Mortgage professionals will have to get used to a new “Good Faith Estimate” to be disclosed in 2010. The U.S. Department of Housing and Urban Development (HUD) has updated and re-released “Shopping for Your FHA loan: HUD’s Settlement Cost Booklet.” A large share of content in the 49-page publication, which helps consumers comparison-shop mortgages, addresses the standardized Good Faith Estimate (GFE) and HUD-1 settlement statement forms that lenders must start using on Jan. 1, 2010.
HUD estimates that consumers could save almost $700 in costs and fees per mortgage loan on average as a result of the new requirement, which is one of several changes to the Real Estate Settlement Procedures Act (RESPA). In addition to the updated literature, the agency has set up a RESPA “FAQ” section and other information on a dedicated RESPA page so that consumers, settlement service providers and lenders can gain a better understanding of the new rules.
Here is the location of the .pdf of the booklet that you can save or print out for your reference. http://portal.hud.gov/portal/page/portal/HUD/documents/Settlement Booklet December 15 REVISED.pdf
Mortgage lenders are now required to provide loan applicants with the following:
- Good Faith Estimate—provided at the time of application to borrowers to outline the home loan terms and Total settlement costs.
- HUD-1/HUD-1A Settlement Statements—to inform borrowers of final costs at settlement.
- Servicing Disclosure Statement—to inform the borrower whether another financial institution may be servicing their loan.
- Settlement Cost Booklet—provided within three days of application to inform the borrower of fees involved in home purchase settlement.
HUD announced they were making changes to the guidelines for with FHA mortgage products. The Federal Housing Administration still has money, but its loan reserves are depleting to dangerously low levels. FHA’s capital reserves are supposed to be 2% of outstanding loans. According to the actuarial review for fiscal year 2009, the reserves are a mere 0.5%. By the time you read this, FHA loan reserves might have disappeared entirely, thanks to the increasing number of FHA home foreclosures. All FHA borrowers pay a mortgage insurance premium. These premiums go into the FHA’s capital reserves fund and are used to pay for home loans that are foreclosed upon. As FHA refinance loans and purchase mortgages have become much more popular, and the unemployment numbers have risen, more of these loans have gone bad, requiring more payments from the capital reserves.
Unlike the Federal Deposit Insurance Corporation , which recently proposed that banks pay three years of insurance premiums at once in order to replenish the FDIC’s reserves, FHA can’t require current borrowers to pay more. But it can change the rules going forward that will make it more difficult to qualify for an FHA loan. According to a senior official at the Department of Housing and Urban Development , conversations are ongoing to determine what will make the most sense. “Nothing will be taken off table,” the official said. “Everything needs to be assessed through the lens of the FHA core mission as well as the broad economic policies of the Administration with regard to stabilizing housing.”
AmTrust Bank of Cleveland, which until recently was the nation’s third largest residential mortgage wholesaler, was seized by the government late Friday with a majority of its assets sold to New York Community Bank, Westbury, N.Y., a top ranked player in multifamily lending. According to Home Loan Wholesale, the government actually took bids on AmTrust’s operations two weeks ago, saying interested investors included BB&T, EverBank, Fifth Third Bancorp, Key Bank and others. Its failure is expected to cost the government roughly $2 billion. The lender’s demise is yet another blow for loan brokers in search of wholesalers willing to table fund their customers. At press time, it was unclear whether NYCB would keep AmTrust’s wholesale division intact. A thrift, AmTrust had $12 billion in assets and until a few years ago was called Ohio Savings and Loan. The thrift was a national correspondent originator, selling its conventional mortgage loans to Fannie Mae and Freddie Mac. NYCB paid no premium to assume all of AmTrust’s $8 billion in deposits, and also agreed to take over $9 billion of the failed thrift’s assets. New York Community and the FDIC will share losses on $6 billion of those assets. The nation’s largest privately owned thrift, AmTrust had been stung by a string of losing quarters and mounting losses from construction and development home loans. Last Monday its holding company, AmTrust Financial Corp., filed for Chapter 11 bankruptcy protection.
