considered an approval, the terms presented — if accepted within 10 days —
are binding on loan originators. If,
however, “changed circumstances”
occur, then originators may present a
Changed circumstances include:
“Acts of God, • war, disasters or other
Modifications • to customer-provided
information that impact borrowers’
New information • ; and
“Nothing that is known
Circumstances • particular to the bor-
rowers or the transaction, such as
boundary disputes, flood-insurance
issues or environmental concerns.
« NE W-LOOK continued from page 23
or should have been
known when the GFE
is provided can form the
basis for changed
Nothing that is known or should have
been known when the GFE is provided
can form the basis for changed circumstances. Originators should know
borrower information such as name, address, income, property value and loan
amount before issuing an estimate.
The rule also requires originators to
retain any documentation of changed
circumstances causing revision of a GFE
for three years.
Tolerance of 10 percent
Fees subject to the 10-percent tolerance
for change include:
Required services • the originator
Title services • and lender’s title insurance, if selected by the loan originator or by the borrowers from a list of
companies the originator identified;
Owner’s title insurance, • if selected
from a list of companies the originator identified;
Required services • borrowers can
shop for, if selected from a list of companies the originator identified; and
Government • recording charges.
The 10-percent tolerance applies to
the total change associated with these
items, not to each item individually.
The cost for services borrowers select
outside of lists originators provide can
change by more than 10 percent.
The final RESPA rule also attempts
to clarify when a GFE is required. It
notes borrowers must select a property prior to filling out an application,
and loan originators must provide a
GFE within three business days of
Important Points on GFE
Here are some key terms on the new good-faith estimate (GFE) and their
Important dates: • This section indicates the date until which quoted rates
and fees will be available.
Summary of your loan: • Located on Page 1 of the new GFE, this section
addresses the loan’s rate and terms, as well as any negative amortization,
prepayment penalties, balloon payments and escrow requirements.
It also addresses if the loan has a fixed or variable rate.
Tradeoff table: • If completed (not required), this shows the relationship
between settlement charges and interest rates.
Shopping chart: • Borrowers can use this tool to compare different loan
More information about the Real Estate Settlement Procedures Act:
The RESPA changes differ from the
Mortgage Disclosure Improvement
Act changes already in place (sctsm.
in/TILArule). They also are separate
from the proposed Truth in Lending
Act (TILA) changes, which are open
to public comment until Dec. 24. You
can submit TILA comments at sctsm.
The structure and presentation of the
new GFE are designed to encourage
borrower shopping for rates, fees
and terms. In turn, brokers must have
clear pricing structures. Loan originators must give accurate quotes and
be able to overcome objections from
customers who want an estimate to
shop fees without giving their personal
While provisions exist for originators
to cure any charges over the tolerance
levels within 30 days, being prepared
for RESPA’s new requirements can save
the hassle and expense. •
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