Plus Related Forms, Disclosures, Policies and Procedures

Plus Related Forms, Disclosures, Policies and Procedures
Guide to Completing the 2010 GFE & TIL, Plus Related Forms, Disclosures, Policies and Procedures © 2010 American Financial Network. All Rights Reserved. Updated 10/19/2010

Training Agenda Introduction Home Valuation Code or Conduct (HVCC)
FHA Appraiser Independence Higher-priced Mortgage Loan (HPML) Mortgage Disclosure Improvement Act (MDIA) Completing the Truth-in-lending (TIL) Real Estate Settlement Procedures Act (RESPA) Completing the Good Faith Estimate (GFE) Disclosure Checklists Q&A Session 1

Home Valuation Code of Conduct (HVCC)
© 2010 American Financial Network. All Rights Reserved. Updated 10/18/2010

HVCC: Summary Appraisals conducted in connection with single-family mortgage loans, other than government-insured and government–guaranteed loans, with application dates on or after May 1, 2009, must conform to the Home Valuation Code of Conduct. The Home Valuation Code of Conduct… Applies to all conforming loan products Is effective for all conforming loans with application dates on or after May 1, 2009 Reinforces the independence of the appraiser Enhances the overall appraisal process, providing a greater level of integrity to the appraisal ordering process and appraiser contact 3

HVCC: Ordering Appraisals
AFN commissioned sales staff may not make direct contact with the appraiser; this includes loan originators or anyone else earning commissions or a bonus on the file. Additional Policy Points: Appraisals must be ordered through AFN’s Encompass software on the rotation system or from an AFN appointed Appraisal Management Company (AMC). The loan officer cannot pay for the appraisal. The borrower cannot pay the appraiser directly. 4

HVCC: Low Value on the Appraisal
If an appraisal comes in with a lower-than-anticipated value, neither the loan officer nor the loan processor may contact the appraiser directly. Furthermore, it is against AFN policy to order a second appraisal and disregard the original appraised value. Additional Policy Points: The loan officer or the real estate agent may provide additional documentation and/or comps to the file underwriter for review. If the underwriter believes an increase in value is warranted, he or she may contact the appraiser directly to discuss any documentation-supported reason to increase the appraised value. 5

HVCC: Appraisal Delivery
A copy of the appraisal must be delivered to the borrower prior to loan docs being drawn. Additional Policy Points: If the appraisal is ed or hand-delivered to the borrower, the waiting period for drawing docs is three business days. If the appraisal is mailed to the borrower, the waiting period for drawing docs is six business days. NOTE: Sundays and legal holidays may not be included in the business day calculation; however all of the following may be included: Appraisal delivery day The date the loan documents are prepared Saturday 6

HVCC: Appraisal Delivery Business Day Counting
Example 1: Over an average week without a holiday… The borrower receives the appraisal on Monday. Monday is day one, Tuesday is day two, and Wednesday is day three. The loan documents may be drawn/dated on or after Wednesday. Example 2: An average week, weekend included… The borrower receives the appraisal on Friday. Friday is day one, Saturday is day two, and Monday is day three. The loan documents may be drawn/dated on or after Monday. Example 3: Weekend included, plus a legal holiday… The borrower receives the appraisal on Friday. Friday is day one, Saturday is day two, Monday is a legal holiday, and Tuesday is day three. The loan documents may be drawn on or after Tuesday. 7

HVCC: Appraisal Delivery Certification Required
For all conforming loans, the loan processor must complete the HVCC Appraisal Delivery Certification form prior to docs being drawn. Additional Policy Points: This form will be a Prior to Docs (PTD) condition. The condition must be signed off by the underwriter prior to releasing loan documents. 8

HVCC: Appraisal Delivery Certification Form
This form must be completed, signed, and dated by the Loan Processor. Underwriters, please note: When signing this off, you must ensure the appraisal was dated or delivered to us on the date the cert is stating it was sent out for delivery. 9

FHA Appraiser Independence

FHA Appraiser Independence: Summary
FHA-approved lenders are prohibited from accepting appraisals prepared by FHA Roster appraisers who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender’s staff who is compensated on a commission basis—or receives a bonus—tied to the successful completion of a loan. Compliance with the FHA Appraiser Independence rule is effective for all FHA loans with case numbers ordered on or after January 1, 2010. 11

FHA Appraiser Independence: Ordering Appraisals
Appraisals must be ordered through AFN’s Encompass software on the rotation system or from an AFN appointed Appraisal Management Company (AMC). AFN commissioned sales staff may not make direct contact with the appraiser; this includes loan originators or anyone else earning commissions or a bonus on the file. 12

FHA Appraiser Independence: Low Value on the Appraisal
If an appraisal comes in with a lower-than-anticipated value, neither the loan officer nor the loan processor may contact the appraiser directly. Furthermore, it is against AFN policy to order a second appraisal and disregard the original appraised value. Additional Policy Points: The loan officer or the real estate agent may provide additional documentation and/or comps to the file underwriter for review. If the underwriter believes an increase in value is warranted, he or she may contact the appraiser directly to discuss any documentation-supported reason to increase the appraised value. 13

