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RESPA: New HUD-1 and GFE Forms

RESPA Reform Overview

Surprisingly, the new RESPA reform may help level the playing field between a broker and lender simply because the borrower is encouraged to compare the "Adjusted Origination Charges" (the total cost to the borrower) – not the origination fees. See below. As part of the updated Real Estate Settlement Procedures Act (RESPA) the new HUD-1 and GFE must be used beginning January 1st, 2010. Below are instructions related to some of the changes, as well as examples of how to fill out Good Faith Estimate (GFE) Blocks 1, 2, & A - and Lines 801, 802, & 803 of the new HUD-1.

 

New Form Examples — Side by Side Comparison 

Below are examples of how a lender and a broker might fill out the new GFE and HUD-1 for the following scenario: $100,000 loan amount, locked at 5% with a 1.125% YSP, receiving 2.125% compensation for originating the loan.

New GFE   View the New GFE form or Old GFE form.

GFE Side by Side Comparison

New HUD-1   View the New HUD-1 form or Old HUD-1 form.

HUD-1 800 Block Lender and Broker Comparison

Example Explanations

GFE— Broker 

See highlights in blue. In this scenario, a broker may decide to charge a 2.125% origination charge and would list the dollar amount in Block 1. The second check box would be marked in Block 2, and the amount of the YSP would be listed both in the box near the 2nd check box and in the right column. Block A would contain the adjusted origination charge, which in this scenario is $2,125 less $1,125, which equals $1,000. The total compensation to the broker would be $2,125.00.

GFE — Lender 

See highlights in green. The lender would be required to note the dollar amount of the origination fee in Block 1. If the lender assesses a 1% origination charge, that amount in this scenario is $1,000. The lender may denominate credits or charges in Block 2 using the second or third boxes, but is free to simply check the first box, in which case the loan interest rate is noted. In this scenario, that is 5.0%. The adjusted origination charge is recorded in Block A and is the sum of Block 1 and Block 2. In this example, the amount in Block A is $1,000. The total compensation to the lender would be $2,125.00 (including $1,125 hidden YSP); the lender's adjusted origination charge to the borrower is the same as the broker’s adjusted origination charge.

HUD- 1 — Broker 

These lines must now always exactly match the GFE. Brokers are required to credit to the borrower any payments from the lender to the broker. Therefore, in this scenario, a broker may decide to charge a 2.125% origination fee and would list the dollar amount on line 801. The amount of the YSP would be listed on line 802 as a negative number since it is being credited to the borrower. The adjusted origination charge would be line 801 plus line 802 and listed on line 803 in the columns. The total compensation to the broker would be $2,125.00.

HUD-1 — Lender 

These lines must now always exactly match the GFE. The lender would be required to note the dollar amount of the total origination fee on line 801. If the lender assesses a 1% origination charge, that amount in this scenario is $1,000. Lenders are not required to note points or yield spread premiums (YSP). The adjusted origination charge would be line 801 plus line 802 and listed on line 803 in the columns. The total compensation to the lender would be $2,125.00 (including $1,125 hidden YSP); the lender's adjusted origination charge to the borrower is the same as the broker’s adjusted origination charge.

 

New GFE Instructions 

Instructions: Blocks 1, 2, & A 

The top of the second page of the new Good Faith Estimate (GFE) requires that the origination charge be listed (Block 1), and the credit or charge for the specific interest rate (Block 2) is required to be subtracted or added to the origination charge to arrive at the adjusted origination charge (Block A).

Block 1
GFE Block 1

Broker 
Must include all charges to be paid by the borrower that are to be received by the broker and any other originator for, or as a result of, the mortgage loan origination, including any payments from the lender to the broker for the origination. In other words, the amount listed on this line is the sum of all payments from the borrower and the lender to the broker.

Lender 
Must include all charges to be paid by the borrower that are to be received by the originator for, or as a result of, the loan origination to the borrower, except any amounts denominated by the lender as discount points, which are disclosed in Block 2.

Block 2
GFE Block 2

Broker 
Mark the appropriate box. Box two is checked when there is a credit for a higher interest rate. It is also checked when a lender compensates a broker based on a flat dollar amount, or based on the loan amount. Box three is marked when there is a charge (points) for a lower interest rate. Be sure to indicate the dollar amount of the credit or charge both in the blank space near the marked box, and in the large box on the right of the form. The initial interest rate should also be entered in the appropriate blank space for the interest rate.

Lender 
While lenders are not required to check the second or third boxes of Block 2, in loans where they do not make such disclosures, they are required to check Box 1.

If lenders separately denominate any amounts due from the borrower as ‘‘points,’’ they must check the third box indicating that there are charges for the interest rate and enter the appropriate amount for points as a positive number. If lenders separately denominate any amounts as a credit to the borrower for the particular interest rate covered by the GFE, they must check the second box and enter the appropriate amount as a negative number.

If Box 2 or Box 3 is marked, the dollar amount of the credit or charge should be entered both in the blank space near the marked box, and in the large box on the right of the form. The initial interest rate should also be entered in the appropriate blank space for the interest rate.

Block 3
GFE Block A

Broker  & Lender 
Any lender payments are subtracted and any points are added (Block 2) to the origination charge (Block 1) to arrive at ‘‘your adjusted origination charges’’ (Block A).

 

New HUD-1 Instructions 

Instructions: Lines 801, 802, 803 

These lines must now always exactly match the GFE.

Line 801
HUD-1 Line 801

Line 801 includes all charges received by a loan originator, except for any additional charge ("points") for the interest rate chosen on the loan. The amount on Line 801 also includes all amounts received for any service, including administrative and processing services, performed by or on behalf of the lender or any mortgage broker.

This amount must not be listed in either the borrower paid or seller paid column.

Line 802
HUD1 Line 802

Line 802 is used to record ‘‘Your credit or charge (points) for the specific interest rate chosen,’’ which states the charge or credit adjustment as applied to ‘‘Our origination charge,’’ if applicable. Lenders are not required to list an amount here. Brokers are required to list the sum of all payments to the mortgage broker from the lender, including any payments based on the loan amount or loan terms, and any flat rate payments.

Indirect payments from a lender to a mortgage broker may not be disclosed as P.O.C., and must be included as a credit on Line 802.

This amount must not be listed in either the borrower paid or seller paid column.

Line 803
HUD1 Line 803

Line 803 is used to record the sum of the amounts shown in Lines 801 and 802. It is the net loan origination charge. This amount must be listed in the borrower paid or seller paid column.

 

Final Ruling & FAQ  

For more information, please click the RESPA Final Ruling or RESPA Final Ruling FAQ links.
Until January 1st, 2010, either the old or new GFE can be used. If the old GFE is used, the old HUD-1 must be used. If the new GFE is used, the new HUD-1 must be used.

RESPA Final Ruling
RESPA Final Ruling FAQs


 



 
 
 
 
 
 
 

 
 
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