HUD is requiring that loan originators provide borrowers with a standard Good Faith Estimate that clearly discloses key loan terms and closing costs and fees.  Loan originators must provide borrowers with a new HUD-1 settlement statement. The new 3-page form will allow the borrower to compare loan terms and make a more informed decision.

Of key interest are the fees.  Typically, a loan has 2 types of fees : origination fees or the fees associated with the lender providing the loan and settlement fees/closing costs or the title fees, appraisal fees, etc.  In the past the fees were an estimate and open to many surprises.  Now, the fees must be exact.  If the borrower accepts the loan as presented, the lender must provide the loan with the costs listed. NO SURPRISES.

If the lender provides services, they must be charged within 10% of what was listed. So if an appraisal is $500, it must cost no more than $550.

The new form will have a page that clearly lists the initial loan amount, the term length in years, the monthly payment, the initial interest rate, and whether that interest rate can rise plus any prepayment penalties or balloon payments. 

There’s also a “shopping chart” on the third page in which up to four different deals can be placed side-by-side and their costs easily compared.

For more information contact: Mary Lou Yoch, Frost Mortgage Lending, (949) 584-8865

I have been unable to blog the past week due to market changes and adapting to the new Good Faith Estimate. What seemed simple in theory has turned into a mess for lenders and home buyers/borrowers.

The trouble so far is that the new good faith estimate is so poorly designed that it tricks buyers into thinking higher costs for loans are being presented to them. The new GFE blocks most all lender fees into one section called “origination charges.” It shows this on top of listing origination fee or discount points.  Instead of adding transparency to mortgage banks this new form has turned into a nightmare for us all making borrowers and lenders shaky as they contemplate moving forward on a home loan.

What the brilliant people at the FED don’t realize in their inability to fix ANYTHING is that when they make a change like this new GFE, lenders double the time they spend with each borrower — first, explaining the new form and how odd it is compared to the plain english approach to the old GFE; second, as lenders, we are penalized for any mistakes on the estimate itself even small variances in fees that lenders have no control over such as title, transfer and some insurance fees.  As everyone knows, when you double the time an employee spends on anything, eventually, costs will go up. Why our pals up on the hill can’t figure out the basics of economics is beyond me.

As a lender, I am 100% honest with my clients and I’ve never mislead a buyer into a fee that was not valid. I can say that for almost every lender I know. I am sickened to think that we as lenders may be forced to charge more to our buyers to give them the same great service they deserve and we’ve always given.

Now that we’re getting the hang of this new set of rules I am hoping that everyone gets back into the groove of things by next week.

On a better note, I hope everyone smiled when my prediction came true regarding interest rates coming down around the 11th of January! Here is my gift to you, as rates are still great here at Urban Austin Mortgage …

Todays Rates:

30yr Fixed- 4.75% 0+1

15yr Fixed- 4.25% 0+1

FHA/VA 30yr- 4.875%

USDA 100% financing- 4.875%

Any and all questions can easily be answered over the phone or via email any time.

Sincerely,

D. Stephen Steakley, Jr.
Austin, Texas Home Loan Expert
512-577-8898 ph

UA website - Austin Texas Home Loans
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A company founded on the philosophy of conducting business in a more logical, sensible and upfront manner.

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Having a baby and refinancing your home loan.

Diapers, Bottles, Strollers and Clothes…Have you ever wondered “How can I ever have enough money to save for retirement and my child’s education?” and “How did my parents ever make ends meet?”

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Builder: Pink slip? Mortgage paid for 3 months

http://www.chron.com/disp/story.mpl/headline/biz/6380778.html

Six firms to get mortgage incentives named

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/04/15/BUP61737PV.DTL&type=business

Fallen stocks need time to get up

http://www.goerie.com/apps/pbcs.dll/article?AID=/20090419/BUSINESS05/304199971/0/BUSINESS04

Tulsa Home Sales Down 24%

http://www.ktul.com/news/stories/0409/614834.html

Low rates can mean big savings when refinancing

http://www.tulsaworld.com/business/article.aspx?subjectid=15&articleid=20090416_15_E4_DearAc878441

We should be happy we live in Tulsa, Oklahoma

http://www.tulsaworld.com/business/article.aspx?subjectid=46&articleid=20090412_46_E1_Oklaho982681

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If you are in the process of purchasing a home, you will probably hear the word “RESPA” in connection with your loan.  As a result of new HUD regulations, RESPA h as become an important term that everybody involved in the loan process must understand.

So what does “RESPA” stand for:  Real Estate Settlement Procedures Act.  As of January 1, 2010, HUD requires that loan originators issues a Good Faith Estimate that discloses loan terms and closing costs.  The new regulations also outlaws “kickback” that increase the cost of settlement services.  The new procedures are designed to protect homebuyers.

In order to better understand the new regulations, click here