Today I received some information in my email..about RESPA changes and the fact..there will be more disclosure to a potential borrower. The Good Faith Estimate and the Settlement Statement. What a concept! Right?..I think that way...because as real estate professionals we have many disclosures..and many are requirements by law. As a real estate professional you get used to it..the extra paperwork..and in truth as irritating as it is...the reality..its a paper trail. Paper trails are important...regardless of any market! In the State of Florida we will have a new sales contract coming soon! Bigger..Longer...due to the large number of foreclosures...same reason why these changes have occured! For the first time ever, HUD will require mortgage lenders and brokers to provide borrowers with an easy-to-read standard Good Faith Estimate (GFE) that will clearly answer the key questions they have when applying for a mortgage including: But as I continued reading...I decided to go to the HUD site and confirm what I was reading...because if a ruling is passed....and it confirms it on the HUD site....and there is links to the new docs........ If it is available online right now...And now the Mortgage Industry will have more too...disclosing...that is!
Why are they waiting until January 2010 to enforce it or am I missing something?
Midori Miller is a licensed real estate associate with CENTURY 21 Sundance Realty, Real Estate Trainer and Manager. If you are interested in a career in real estate please contact me! All calls and inquiries are confidential. CENTURY 21 Sundance Realty is located in Volusia County with 3 office locations to better serve the public. Daytona Beach, Ormond Beach and Ormond by the Sea. midorimiller@yahoo.com (386) 453-3236
Midori, Some things just have no good explanation. The government moves at glacial speed and consumers suffer.
New c=disclosures wont do a thing in my opinion. The GFE and TIL are pretty easy to explain now. Easier to read doesn't mean its explained and better.
Same song....but not in tune.
IMHO, Many people don't care about the current disclosures (even the GFE and TIL) or in understanding the detail (some of the current problem). Having said that, full disclosure and transparency is always good whether or not it is demanded/cared about. It should be available and we should make every reasonable effort to educate our buyers. IF the deal ever goes wrong (down the road for whatever reason)......then they will care and will look for someone to blame. Guess who that will be......
I"m glad to hear about the new Florida contract. From past experience, I am aware that your FAR is generally very forward thinking, so I am surprised to hear there have been no few (?) interim updates to reflect the current market.
Disclosure is the best policy, even when it isn't the law and the situation requires it.
Same old story. why do things regarding the goverment tke so long or make any sense...keep smiling
disclose, disclose, disclose, any information in greater detail, explanationa and availabiltiy to resume consumer confidence is always better
Midori - I wrote about the new GFE earlier this month and am as surprised as you are. I think, from my reading they still are taking some comments, but I like the new form and will probably put it into my disclosures just because I like what it says. The one thing I don't like about it is that the total payment is not included on any of the three pages.
The delay in enacting the use of the new disclosures is because at the moment there is nothing in place to allow compliance with the new rules. As a mortgage broker, I could certainly use the new forms by writing everything in by hand, but there is no way for me to get the data electronically from my loan application software into the new form.
Although it's not that big of a deal to hand write everything into the new forms, everything is done electronically these days. We use one software program, Fannie Mae uses another program, the lenders use another one, the doc prep company uses another one, the title company uses another one, etc. Whenever a change is made, it just takes a while to get all the computer programming done correctly.
Another problem is that the new GFE combines many fees into one fee. For example, all of the lender fees are now combined, but in many instances, these fees are disbursed to different companies (origination fee goes to the mortgage company, processing fee goes to the processing company, underwriting fee goes to the lender, etc.). How is that handled? No one knows yet.
I'd say they have at least a year of work to figure this whole mess out. HUD has said, "Thie is the way it will be", which is entirely within their rights - they are in charge of it, after all. But they have not thought about how anyone who is affected by the new rule will be able to conduct business and still remain in compliance.
If everything was handwritten, there would be no problem. Stupid computers! :-)
By the way, wait until you hear the outroar from all the mortgage brokers who now have to disclose how much they make. We've had a state disclosure in Colorado for a year now that is very close to the new GFE, and everyone went nuts when that was enforced, but no one lost any business. Realtors have to say how much they get paid -- why not mortgage brokers? Personally, I kind of like it when borrowers find out that I get paid a lot. It's a great sales tool for anyone who is good. It's the old, "you get what you pay for" thing.
Here's another goof in the new law: we are not allowed to collect any income, asset, etc, info from a borrower until they have chosen a lender, based on the new GFE. The theory is that once a borrower gives all their info to a mortgage broker, they're going to stop shopping around, so HUD says we can't collect anything. How the heck can anyone pre-qualify someone if they don't know how much they make? This will be a HUGE problem for realtors.
As I said, they need at least a year to get this mess straightened out!
Hi Midori,
But wait, it gets better...from my last conversation with our DC office (a couple of weeks ago), this thing still has to make it through Congress before it can be implemented, which means that it could get voted down and NEVER go into effect. I'm trying to find out what the real chances are of this passing...
Great post and thanks for the information. Looking forward to reading more of your posts!
There are still a lot of tweaking I think that is yet to come. They are working on getting the mortgage industry legal.
Hi Everyone-Here is my feelings on this....
I just have one question...why would they make an announcement...place the docs on line and then still have tweaking to do???? It does not make sense to me...it is a public site and anyone can get on it.
People will continue to overpay on loans...why...because they will continue to not read the fine print...it is proven with credit cards...with car loans.
People do not always consider the cost of the credit.
I've done some loans in my lifetime..and I can tell you...even when you fully explain..some..still do not pay attention or care. They qualify...they want it...its there..it's mine!
If I am not mistaken...they are going to combine the FAR BAR and the FAR contract...one will be gone!
As far as them taking a year to get this done electronically...why? They write our new contracts and we use them...I know soft wares need to be updated...but it should not take a year!
It just bothers me its online and there is still sooooo much they have to do! Are they trying to send some sort of message out????
Hard to understand---does it take government that long to gear up for a change?
It is crazy ! When bailouts get approved in a matter of a few weeks, how in the world would this extra disclosure take over a year to implement ? Is certainly a great idea, especially the good faith estimates from the mortgage companies. We have had problems with this in the past and always make sure our buyers get this info often, especially if they are using a mortgage professional that we are not familiar with.
I think it comes down to getting the whole system ready... Of course, it shouldn't take that long... and there is no reason that they couldn't pick a different start date.
I am not sure why this would be Midori. I had read about the RESPA change some months ago. The junk fees still need to be buyer beware. The thing is, the buyer rarely knows what junk fees are, that is why it's importnat to work with a good l/o. I have fought too many junk fees off RESPA for borrowers who would have never known to question or know better.
A longer contract? Ugh. I assume you're talking about the FAR/BAR? Crap. If I wanted a longer contract, I'd just use the FAR contract. I'd rather just add adendums when needed.
Hi Midori, you are right on the mark on this one. That is really hard to understand.
I'm heading over there right now to read it. We got hit with a ton of changes to our contract last year. It almost doubled in size. I like the changes, though. Hopefully...your changes will make your life easier. ~GBU~
Maybe they figured it takes a year to implement a new form?
All you can do is smile.
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Disclosure is the best policy -- However, it still will not stop shady mortgage practices -- JE
Midori, I'm with you...why wait. Seems to me that we have had EeeeeNUFF already. It's time to unveil the shroud that covers the Lending industry and become more transparent, NOW!
Midori - Seriously, to me it makes no sense to wait a year to enforce these requirements... I guess progress is just very slow...
Midori, very interesting post and comments. I've printed out the new form and it looks good to me. As a realtor I see many different GFE, and they can be confusing to me, so I can imagine that the average consumer never really understands them.
As others have said, can't understand why it would take a year, we have new forms every year and the software is up and running in plenty of time.
It's all about CYA! The extra paperwork is worth the protection.
This post is now about a year old. In the last few months there has been more training on the new documents. No longer will your loan fees between the mortgage broker and lender be broken out on the HUD. It will be a lump sum. No longer will your settlement fees and title fees be itemized out on the HUD, it will be lumped together with any other admin fees. Yield Spread Premiums? These will be credited to the buyer.
And on and on. This is a change like I have never seen in my 31 years in real estate, but I feel confident that if we all learn together, it can go smoothly. On the plus side, the GFE and the HUD must match. If it is off, by X (depending), then the time frame for re-disclosure begins again. So let's all be sure to disclose when customers need special services of any kind!!
I just love a challenge.
Thank you for this post. I have just written my own on the new RESPA rules and even went ahead and created a group, just for RESPA posts, like this one.
Would you please consider joining this new group and adding this post to the group.
Thank you in advance,
John