Key Features of RESPA Reform
New style 3 page Good Faith Estimate (GFE):
- Must be provided to borrower within 3 days of receipt of a complete application.
- Must match HUD-1 at closing within certain tolerances.
- Except for “changed circumstances” GFE cannot change prior to closing.
- Changed circumstances – is defined as: (1) Acts of God, war, disaster, or other emergency; (2) Inaccurate information being relied upon, (3) New information particular to the borrower or transaction that was not relied upon; or (4) Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems.
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New style 3 page HUD-1 Settlement form:
- HUD-1 Settlement Statement must match GFE within certain tolerances.
- Lender must correct any intolerance within 30 days of closing.
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With limited exception fees quoted to a borrower on GFE cannot change prior to closing:
- Lender Fees and Points cannot change.
- Some settlement fees can change up top 10%.
- Fees for borrower chosen services may change.
- Escrows for taxes and insurance and per diem interest may change.
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Truth in Lending or Regulation “Z” Changes
- The lender may not collect any fees before the disclosure is provided, except for a reasonable fee for obtaining a credit report.
- The closing may not take place until expiration of a 7 day waiting period after the consumer receives the early disclosure.
- If the annual percentage rate (APR) changes by more than 0.125 (1/8th) of a percent, the lender must provide a corrected disclosure to the borrower and wait an additional 3 business days before closing the loan.
- A copy of the property appraisal must be delivered to the mortgage applicant at least three days prior to closing.
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