Higher Priced Mortgage Loans (HPML)

HPML: Summary A Higher Priced Mortgage Loan (HPML) is defined as a consumer-purpose, closed-end loan that is secured by a consumer’s principal dwelling and has an annual percentage rate (APR) equal to or greater than the Average Prime Offer Rate (APOR) by 1.5% for a first lien or 3.5% for a subordinate lien for a comparable transaction. The APOR is published weekly by the Board of Governors of the Federal Reserve System. The APOR for the week the interest rate is locked is the APOR that must be used to determine if a loan is a HPML. Check APOR online: Certain products are eligible to be closed as a HPML: If the APR falls in the HPML category, the product must be eligible in order to close and fund the loan. If the product is ineligible, the APR must be reduced. 15

HPML: Effective Date, Rules, and Compliance
HPML rules apply to all mortgage applications taken on or after October 1, 2009. Under Section 35, creditors are prohibited from: Making a loan based solely on collateral without regard to the borrower’s ability to pay. Making a loan without verifying the income and assets relied upon to determine the borrower’s ability to pay. Making a HPML without establishing an escrow account. Compliance with HPML Rules Requires: Verifying and documenting the borrower’s ability to pay. Determining repayment ability using the fully indexed rate and fully amortized payment, along with property taxes and insurance. Assessing the borrower’s ability to pay using a DTI Ratio. For ARMs, the lender must determine repayment ability by using the largest scheduled payments of the P&I in the first 7 years of the loan. 16

HPML: Product Eligibility
Eligible Products Certain products may be closed as a HPML. Refer to the ineligible list to determine a product’s eligibility. Ineligible Products Adjustable Rate Mortgage (ARM), Conventional, FHA & VA DU Refi Plus Freddie Mac Relief Refinance Any Loan With a Prepayment Penalty Any Loan Without Impounds Any Loan Where Income is Not Used to Qualify (i.e. the FHA Streamline Refinance) 17

HPML: Curing an Ineligible HPML
An ineligible HPML can be cured by: Reducing the interest rate (may result in worst-case scenario pricing) Reducing or removing originator fees, if applicable (i.e. origination, points) Applying lender credits IMPORTANT: In order to issue loan documents for a HPML, you must first obtain approval from AFN’s VP of Secondary Marketing or VP of Operations. Approval will be noted in the DataTrac notes section. 18

Mortgage Disclosure Improvement Act (MDIA)

MDIA: Summary MDIA requires, among other things, that a creditor provide the early disclosures even when the loan is not for the purpose of financing the purchase or initial construction of the consumer’s principal dwelling. The early disclosures must also be provided for non-purchase closed-end loans secured by the consumer’s principal dwelling (such as a refinance loan). MDIA also requires these disclosures to be given before the consumer pays any fee, other than a bona fide and reasonable fee for obtaining the consumer’s credit history. The creditor must also supply the upfront disclosures, including the Truth in Lending (TIL) and any revisions prior to closing if fees change above tolerance. 20

MDIA: RESPA Requirements
The final rule applies to all RESPA covered loans secured by the dwelling of a consumer. This includes the following: Purchase, refinance and home equity loans on principle residences Purchase, refinance and home equity loans on secondary residences Investment/Rental properties (could be considered exempt, but AFN will treat these in the same manner as it does owner-occupied loans) 21

MDIA: Initial Disclosures
Preparation of Initial Disclosures Loan originators or loan processors are required to prepare the initial disclosures. Refer to the AFN Disclosure Checklist for an up-to-date list of disclosures required for each loan type. Refer to the list of APR versus Non-APR fees for accurate preparation of disclosures. Timing of Initial Disclosures Initial disclosures must be sent out within three business days of receipt of the initial loan application. This rule does not apply to FHA/VA specific forms, which must still be signed and dated the same day the borrower signs/dates the loan application. No fees, except a bona fide and reasonable credit fee, may be charged until the borrower receives the initial TIL disclosure. AFN considers the disclosures received by the borrower when they are signed by the borrower(s). Any additional fees, including the appraisal fee, cannot be collected until the borrower has received and signed initial disclosures. Additional fees can be charged the same day the disclosures are returned signed by the borrower(s). 22

MDIA: Application Defined
For purposes of MDIA, AFN will use the definition of application provided under regulation z as revised by HUD. Application means the submission of a borrower’s financial information in anticipation of a credit decision relating to a federally related mortgage loan. It shall include the following: Borrower’s Name Borrower’s Income Borrower’s SSN to obtain credit Property Address Estimated Property Value Loan Amount Any additional information deemed necessary An application may either be in writing or electronically submitted, including a written record or an oral application. Disclosures are required when all items are received. 23

