1 IT Services | Business Solutions Copyright © 2013 Tata Consultancy Services Limited TCS CONFIDENTIAL Module III Up-Front Costs

2 IT Services | Business Solutions Once mortgage loan application process is completed, loan officer will provide you with a and variety of documents outlining the costs associated with your loan. Up-Front Fees In order to move forward, borrower is required to provide “consent to proceed” verbally, document or electronically to move forward with the loan application. Once consent is received from the borrower necessary Up-Front Fees are charged. Up-Front Cost

3 IT Services | Business Solutions  A Good Faith Estimate (GFE) is a form that provides you with basic information about the terms of a mortgage loan for which you have applied and estimated costs to borrower/s in acquiring the loan.  The lender or the mortgage broker must provide borrower with a GFE within three business days of the receipt of your application or required information. After receiving the GFE Borrower confirms Consent to proceed with the loan before fees are charged. What is Good Faith Estimate (GFE)? Up-Front Cost

4 IT Services | Business Solutions  If the lender denies application within three business days, it does not have to provide borrower with a GFE. It does have to tell within 30 days either why the application was denied or the borrower have 60 days to request the reason why it was denied.  Receiving a GFE does not require borrower to take the loan. Providing a GFE also does not commit the lender to making the loan. Instead, the GFE provides you with basic information about the loan, which will help you compare offers, understand the real cost of the loan, and make an informed decision about your loan choice. Good Faith Estimate (GFE) Contd… Up-Front Cost

5 IT Services | Business Solutions  An up-front fee is charged by a lender for processing a new loan application, used as compensation for putting the loan in place. 0.5% and 1% on  Origination fees are quoted as a percentage of the total loan and are generally between 0.5% and 1% on mortgage loans What is Up-Front Fee? Up-Front Cost

6 IT Services | Business Solutions  The purpose of the fee collection activity is to ensure that all upfront fees are collected or accounted for on each loan except if waived/deferred as required by a specific product, program, marketing promotion or state specific requirement.  Once the borrower decides to move forward with the loan borrower provides the consent, the borrower must pay the required fees by credit card. Up-Front Fee Contd… Up-Front Cost

7 IT Services | Business Solutions  Fees to be collected upfront (includes resubmitted loans where fees weren’t collected on the original loan or were collected and subsequently refunded), once the applicant has received the initial Good Faith Estimate, Truth-in-Lending Disclosure Statement, state specific disclosures and provided consent to proceed with the loan application Up-Front Fee Contd… Up-Front Cost

8 IT Services | Business Solutions  Application fee – $100  Appraisal fee – as per policy (depends on loan amt.)  Credit Report Fee – $2.25  Flood Cert fee - $3.25  International Credit Report Fees - $150 & Language Translation Fees - $500 (*Optional - for Non Resident Aliens only) Fees To Be Paid Up-Front: Up-Front Cost

9 IT Services | Business Solutions Application Fees A fee that some lenders charge to accept an application. It may or may not cover other costs such as a property appraisal or credit report, an it may or may not be refundable if the lender declines the loan. Up-Front Cost

10 IT Services | Business Solutions Appraisal Fees A fee charged by an appraiser (A professional with knowledge of real estate markets and skilled in the practice of appraisal. When a property is appraised in connection with a loan, the appraiser is selected by the lender, but the appraisal fee is usually paid by the borrower for the appraisal of a particular property. Up-Front Cost

11 IT Services | Business Solutions Flood Certificate Fees This charge is for the insurance borrower must buy for the property to protect property from a loss, such as fire, floods, and storm damage. In many cases, homeowners choose to let the lender pay the insurance from an escrow account the lender sets u. Up-Front Cost

12 IT Services | Business Solutions Credit Report Fees Credit Report Fee is the cost of getting copies of borrower’s credit report to assess his/her mortgage loan application. Borrower’s credit score, included in credit report, is one of the most important factors in determining the interest rate. Up-Front Cost

13 IT Services | Business Solutions There are several states where an application fee is not permitted. In these states, lenders does not collect upfront fees when an appraisal is not required for the loan transaction. The credit report and flood certification fees are deferred until closing. Fees Deferred Up-Front Cost

14 IT Services | Business Solutions The GFE must accurately reflect the collection of fees at closing In these states, if an appraisal is required, the appraisal fee is to be collected upfront. Below mentioned are those states: Fees Deferred Contd… Pennsylvania Tennessee Vermont Connecticut Iowa Kansas Missouri Up-Front Cost

15 IT Services | Business Solutions  If a credit card is not available or an approval on the credit card is unobtainable, the fees may be deferred to closing.  All efforts to obtain an acceptable credit card should be exhausted before a manager approves deferral.  The manager must also note in system their reasoning for the deferral fee approval and why an acceptable credit card could not be obtained. Declined Cards Up-Front Cost

16 IT Services | Business Solutions  Upon the resubmission of a new application, the fees from the previous loan may be transferred to the new loan provided: The fees from the previous loan have not been refunded. The property address has not changed. The new loan is submitted no later than 120 days after the application date of the previous application Fees on Re-submit Applications Up-Front Cost

17 IT Services | Business Solutions If the appraisal requires a recertification of value, an appraisal recertification fee will be charged. Fee may not be collected until one calendar day after the applicant receives the initial Good Faith Estimate and Truth-in- Lending Disclosure Statement on the resubmitted loan, as well as provided their expressed consent to continue. Fees on Re-submit Applications Contd… Up-Front Cost

18 IT Services | Business Solutions Upfront fees may be deferred to closing for loans that meet the following guidelines:  The property is located within Lender Assessment Area.  The property is located in a low- or moderate-income (LMI) census tract.  The applicant’s combined income is less than 80% of Area Medium Income (AMI). LMI Up-Front Cost