RACI Newsletter
New GFE and HUD-1 Forms Go Into Effect January 1, 2010 (Back)
Published by Renee on Jan 05, 2010
Discloses key loan terms and closing costs: HUD’s goal was to have greater clarity and transparency. The GFE, now three pages in length, must be provided to the borrower within three business days of loan application. The lender may not verify borrower information prior to issuance of the GFE, and may not charge the borrower for preparation of the GFE. The GFE quotes are good for ten business days. The new HUD-1, now three pages in length as well, changes the way a real estate broker’s commission is shown. Real estate commission percentages are no longer disclosed, only the total dollar amount of commission to each real estate broker appears as Lines 701 and 702.
The new HUD-1 can be found here (http://www.indianarealtors.com/uploads/docs/360.pdf). Rebates will be disclosed on page 1 of the HUD-1 Settlement Statement as a credit to borrower. If a seller or real estate agent pays a borrower charge, or a charge typically paid for by borrower, this will show up as a credit to borrower. HUD is holding the lenders’ feet to the fire by making sure that GFE charges don’t increase at closing as exhibited on the HUD-1. If these two forms don’t match up, a lender may be required to write a check to the borrower (within 30 days of closing) for the excess. For example, if the lender origination charges are higher at closing than shown on the GFE provided, and there are no changed circumstances to affect the charges.
This excess can also be paid by credit at the closing. Certain charges can increase up to 10% at closing, such as government recording charges. Other charges, like homeowner’s insurance, may change at closing with no penalty to a lender since they have no control over these fees.
A FAQ has been posted on HUD’s website regarding the changes to these forms. (http://www.hud.gov/offices/hsg/ramh/res/resparulefaqs.pdf). Please contact the IAR Legal Hotline at 1-800-444-5472 if you are a principal, managing broker, or designated agent and have any questions regarding the new RESPA changes for 2010. If you have any comments about these new changes to the GFE or HUD-1, please visit our Legal Blog to post your thoughts. (http://www.indianarealtors.com/blog/2009/11/new-gfe-and-hud-1-effective-date.aspx).
Legal Affairs
BY RICHELLE COHEN MOSSLER, IAR LEGAL AFFAIRS DIRECTOR