MDIA: Verbiage Requirements
The following verbiage must be added to the disclosures: “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.” The following rules also apply: AFN Corporate uses the latest Point and Encompass versions, which include the new verbiage on the disclosures. Branches must ensure their software/disclosures are current and have the updated verbiage. The required verbiage must be noticeably added. All numeric disclosures are still marked “E” for estimate. This verbiage must also be included in any subsequent disclosures. 24

MDIA: Waiting Periods/When to Re-disclose
Seven-day Waiting Period After Disclosure Once the initial estimated disclosures are provided, there is a seven business day waiting period before borrowers sign loan documents. The initial seven business day waiting period begins when the borrower receives the initial disclosures. AFN will consider the disclosures received when they are signed by the borrower(s). The business day definition for the purpose of the waiting periods is similar to the definition used for rescission: Monday – Saturday excluding legal federal holidays. The only difference is: with rescission, when you’re counting days, you may fund the day after the last day in the count; with MDIA, when you’re counting days, you may draw docs on the last day of the count. When to Re-disclose If the APR, as defined by RESPA, increases or decreases by more than .125 of 1% from the previously disclosed APR, you must re-disclose. There are various interpretations of this regulation. While some lenders will only re-disclose if the APR has increased, AFN sells to one or more investors that require re-disclosure for an APR decrease as well. 25

MDIA: Waiting Periods/When to Re-disclose (Cont’d)
Three-day Waiting Period After Re-Disclosure Any re-disclosure requires an additional three business day waiting period prior to consummation (date the borrowers sign loan documents). The business day definition for the purpose of the waiting periods is similar to the definition used for rescission: Monday – Saturday excluding legal federal holidays. The only difference is: with rescission, when you’re counting days, you may fund the day after the last day in the count; with MDIA, when you’re counting days, you may draw docs on the last day of the count. If revised disclosures are mailed, the three business day waiting period will begin after allowing three business days for mail to be delivered, thus loan documents cannot be prepared or signed until six business days have passed. If revised disclosures are delivered in person, faxed or ed and returned signed and dated by all borrowers, the three business day waiting period may begin based on the date the revised forms are signed/dated. 26

MDIA: Initial Disclosure – Day Counting Chart
* Date borrowers sign/date initial disclosures *** Applies to scenarios where Saturday is counted as a business day, and there is no legal holiday from the date the initial disclosure was received. 27

MDIA: Re-disclosure – Day Counting Chart
* Applies to scenarios where Saturday is counted as a business day, and there is no legal holiday from the date the initial disclosure was received. 28

MDIA: Avoid Unnecessary Delays with Loan Docs
Following are things you can do to help avoid unnecessary delays with the issuance of loan documents: Obtain accurate fees for escrow and title before issuing initial disclosures Do not over- or underestimate fees (including daily interest) on initial disclosures Record APR and Non-APR fees correctly when issuing initial disclosures Do not collect appraisal fees until signed initial disclosures are received Obtain an updated estimated closing statement from escrow at the time of loan approval; if a re-disclosure is required, prepare it at that time Review the APR when the loan is locked or when you know the rate will change; if re-disclosure is required, prepare it at that time Use the correct upfront MI Premium or monthly MI Premium (see chart) Complete Point/Encompass correctly to calculate the monthly MI (see example) 29

MDIA: Calculating the Monthly MI
You must go beyond the primary MI fields to properly calculate MI pay-ments. In this Encompass example, click the pencil icon next to the MI fields to reveal another box in which you must enter data. On the 2nd screen, enter “Cancel at 78%” (LTV) and also check the box for “Calculate based on remaining balance.” MI will not be correct if it is calculated as base loan amount multiplied by the MI factor and divided by 12. 30

Completing the Truth-in-Lending (TIL)

TIL Disclosure Statement – Top of the Form
The top of the TIL lists: Applicant Name(s) Property Address Application Number Preparer Date prepared APR Finance Charge Amount Financed Total of Payments Payment Schedule The last five items are calculations completed by Point or Encompass based on loan data entered. 32

TIL Disclosure Statement – Middle of the Form
This section of the form identifies the lender’s insurance requirements. Under the INSURANCE section, always indicate that Hazard insurance is required, and add Flood Insurance if it is required. 33

TIL Disclosure Statement – Bottom of the Form
Completion of this section will vary, depending on whether the loan: Is a purchase or refinance Is FHA, VA or Conventional Has a Prepayment Penalty 34

TIL Disclosure Statement – Bottom (Continued)
1 1 Under the SECURITY section, mark “The goods or property being purchased” for a purchase loan, or “Real property you already own” for a refinance. Under FILING FEES, this amount should match the recording fees shown on the GFE/GFE Itemization. 2 3 4 5 6 2 Under LATE CHARGE, enter “15” for the number of days late, and “4%” for the penalty percentage if it is a FHA or VA loan, and “5%” if it is a conventional loan. Under PREPAYMENT, regardless of loan type (Conv, FHA, VA) mark “will not have to pay a penalty” and “will not be entitled to a refund of part of the finance charge.” Under ASSUMPTION, mark “may, subject to conditions” for FHA/VA loans, and mark “may not” for conventional loans. For all loan types, mark the “E means an estimate” box. 3 4 5 6 35

