This message was sent to all Account Executives, Branch Managers, Underwriters and Closers
In case you are not aware, your lives are changing substantially as of January 1. The way you have always done loans in the past goes away and a whole new era takes place. It’s a brave new world.
The FHA has changed the rules for the Good Faith Estimate effective with new loans taken January 1, 2010 and thereafter. The form and format has changed. Instead of a one-page document, the new form is three pages. Instead of giving an estimate of settlement cost and the cash required to close, you will not give a guarantee of most of the costs and guarantee those costs for a specific period unless events change in the loan. The estimated cash the borrower will have to provide at closing is no longer a part of the GFE. The monthly payment for principal, interest, taxes and insurance is no longer a part of the GFE. You will never again charge an underwriting fee or a doc prep fee or a processing fee. Instead, FHA says you will guarantee “Our origination charge” and that “This charge is for getting this loan for you”. And, it is only one fee. This rule is so complicated that FHA has issued an on-going set of Frequently Asked Questions that is now 51 pages. And just this week they were conducting seminars announcing information not previously provided. To the point that Calyx, for example, now has to make further adjustments to their system to eliminate a place for the borrower to sign this document since this document is promulgated by the federal government and may not be changed. The promulgated form has no place for a signature.
I believe we have a basic understanding of how this works. In lieu of holding a number of web-ex type conferences, we have videotaped a PowerPoint presentation of how you should complete the new GFE and HUD-1 with applications taken January 1, 2010 and thereafter. This videotape has been posted on our website. We have added a new tab near the center of the page on the far right in the same place the tabs for Home, Secondary, Branch Resources, etc. are located. This tab is called Training and when you click on the tab, the only option is for RESPA Reform. When you click on RESPA Reform, a new page opens that contains videos and information about this topic.
There are five videos about this topic each running 15 to 18 minutes. We thought it best to break these down into shorter segments for each in opening and using. The five videos are composed of:
- Videos 1 through 3 which are the primary presentation of this Rule in three continuous videos
- Video 4 is the Examples video which reviews various parts of the GFE and HUD-1 to make sure everyone is clear on what is reported where
- Video 5 is the Broker video which explores the problems with the Rule and the requirements if you are brokering a loan to another lender
The two copies on the website are only for ease of use from a programming standpoint. If you have trouble opening one, you can switch to the other format. Either can be increased to “full screen” size.
In addition and prior to starting the video, on the left side of this screen we have posted information that you should print prior to watching the videos. The information includes print-outs of the PowerPoint programs themselves and a copy of the new Good Faith Estimate and the new HUD-1. It will make watching the video easier if you have these documents to review with the video.
Also in this section, we have provided a copy of the FHA FAQ document – the 51 page document of frequently asked questions about this subject. I highly encourage you to review this before you ask questions.
Nonetheless, we anticipate that you will have questions of this new policy. We encourage you to send your questions to RESPA@nflp.com. We have created a BLOG that will be available later today and will post questions received and our response to those questions on the BLOG. It will be updated on a regular basis during the day. So everyone will be able to see all the questions we have been asked about this program and how we implement.
Note that Calyx does have these documents as part of their program today. Their system currently requires a user to input the data on an old Good Faith and will transmit it to a new GFE. Version 7.2 has the Service Provider document included with the new GFE. But further changes are coming from Calyx and we will notify you as soon as we receive.
It is the responsibility of every branch manager to make sure every origination related employee you have in your branch review these documents and be able to complete a GFE by January 1. If you have questions, go to the BLOG and if the answer is not there, send to RESPA@nflp.com.
Good luck. And may God bless us everyone.
Tommy Orr
COO – Network Funding, LP