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Recent guidelines from Washington have forced a change to the way that loan originators will disclose closing costs for all homebuyers. The purpose of the new Good Faith Estimate is to level the playing field for borrowers comparing loans to be able to make apples to apples comparisons for loan scenarios.
In essence, HUD is working to bring all lenders up to the same standard of excellence in reporting closing costs and estimating realistic fees that a buyer should expect to pay at closing with no last minute surprises.
Below are some important points to know:
1. All fees paid to the lender/broker are to be consolidated in one line, including processing fees, origination fees, etc. These charges cannot change from the original estimate without a material change to the loan requested. 2. In the event fees are being charged to obtain a lower rate, these are to be broken out and itemized for the borrower’s ease of comparison to other loan programs. 3. Estimates for fees from government recording charges and third party settlement providers we suggest are to be itemized and the lender is held to a tolerance of 10% for their accuracy. In the event the estimated charges exceed the amount listed by the allowable tolerance, the lender will be responsible for making up the difference. 4.Estimates for services that the buyer can shop for and do choose can change at settlement without the lender being held accountable. This can include title charges, homeowner’s insurance, and initial deposits for an escrow account. 5. Owner’s title policy must be included on the GFE as a borrower cost, regardless of who is paying for it. Therefore, the Good Faith Estimate of cost will appear very high. 6. There is no cash to close estimate and there is no total payment shown on the GFE.
Now here is an important point to watch for. Many lenders instead of giving out the OFFICIAL GFE are giving out what they are calling a Closing Cost Estimate or Closing Cost Analysis. Neither of these is the official GFE. Lenders who give these out in lieu of the GFE do not have to guarantee the fees that are shown. At some point Lenders do have to give you the GFE but if they wait to long they then have you the buyer over a barrel. Please click on the link above, the new GFE, to see what the real one actually looks like. If you are working with a lender and they have not given this to you then you need to contact them immediately.
If you are not sure what your lender has given you or if you are interested in Homes for sale in Frisco, Plano, Allen, McKinney and the Surrounding Area then TEAM DECELL is who you need to call. We are your home town experts. 214-975-3210. TEAM DECELL works with local lenders that we know are reputable and are not trying to take advantage of the unsuspecting buyer.
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Archive for ◊ January, 2010 ◊
• Wednesday, January 27th, 2010
Category: Mortgage Info, Mortgage Update
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• Thursday, January 21st, 2010
Here we go again with additional changes in the already trouble world of Mortgage. It seems that the only thing that is certain is that the mortgage industry is going to continue to change. If you are considering the sale and purchase of a home it is crucial to speak with a LOCAL Lender that can walk you thru this very complicated process.
I say LOCAL because many consumers have used mortgage institutions over the internet only to find that the loan does not close or the fees have drastically changed. Work with your Realtor because they will usually have a recomendation of someone that they already have a relationship with.
TEAM DECELL is your neighborhood experts. We assist clients in buying or selling their home in Frisco, Plano, McKinney, Allen and the Surrounding Area. We also have relationships with Lenders that have a proven track record and can get the job done in a painless and timely manner. Don’t let the inexperience of others spoil your Home Purchase. We have a team of experts that will take care of your needs. Below are the upcoming changes.
- Mortgage insurance premium (MIP) increased to build up capital reserves and bring back private lending.
- FHA will raise the up-front MIP to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
- If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
- This will allow for capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
- The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.
- Update the combination of FICO scores and down payments for new borrowers.
- New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
- This allows FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
- This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
- Reduce allowable seller concessions from 6% to 3%
- The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
- This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.
- Increase enforcement on FHA lenders
- Publicly report lender performance rankings to complement currently available Neighborhood Watch data – Will be available on the HUD website on February 1.
- Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
- Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
- HUD is pursuing legislative authority to increase enforcement on FHA lenders.
Category: Mortgage Info, Mortgage Update
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