Real Estate Settlement Procedures Act (RESPA)

RESPA: 3 Business Days for GFE Issuance
Effective for all loans originated on or after 01/01/2010, the Good Faith Estimate (GFE) must be issued within three business days of the loan originator’s receipt of an application or information sufficient to complete an application. Sufficient information includes: Borrower’s Name Borrower’s Monthly Income Borrower’s SSN Property Address Estimated Property Value Loan Amount 37

RESPA: GFE-related Disclosures
GFE-related disclosures include: Notice of Intent to Proceed, signed by borrower(s) Good Faith Estimate (GFE) Initial Fees Worksheet (Point form)/Itemized Fee Worksheet (Encompass form) Settlement Service Provider List AFN will soon modify its paper-less system to include an index definition for these 4 forms to upload as a group. 38

RESPA: GFE Preparation and Issuance Rules
GFE preparation and issuance rules include: Prior to issuing a GFE, the loan originator/lender may only collect a bona fide fee for the cost of the credit report. Additional fees, such as the appraisal fee, cannot be collected until the borrower has received a copy of the GFE and returns a Notice of Intent to Proceed (with the loan covered by the GFE). Fees may not be listed as POC (paid outside of closing) on the GFE. 39

RESPA: GFE “Changed Circumstances” Rules
The loan terms or charges can only be changed in the event there are “changed circumstances” as outlined below: Acts of God, war, disaster, or an emergency situation has arisen. Information particular to the borrower or transaction, which was relied upon when providing the GFE, has since been found to be inaccurate or has changed; such information may include the borrower’s credit to qualify, the loan amount, the estimated property value or any other information that was used to provide the GFE. New information particular to the borrower or transaction, which was not relied upon when providing the GFE, has been discovered. Other circumstances particular to the borrower or transaction, such as boundary disputes, the need for flood insurance, or environmental problems have arisen. 40

RESPA: GFE “Changed Circumstances” Rules (Cont’d)
"Changed Circumstances" must be disclosed within three business days of receiving the changed information and only those fees affected by the changed circumstance may be amended. Common Examples of "changed circumstances" (this is not an all-inclusive list; all must be disclosed within three business days of the change): Underwriter determines a desk review is required Borrower requests a change in the loan amount or terms Loan is locked and points change based on the locked price 41

RESPA: GFE Disclosure Tolerances
RESPA contains 3 tolerance levels for costs disclosed on the GFE. These levels dictate which disclosed fees can change at settlement and by how much (if at all). Those with Zero Tolerance cannot change at closing. Those with a 10% Tolerance can increase up to 10% at closing. Those with Unlimited Toler-ance can increase by any percentage or amount at closing. 42

RESPA: GFE Re-disclosure Requirements
Each time the GFE is amended, the following forms are required with this re-disclosure: Notice of Intent to Proceed, signed by the borrower(s) Changed Circumstance Form, identifying the change(s) that are being made Revised GFE with new disclosure date and charges Re-disclosed Initial Fees Worksheet (Point form)/Re-disclosed Itemized Fee Worksheet (Encompass form) AFN will modify its paperless system to include an index definition for these forms to be uploaded as a group and numbered for the various re-disclosures. 43

RESPA: Right to Cure and Tolerance Violations
If any charges at settlement are greater than those listed on the GFE by more than the permitted tolerance, the loan originator may “cure” the tolerance violation by issuing a lender credit to reimburse the borrower. The reimbursement must equal the amount by which the tolerance was exceeded. 44

Good Faith Estimate (GFE)
Completing the Good Faith Estimate (GFE) © 2010 American Financial Network. All Rights Reserved. Updated 10/19/2010

GFE Page 1: Originator, Borrower & Property
Page 1 of the GFE contains basic loan information, including the loan originator, borrower(s) and loan terms. You must also provide the loan originator’s name, address, phone number and address and his/her business name. Use AFN phone number or cell phone numbers, and AFN or personal accounts. Names of all applicants are also required, as well as the subject property address. The GFE must also be dated with the completion date. 46

GFE Page 1: Important Dates – Floating Loans
“Important Dates” for floating loans are to be completed as follows: Line 1. The date (and time, if applicable) until which the stated interest rate is available (typically the initial disclosure date; N/A is not acceptable) Line 2. The date until which the estimate for all other settlement charges is available; it must be at least 10 business days from the date of the GFE (N/A is not acceptable). Counting the day the GFE is disclosed, the GFE expires at midnight on the 10th business day. Saturday counts as a business day, Sunday and a legal holiday do not. Line 3. The rate lock period, in calendar days (if not applicable, enter “N/A”) Line 4. The minimum number of days before settlement the rate must be locked (AFN policy is 7 days) NOTE: Complete either Line 3 or Line 4 for locked loans. If the rate is floating, enter N/A on Line 3 and complete Line 4. If the rate is locked, complete Line 3 and enter N/A on Line 4. 47

