitment.  The system usess Microsoft word to assemble the documents required to go into the commitment package.  Then there are all the supporting documents like the county search, the tax search and the judgement search.  Most of those get delivered via the web so they are already in pdf format.  The county search may come via mail, fax, or email.  This is where the copy machne/scanner comes in.  We can now put all the documents into one file whether we have to scan them in or just upload them.  We can then move the pages around on the screen by just clicking and dragging them to the place we want.  We can take out pages that aren't needed and scan in pages that are needed.  The Word docs that were generated by the title software are converted on the fly as we drag them from Windows Explorer to the copy software were the package is assembeled.  Once we have all the pages we need in the order we need them, we can email the package as an attachment.  Saves some time and lots of paper.  Once we get it all figured out, we sholdn't have to print out anything. 

 

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New course offered by Learntitle

Learntitle.com has recently had a course approved by the New Jersey Dept of Banking and Insurance.  “How to Search” is now available at www.Learntitle.net.  The course is good for 2 hours of continuing education credits.  It discusses the proper technique for searching the public records in the courthouses of New Jersey.  Something every title agent should know and now can learn about online from the comfort of your home or office. 

 

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Mortgage Modification

There seems to be a lot of buzz on the web about mortgage modifications.  Seems there are some firms that are specializing in “forensic loan” examinations.   These firms are looking for respa violations that may have happened during closing of a loan that may give the borrow some leverage in renegotiating their mortgage.  Not sure how effective these investigations are.  I’m sure they are not done for free and I am wondering if the subsequent modification is really worth the trouble.  I am wondering also if there are violations found, if the title agent has any culpability and what their level of liability is. 

 

As always your comments are welcome.

 

Art Oswald

www.learntitle.com, LLC

551 404 5341

The richest man is not the one with the most stuff - it is the one with a satisfied mind.

 

How I would Remake Federal Financial Regulation

by Bill Maloni

The Obama Administration and Congress need to substantively refurbish the federal financial regulatory network, which failed us as a nation during the Bush years and continues to provide more questions than answers.

Rhetoric to the side, federal policy makers have an opportunity today to drive a significant restructuring or just could wimp out and merely change the coverlet on the financial regulatory bed, introducing some pretty new colors, but leaving in place soiled blankets and sheets underneath.

The early Obama/Geithner plans look more like the latter than the former. The President needs to be bolder.

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