RESPA, GFE2010, Loan Fee Worksheet, Initial Fee Sheet, 2010 itemization and Letter of intent to proceed, it’s all enough to make your head spin.
First I want to point out a number of helpful items I’ve come across in my research on this topic.
1. Calyx Point – Link on How to Complete Initial Fees Worksheet
2. Calyx Point – Link about GFE2010
3. Wells Fargo Completing GFE2010 Scenarios
4. Wells Fargo GFE Job Aid
So, when you are completing all of these forms remember the following:
Calyx Users: We need GFE AND Initial Fees worksheet ONLY (no Loan Fee Worksheet) – Read the link above on how to compete your forms.
Encompass Users: we need GFE2010 AND Loan Fee Worksheet (on FAMC site)
About our Loan Fee Worksheet (Encompass users) specifically Yield Spread Premium (YSP): do not think about this form in terms of GFE2010. Think about this form in terms of GFE2009 (the old way).
If your loan is locked you need to complete this section (YSP). Head down to the line that is for YSP, The first box is the total amount of locked in YSP.
If through your origination charge you are earning (retaining) any YSP you need to include this in Broker retained YSP section. Whatever amount you are NOT retaining (crediting) gets listed in YSP Credited to borrower.
Put another way: If you are looking to earn 2.50% on your transaction AND the loan is LOCKED at 1.45% YSP you would write in:
Origination fee of 1.05% (in dollars)
YSP = 1.45% (in dollars)
Broker retained YSP of 1.45% (in dollars).
If you are charging 2.50% AND are crediting the entire YSP to the borrower then you would write in:
Origination fee of 2.50% (in dollars)
YSP Credited to the Borrower =1.45% (in dollars)
If your loan is NOT LOCKED: You would NOT complete the YSP section and ONLY list Origination of 2.50%.
Calyx Users and Initial Fees Worksheet: LOCKED LOANS:
If you are looking to earn 2.50% on your transaction AND the loan is LOCKED at 1.45% YSP you would write in:
Line 801 - Origination fee of 1.05% (in dollars)
Line 812 - YSP = 1.45% (in dollars)
In the area below Line 814 - Compensation Paid to Broker from Lender (not paid from applicants loan proceeds) you would include ALL of YSP of 1.45% (in dollars) so that it carries over correctly to GFE2010 Line 2.
Calyx Users with unlocked loans: ALL origination in this example of 2.50% goes into Line 801.
Wait! My damn Initial fees worksheet doesn’t balance! The borrower is showing as coming in with too much cash to close. In this case you will need to head on down to the bottom of your Initial Fees sheet and add a lender credit of however much you would like to balance the sheet correctly. You will also want to add a lender credit on Page 4 of the 1003 in order to get that piece Balanced correctly too.
Calyx Users: Where do all of my Fees go? How to they Transfer Back and Forth between Initial Fees worksheet and GFE2010?
Box 1 – ALL 800 Series Charges
Box 2 – if marked as credit (from above 814)
Box 5 – Do not put owners title on the Initial Fees sheet (when you break it out separately in Box 5 it will carry back to Initial Fees section 1300: Total from GFE2010)
Box 6 - Pest Inspection is auto-populated from 1302 (if input) on Initial fees worksheet.
Box 6 Continued: Any additional itemized amounts listed here will carry back to Initial Fees
section 1300: Total from GFE2010
Box 9 – Adds together ALL of 1000 series charges
Box 10 – generated from Line 901
Box 11 – Generated from Line 903
What’s Up with this Letter of Intent to Proceed?
Here’s a dooozy and this is VERY important. As you all should understand at this point, GFE’s MAY EXPIRE after the 10 business days as posted on your GFE2010 important dates line 2 (GFE2010 Page 1). After the expiration of the GFE and because there is no place for the borrower to sign the new GFE you will eventually need the borrower to commit to (or lock in) your GFE2010. Once the borrower has signed the Letter of Intent to Proceed your GFE is locked in forever. You may not make a single change (other than change of circumstance). So: DO NOT send this in with your submission ONLY send it in when you are ready to order loan docs.
I am hopeful that this was able to clarify SOME of the issues going forward with GFE2010 and where what charges are etc.
Please DO NOT hesitate to call me with any questions.
I would have to say FHA has helped to bolster the majority of our books over the last 24+ months. Without it there would be even fewer of us still in business today. That said, having David Stevens at the helm of the FHA has been a blessing in disguise. He'll be making necessary changes as he sees fit so that we can all have an origination source and platform going forward.However, these changes aren't necessarily going to be easy to swallow.
Just a as a reminder about what changes have taken effect @ FHA and which Changes are coming soon (as announced by ML).
1. The Spot Approval Process has been Eliminated all together, if your Condo project is NOT approved there are specific rules that must be followed (ML09-46a/ML09-46b) more on this below.
2. HVCC for FHA: As of any case file number issued on or after February 15th, 2010 you will have to order your FHA appraisal through an HVCC styled appraisal source, provided by your sponsoring lender (yours truly).
3. UFMIP Increase: On April 5th, 2010 the UFMIP for any case file issued on or after this date will INCREASE to 2.25% for relatively all of your FHA loans (purchase, refinance, streamline refi). (ML10-02)
4. Short Sales - this policy jives with my company's stance since day I started. IF your borrower has a short sale (with certain specific instances excepting) they will need to wait a full 3 years (as with Foreclosure) before being eligible for FHA financing. (ML09-52)
5. Appraisal Portability - Any appraisal completed after January 1st, 2010 is only valid for 120 days from its completion date. This is shorter by 2 months of the previous rule which required 180 days waiting period before a new appraisal could be issued on a property. (ML09-29).
More on Condos and the approval process: The new processes are:
HRAP - HUD Review and Approval Process - HUD reviews the project for approval to lend
DELRAP - Direct Endorsement Lender Review and Approval Process: the Sponsor/Lender reviews the project, bylaws and financials for approval and allows for FHA financing in the project. This is tricky with respect to risk and we're hearing that many if not most Sponsors/Lenders (mine included) will not be participating in this specific process. We will only be writing loans in previously approved projects (those showing on HUD's approved list). If the Document status shows as "Unrecorded" we will be unable to move forward. Some updates to the project approvals are:
1. No more than 10% owned by one investor
2. No more than 15% of the HOA dues are in arrears
3. The project must have 50% Owner Occupancy Rate
4. No more than 50% FHA concentration (or up to 100% if ML09-46a terms are met).
Guaranteed this will make financing Condo's (at least in the near term) much harder than before.
So: Keep this list.. remember..learn it. love it. share it with your partners and let's get the loans in that fit.
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Remember to Go out and have fun!
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