GFE Page 1: Important Dates – Locked Loans
You must re-disclose when the loan locks and issue a new GFE (within 3 days), changing information on Page 1. “Important Dates” for locked loans are to be completed as follows: Line 1. The date (and time, if applicable) the rate lock will expire Line 2. This should remain at 10 business days from the date of the initial GFE (N/A is not acceptable; date does not change with re-disclosure) Line 3. The rate lock period, in calendar days Line 4. Enter N/A if the loan is locked NOTE: Complete either Line 3 or Line 4 for locked loans. If the rate is floating, enter N/A on Line 3 and complete Line 4. If the rate is locked, complete Line 3 and enter N/A on Line 4. 48

GFE Page 1: Summary of Your Loan
Your initial loan amount is – The total loan amount Your loan term is – The term of the loan, expressed in years Your initial interest rate is – The note rate, or initial rate if an ARM Your initial monthly amount owed for principal, interest, and any mortgage insurance is – This amount should reflect principal, interest, and any mortgage insurance payments. 49

GFE Page 1: Summary of Your Loan (Continued)
Check No or Yes to indicate whether the interest rate could rise. If yes, indicate the maximum rate to which it can rise over the life of the loan and the first rate change date (if date unknown, enter “unknown”). Check No or Yes to indicate whether the loan balance can rise, even if the borrower makes payments as agreed and on time. A loan with a negative amortization is an example of a “Yes.” If yes, indicate the maximum amount to which the balance can rise during the life of the loan. NOTE: If the loan balance will increase only because escrow items are being paid through the loan balance, you do not have to check Yes. 50

GFE Page 1: Summary of Your Loan (Continued)
Check No or Yes to indicate whether the monthly amount of principal, interest, and mortgage insurance can rise, even if payments are made as agreed and on time. If yes, state: the # of years (or months) until the monthly amount can first change; the maximum monthly amount at the first change; and the most the monthly payment amount could ever be over the life of the loan. Check No or Yes to indicate whether a prepayment penalty applies. If yes, indicate the maximum amount it could be. Check No or Yes to indicate whether there is a balloon payment. If yes, state the amount of the payment and the number of years until it’s due. 51

GFE Page 1: Escrow Account Information
This box is used to inform the borrower(s) whether or not the loan includes an escrow account for property taxes and other of their financial obligations. The “monthly amount owed of…” should match the amount you entered as the initial monthly payment amount in the “Summary of your loan” section. It includes principal, interest, and mortgage insurance only (and does not include the amount of the estimated escrow payment). Check No or Yes to indicate whether or not there is an escrow account. If yes, you are required to provide further details on page two. 52

GFE Page 1: Summary of Settlement Charges
Block A – This is the amount carried forward (actually, backward) from origination charges/fees calculated on page 2. Block B – This is the amount carried forward (actually, backward) from all other charges/fees for settlement services calculated on page 2. Block A + B – This is the total sum of the amounts shown in the two blocks above. 53

GFE Page 2: Estimated Settlement Charges – Origination Charge
Block 1 – The total of all charges that all originators (lenders, mortgage brokers) involved in the transaction will receive. This includes all fees associated with getting the loan, such as: the broker’s YSP; origination points; application, processing, underwriting, administration, document preparation, wire, lender inspection, and other miscellaneous fees (does not include discount points used to buy down the rate). An originator cannot separately charge additional fees. EXAMPLE: If there is a 1% origination fee on a $250,000 loan, plus a $250 underwriting fee, and a $100 wire fee, the amount listed here would be $2,850 (1% of $250,000 = $2,500 + $250 + $100 = $2,850). 54

GFE Page 2: Estimated Settlement Charges – Origination Charge (Continued)
Block 2 – Check only one of the three checkboxes, insert the interest rate, and insert the dollar amount (or zero if none) in the box on the right. How this box is completed depends on whether or not the transaction involves a mortgage broker. No Mortgage Broker Involved – You may choose not to disclose any credit or charge for the interest rate separately from the origination charge by checking the 1st box and inserting a zero in the box on the right. AFN requires that lender credits are disclosed here, as well as any points charged to the borrower. 55

GFE Page 2: Estimated Settlement Charges – Origination Charge with Broker Involvement
Remember, how this box is completed depends on whether or not the transaction involves a mortgage broker. Mortgage Broker Involved – Check the 2nd or 3rd box to disclose whether there are discount points that reduce the rate (a charge) or a YSP (a credit) for the specific interest rate. This amount is the net payment from the lender to the mortgage broker. Calculate the sum of all payments from the lender to the broker, including payments based on the loan amount, a flat rate, or any other computation. 56

GFE Page 2: Estimated Settlement Charges – Origination with Broker Involved YSP
X 500.00 5.00 YSP Example – If the net payment from the lender to the mortgage broker is positive (i.e. a YSP is paid to the broker), check the 2nd box to reflect a credit to the borrower. State the amount of the YSP in the box provided and insert this as a negative amount (a credit) in the box on the right. This negative amount offsets the amount of YSP paid to the broker as compensation, which was included in Block 1 under “Our origination charge.” NOTE: Check only one box in Block 2; there cannot be both a credit for a YSP and a charge for discount points in the same transaction. 57

GFE Page 2: Estimated Settlement Charges – Origination with Broker Involved Points
500.00 X 500.00 5.00 Points Example – If the net payment from the lender to the mortgage broker is negative (i.e. the borrower paid discount points to buy down the rate), check the 3rd box to reflect a charge to the borrower. State the dollar amount of the charge and insert it as a positive amount (a charge) in the box to the right. If there is no net payment (the sum calculated equals zero), either the 2nd or 3rd box may be checked. A zero must be entered in the box to the right. NOTE: Check only one box in Block 2; there cannot be both a credit for a YSP and a charge for discount points in the same transaction. 58

GFE Page 2: Estimated Settlement Charges – Total Origination Charges
Block A – This is the total of the amounts shown in Block 1 and Block 2. Transfer this amount to Block A on Page 1 of the GFE. NOTE: A negative sum is possible in some transactions. Where a “no cost” loan encompasses the loan origination fee and other third-party fees, list a negative amount (a credit) in Block 2 to offset all of the fees in the “no cost” loan. This will result in a negative number in Block A to cover the intended third-party fees listed in Blocks 3-11. 59

GFE Page 2: Charges for Settlement Services – Lender-selected Required Services
Block 3 – List third-party service providers that are required and selected by the originator (other than title services), including the specific service provided and estimated charge for each. Enter the sum of these charges in the box to the right. Third-party settlement providers are providers of services other than the loan originator itself. Examples include credit vendors, appraisers, flood and tax-related service providers, and mortgage insurance companies. 60

GFE Page 2: Charges for Settlement Services – Title Services, Lender’s and Owner’s Title Ins
Block 4 – Enter the estimated total charge for these third-party settlement services in the box to the right, regardless of who selects of pays for them. This may include fees for title searches, examinations and endorsements, delivery, lender’s title insurance premiums, notary and settlement fees. Block 5 – For purchase transactions, enter an estimate of the charge for owner’s title insurance and endorsements in the box to the right, regardless of who selects and pays for them. For non-purchase (i.e. refinance or home equity loan) transactions, enter “Not Applicable” or “N/A” in the box to the right. 61

GFE Page 2: Charges for Settlement Services – Required Services for which Borrowers Can Shop
Block 6 – List each required third-party service for which the borrowers are permitted to shop/select the settlement service provider (other than title services). Describe the service and insert a fee estimate in the charge column. Enter the sum total of these fees in the box to the right. NOTE: If the borrowers are permitted to shop for third-party settlement services, they must be given a separate “Written List of Settlement Service Providers” at the time of the GFE. 62

GFE Page 2: Charges for Settlement Services – Government Recording Charges, Transfer Fees
Block 7 – Enter an estimate of the state and local government recording fees for loan and title documents in the box to the right. Block 8 – Enter an estimate of all state and local government fees attached to mortgage loans and home sales that are likely to be charged at settlement (based on the proposed loan amount or sales price and the property address) in the box to the right. 63

GFE Page 2: Charges for Settlement Services – Initial Escrow Account Deposit
Block 9 In the gray shaded box: Check the appropriate box(es) to indicate whether the account will cover future payments for all property taxes, all insurance as they come due. In the box to the right: Enter an estimate of the amount the borrower will be required to place into a reserve/escrow account at closing for recurring charges. These may include: property taxes, hazard insurance, flood insurance, mortgage insurance, other periodic charges. 64

GFE Page 2: Charges for Settlement Services – Daily Interest Charges
Block 10 In the gray shaded box: Calculate the amount of a single day’s interest, and enter this figure in the money field in the gray shaded box. Next, enter the number of odd days (from the date of settlement until the first day of the first period covered by scheduled mortgage payments). Indicate the projected closing date. In the box to the right: Multiply the daily interest by the number of odd days and enter the product here. 65

GFE Page 2: Charges for Settlement Services – Homeowner’s Insurance
Block 11 List the hazard and other similar insurance types (i.e. fire, flood, etc.) the borrower is required to purchase at or before closing, along with an estimated charge for each. Enter the sum total of these fees in the box to the right. 66

GFE Page 2: Charges for Settlement Services – Total Settlement Charges
Block B – Enter the sum total of all amounts listed in Blocks 3-11. Block A + B – Enter the sum total of the amount in Block A plus the amount in Block B. Remember to also transfer these amounts to the corresponding Blocks on Page 1. 67

GFE Page 3: Charges that Can Change at Settlement
This section offers information to the borrower regarding disclosed estimates of fees on the GFE that cannot increase, fees that can increase up to 10%, and other charges that can change at settlement. 68

GFE Page 3: Using the Tradeoff Table
Completion of this section is optional. If you choose to complete it, enter data from the current GFE in the first column, and the options as captioned in the headers of the other two columns. The alternative loans must use the same loan amount and be identical to the loan on the GFE except for the differences expressed in the column headings. 69

GFE Page 3: Using the Shopping Cart
This is a tool provided for the borrower to record and compare loan offers. It is to be left blank by the originator and the borrower may complete it if he or she wishes. Below the table is a statement to the borrower that the loan, its fees and settlement charges will not change if the lender sells the loan. 70

Disclosures: Conventional
Initial 1003, signed by Loan Originator and Borrower (LO signature and date should be on or up to 3 days before the date of initial disclosures, borrowers can sign afterwards) Please stack disclosures in the following order (top to bottom) ARM Disclosure, Buydown Disclosure or other loan type specific disclosure(s) Notice of Intent to Proceed for any changed circumstance, as applicable Changed Circumstance Form (if applicable) Revised GFE 2010 (if applicable; must be dated with 72 hours of changed circumstance) Re-disclosed Initial Fees Worksheet (Point form)/Re-disclosed Itemized Fee Worksheet (Encompass form) Notice of Intent to Proceed (initial) GFE 2010 (initial) Written List of Service Providers (complete with service provider info) Initial Fees Worksheet (Point form)/Itemized Fee Worksheet (Encompass form) New Construction Statement (if applicable) Continued… 72

Disclosures: Conventional (Continued)
Re-disclosed TIL (must be dated the date of re-disclosure and signed 3 days prior to loan docs being drawn; write “re-disclosure” on the bottom of form) if APR changes by more than .125% up or down Re-disclosed Itemization of Amount Financed (Point form)/Re-disclosed 2010 Itemization (Encompass form) if APR changes by more than .125% up or down Truth-in-lending Form (initial) Itemization of Amount Financed (initial) (Point form)/2010 Itemization (initial) (Encompass form) Borrower Signature Authorization Borrower’s Certification and Authorization Disclosure Notices Equal Credit Opportunity (ECOA) Disclosure Credit Score Information Disclosure (must reflect credit scores) Patriot Act Information Disclosure (must be completed) Privacy Policy Disclosure Servicing Disclosure Statement (“We will not service your loan.”) IRS Form 4506-T Notice of Right to Receive Appraisal HUD’s Settlement Cost Booklet Acknowledgement of Receipt State-specific Disclosures (see State-specific Disclosures Checklist) Private Mortgage Insurance (PMI) Disclosure (only if MI is required) 73

Disclosures: FHA Initial 1003, signed by Loan Originator and Borrower (LO signature and date should be on or up to 3 days before the date of initial disclosures, borrowers can sign afterwards) Initial 92900A, Pages 1&2 (LO or Loan Processor must sign Page 1; Borrower(s) must sign Page 2 in two places) Please stack disclosures in the following order (top to bottom) ARM Disclosure, Buydown Disclosure or other loan type specific disclosure(s) Notice of Intent to Proceed for any changed circumstance, as applicable Changed Circumstance Form (if applicable) Revised GFE 2010 (if applicable; must be dated with 72 hours of changed circumstance) Re-disclosed Initial Fees Worksheet (Point form)/Re-disclosed Itemized Fee Worksheet (Encompass form) Notice of Intent to Proceed (initial) GFE 2010 (initial) Written List of Service Providers (complete with service provider info) Initial Fees Worksheet (Point form)/Itemized Fee Worksheet (Encompass form) New Construction Statement (if applicable) Continued… 74

Disclosures: FHA (Continued)
Re-disclosed TIL – if APR change by more than .125% up or down (must be dated the date of re-disclosure and signed 3 days prior to loan docs being drawn; write “re-disclosure” on the bottom of form) Re-disclosed Itemization of Amount Financed (Point form)/Re-disclosed 2010 Itemization (Encompass form) if APR changes by more than .125% up or down Truth-in-lending Form (initial) Itemization of Amount Financed (initial) (Point form)/2010 Itemization (initial) (Encompass form) Borrower Signature Authorization Borrower’s Certification and Authorization Disclosure Notices Equal Credit Opportunity (ECOA) Disclosure Credit Score Information Disclosure (must reflect credit scores) Patriot Act Information Disclosure (must be completed) Privacy Policy Disclosure Servicing Disclosure Statement (“We will not service your loan.”) IRS Form 4506-T Notice of Right to Receive Appraisal HUD’s Settlement Cost Booklet Acknowledgement of Receipt State-specific Disclosures (see State-specific Disclosures Checklist) Continued… 75

