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New GFE and HUD-1/1A Forms
- The GFE has been shortened from four pages to three.
- The HUD-1 has a new third page that includes a chart comparing the amounts listed for particular settlement costs on the GFE. Lenders are re-quired to provide all information needed to complete the comparison chart.
- Everyone must use the new GFE and HUD-1 forms by January 1, 2010, however, some lenders may be early adopters. If the new GFE is used, the new HUD-1 must be used.
Average Pricing
Settlement service providers can utilize average costs for services such as credit reports and courier fees. There is a three-year recordkeeping requirement, and the total average costs over the utilized time period must not exceed the total paid for those services. Ex-cluded from average cost pricing are services based on the value of a property or loan, including any type of insurance.
Ineligible Fees
Fees based on loan amount or property values
Transfer Tax
Interest Escrow
Reserves Insurance premiums (including title)
Provider's own internal charges
Eligible Fees
All other fees including third party fees
Calculations based on specific class of transactions
During a specific time period (not less than 30 days, not more than six months)
For a specific geographical area
Charge may not exceed average calculation
Charge may not exceed the total price paid to third-party provider
Originator must retain all documentation determin-ing accuracy of pricing method for at least three years
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There are three categories of tolerances from the GFE to the HUD-1:
Zero Tolerance
(fees that cannot change)
Origination Fee
Points (or credited YSP to offset origination fee)
Adjusted origination charges
Transfer Taxes
10% Tolerance
(fees that cannot change more than 10% aggregate)
Required services (if lender recommended provid-ers are chosen)
Title services and lender's title insurance (if lender recommended providers are chosen)
Owner's title insurance (if lender recommended providers are chosen)
Government Recording Fees
No Tolerance Limit
(fees that can change with no tolerance limit)
Required services (if selected by borrower)
Title services and lender's title insurance (if selected by the borrower)
Owner's title insurance (if selected by the bor-rower)
Initial escrow deposit
Daily interest charges
Homeowner's insurance
Required Use
The intent of Required Use is to allow bona fide dis-counts and disallow any discounts predicated on pre-ferred service providers. It declares as illegal any economic incentives or disincentives used to improp-erly influence a consumer's choices. In other words, a discount of fees or services shouldn't be predicated on the selection of a specific provider. However, there is an exemption of the Required Use provision for AfBAs if:
- The combination of services is optional AND
- The lower price is not made up elsewhere in the transaction
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