Frequently Asked Questions about RESPA Reform

1.Does RESPA Reform apply to all loan types?

No. It applies to all open-end and closed-end loans but does not apply to home equity lines of credit.

2. At what point can a loan originator collect upfront fees?

An applicant must receive his or her initial disclosures before upfront fees can be collected from that applicant. The only exception is the credit report fee which can be collected at application.

3.What if the settlement agent or attorney that the REALTOR or customer prefers to use is unable to fulfill on the expectations set forth in the closing agent instructions?

In any such case, another settlement agent or attorney who can execute based on our closing agent instructions will need to be selected.

4. Is there anything a REALTOR or Builder needs to look for with settlement agents or attorneys?

We recommend REALTORS and Builders talk to the settlement agents or attorneys right away about the RESPA Reform requirements to ensure the closing agents are prepared to issue the new HUD-1 as required. This may help avoid the possibility of having to select a new closing agent midstream which could impact the closing date.

5. Is a GFE a loan commitment?

No, the GFE is not a loan commitment. A GFE is an estimate of the total charges associated with obtaining the loan, regardless of who is responsible for paying each of those charges, but neither the borrower nor the lender is obligated to enter into the loan. We, however, are bound to the charges quoted on the GFE for 10 days, unless a valid changed circumstance arises.

6. If a charge on the HUD-1 is less than the charge on the GFE, could this cause a delay in the closing?

No. It is permissible for charges to the borrower to decrease without a need for the GFE to be reissued or the closing to be delayed.

7.Are there additional impacts to new construction loans?

In transactions involving newhome purchaseswhere settlement is anticipated to occur more than 60 calendar days from the time the GFE is provided, the loan originator may provide the GFE to the borrower with a disclosure stating that at any time up until 60 calendar days prior to closing, a revised GFE may be issued, even without changed circumstances.