Disclosures: FHA (Continued)
Informed Consumer Choice Disclosure (must be dated) HUD CN (For Your Protection: Get a Home Inspection) (purchase only) Confirmation of HUD CN (signed receipt) Important Notice to Homebuyers (92900B) FHA Assumption Notice Energy Efficient Mortgage (EEM) Fact Sheet NOTES: Initial 92900A, Pages 1&2 (LO or Loan Processor must sign Page 1; Borrower(s) must sign Page 2 in two places); borrower to complete as follows: Section 18 Section 19 (VA only) Section 20 Section 22: A-F Section 23 (VA only) Section 25: (2) VA only; (3) and (6) Final 92900A, Pages 1—4 (Underwriter to prepare these to be signed with loan documents) Page 1 (Signed by the Processor and dated with final docs) Page 2 (Signed by borrower(s) and dated with final docs) Page 3 (Signed by the Underwriter—signature date not required; Date Mortgage Approved and Date Approval Expires are required; Check the “do not” box, discount, and MI term) Page 4 (Signed by borrower(s) and dated with final docs; signed by the Funder and dated on or before the “Recorded” date) 76

Disclosures: VA Initial 1003, signed by Loan Originator and Borrower (LO signature and date should be on or up to 3 days before the date of initial disclosures, borrowers can sign afterwards) Initial A , Pages 1&2 (LO or Loan Processor must sign Page 1; Borrower(s) must sign Page 2 in two places) Please stack disclosures in the following order (top to bottom) ARM Disclosure, Buydown Disclosure or other loan type specific disclosure(s) Notice of Intent to Proceed for any changed circumstance, as applicable Changed Circumstance Form (if applicable) Revised GFE 2010 (if applicable; must be dated with 72 hours of changed circumstance) Re-disclosed Initial Fees Worksheet (Point form)/Re-disclosed Itemized Fee Worksheet (Encompass form) Notice of Intent to Proceed (initial) GFE 2010 (initial) Initial Fees Worksheet (Point form)/Itemized Fee Worksheet (Encompass form) Written List of Service Providers (complete with service provider info) New Construction Statement (if applicable) Continued… 77

Disclosures: VA (Continued)
Re-disclosed TIL (must be dated the date of re-disclosure and signed 3 days prior to loan docs being drawn; write “re-disclosure” on the bottom of form) if APR changes by more than .125% up or down Re-disclosed Itemization of Amount Financed (Point form)/Re-disclosed 2010 Itemization (Encompass form) if APR changes by more than .125% up or down Truth-in-lending Form (initial) Itemization of Amount Financed (initial) (Point form)/2010 Itemization (initial) (Encompass form) Borrower Signature Authorization Borrower’s Certification and Authorization Disclosure Notices Equal Credit Opportunity (ECOA) Disclosure Credit Score Information Disclosure (must reflect credit scores) Patriot Act Information Disclosure (must be completed) Privacy Policy Disclosure Servicing Disclosure Statement (“We will not service your loan.”) IRS Form 4506-T Notice of Right to Receive Appraisal HUD’s Settlement Cost Booklet Acknowledgement of Receipt State-specific Disclosures (see State-specific Disclosures Checklist) Continued… 78

Disclosures: VA (Continued)
Federal Collection Policy Notice Nearest Living Relative Debt Questionnaire VA Interest Rate & Discount Statement Counseling Checklist Important Notice to Homebuyer NOTES: Initial A, Pages 1&2 (LO or Loan Processor must sign Page 1; Borrower(s) must sign Page 2 in two places); borrower to complete as follows: Section 18 Section 19 (VA only) Section 20 Section 22: A-F Section 23 (VA only) Section 25: (2) VA only; (3) and (6) Final A, Pages 1—4 (Underwriter to prepare these to be signed with loan documents) Page 1 (Signed by the Processor and dated with final docs) Page 2 (Signed by borrower(s) and dated with final docs) Page 3 (Signed by the Underwriter—signature date not required; Date Mortgage Approved and Date Approval Expires are required; Check the “do not” box, discount, and MI term) Page 4 (Signed by borrower(s) and dated with final docs; signed by the Funder and dated on or before the “Recorded” date) 79

Disclosures: State-specific for California
In addition to disclosures pertaining to loan type (Conventional, FHA, VA), following are state-specific disclosures, required only for loans made on properties in California. CA Domestic Partnership Addendum to Universal Loan Application (required for all borrowers – two boxes must be marked) Fair Lending (must reflect “Department of Corporations”) CA Copies of Signed Documents Disclosure Hazard Insurance Disclosure Addendum to the Loan Application (married borrowers or loans with co-signers only) 80

Plus Related Forms, Disclosures, Policies and Procedures

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Plus Related Forms, Disclosures, Policies and Procedures

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