Blog of the Mortgage

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

5. Encompass GFE Explanation

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 = 1.45% (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.

Remember to Go out and have fun!

2007 was the year that took us by surprise. 2008 was the year to survive and 2009 was the year to get back to basics.

We took our lumps and bumps and figured out how to originate what I think are the right loans for the right borrowers.

2010 will be the year for the originator to grow and continue to take local market share. With all of the legislative activity,

licensing requirements and HUD’s continuous changes being forced upon both the Consumer and the Originator 2010

will prove itself to be both challenging but also VERY, VERY rewarding.

More will leave this business and that presents us with a unique opportunity to position ourselves as industry veterans

(this has been a war of sorts, no?) with the capacity and ability to move and change with the times. All this upheaval is doing

for us is pushing us to become better at our craft and to hone our skills to be the best in our marketplace.

I feel like 2010 will be the year of professionalization of our industry. For all of the lack of regulation we’ve enjoyed in our

business it’s about time we got serious about our position in our customers lives: Helping them make one of, if not the

largest financial decision in their lifetime.

This presents an additional opportunity for us as well in that we (the originators) are being blamed for the collapse of the

housing industry in our country. With these changes we will be able to further position ourselves with our customers and

those of us left standing in the room will be given some much deserved credibility.

Many fear that the death of the independent originator will happen in 2010 and that may be the case. However that does

not mean that Mortgage Originators will be forced out, you will simply adapt and end up working under a different umbrella.

If this does happen, just take heart that consolidation doesn’t last forever and independence will be permitted again in the

future only with different (and definitely higher) barriers to entry. Not a bad thing for us or our business.

I look forward to continuing to partner with you and your team in 2010 and having some of the best professional years of our careers ahead of us.

Happy New Year

Sincerely,

Raoul Badde

Delayed Implementation Date for New Requirements in ML 2009-28

Enactment of ML 2009-28, Appraiser Independence, will be delayed until February 15, 2010. ML09-28 (originally planned for a January 1, 2010 implementation) has two parts:  a) prohibition of mortgage brokers and commission-based lender staff from the appraisal process, and b) appraiser selection in FHA Connection.  The effective date for both sections of this guidance will now take effect for all case numbers assigned on or after February 15, 2010.  This extension will provide FHA and lenders additional time to adjust systems to accommodate the changes.

Detailed instructions on changes to FHA Connection will be issued in a new mortgagee letter. However, lenders should be aware that the requirement for inputting the appraiser ID and the appraisal assignment date in the FHA Connection case number assignment screen will be removed.  Instead, lenders will be required to enter all appraisal data, including the appraiser ID, in the Appraisal Update Screen once the completed appraisal is received by the lender and prior to closing the loan. 

Delayed Implementation Date for ML 2009-51

ML 2009-51, Adoption of the Appraisal Update and/or Completion Report, states an effective date of January 1, 2010. The effective date is being extended and will now apply to all case numbers assigned on or after February 15, 2010. This extension will provide additional time needed by FHA and lenders to adjust their systems to accommodate use of the form.

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• Lenders can alternate between HRAP and DELRAP
• Spot condos are not eliminated until end of January 2010
• Increased FHA concentration levels to 50% and 100% in well-established projects (over 1 yr. from construction).
  
• Pre-sale reqmts for new construction lowered (from 51% to 50%)
• Owner-occupancy reqmt lowered (from 51% to 50%): Vacant or tenant occupied REO may be removed from the calculation!
  
• Florida projects still require HUD processing
• Reserves study requirement eliminated provided certain reqmts are met
• All the currently approved projects will migrate to the new approval list and have an extended re-cert time line.