Thursday, November 19, 2009

RESPA changes to the GFE and HUD-1 begin January 1, 2010. Are you ready?

Are you ready for the $1,000.00 closing? Let me explain...

I have recently attended two seminars to learn about new RESPA rules taking affect January 1, 2010 as it relates to the new Good Faith Estimate (GFE) and the revised HUD-1 Settlement Statement. Be ready for some BIG changes! If this is news to you you may want to give me a call as you don't want to be caught off guard. The goal for the new GFE is to allow consumers to go shopping for the best deal on their loan. Likewise, they want consumers to be able to compare apples to apples (rates, lender fees, closing fees, state fees, etc.). Another goal is to ensure that the closing numbers (on the HUD-1) will match the GFE exactly. I have no issues with these goals; I have seen several 'surprises' at the table in my career and it is never fun for any of us--especially the borrower. Hopefully this will happen less often with these 'new and improved' (well, maybe?) disclosures.

As for the $1,000 closing comment, this speaks to line 1101 from the new HUD called "title services and lenders' title insurance". Translation: ALL of our closing fees will be lumped together. Take all of our standard purchase fees: $450 attorney fee, $125 title search, $50 title binder, $55 "Special Handling"/courier fee--add that together and you already have $680. Lender's title insurance is published by the title company as being $2.00 per $1,000 in loan value, so take a $100,000 loan and that $680 ends up being $880.00 for "attorney fees" which may create 'sticker shock' for your clients. For that matter, Owner's title insurance will be a separate line as well.

Please make note of those fees and that bottom line and compare it with other firms. We are proud of the lack of junk fees that many other firms charge over and above what is listed (no $25 wire fee, $25 tax search fee, $150 'doc prep' fee, etc.). I acknowledge that we are NOT the cheapest but I know that you won't find the same level of customer service elsewhere!

I have much more to say about this topic but I want to leave you with one more thought--IF your buyers or borrowers truly start shopping, I just want to pass along something that we've seen (remember-the law firm is the last person in the chain). Some lenders can quote a great deal--my question is "can they deliver?" I am a fan of free enterprise and low costs, but I want to be able to pick up the phone and talk to someone if I have a problem--it's no different with loans. You need to have someone you can reach as well as someone who can actually get us a package. CAVEAT: loans are no longer the 'Wild Wild West' but underwriting and/or appraisals can delay a closing--or kill it (thanks HVCC! Look for a posting on this and other reasons to contact your Congressman soon). Suffice it to say that it's not always your lender's fault; sometimes it's totally out of their control. With that being said, based on all the new disclosure requirements, choose wisely. Make sure you have a great team--lender, agent and (of course!) your closing attorney. Contact me anytime to chat about this or any other issues you may face. Thanks for your business, your interest and your friendship! See you soon!

No comments: