Archive for the ‘2010 RESPA Rules Implementation’ Category


New RESPA Rule Implementation – 30-Day Review

Tuesday, February 9th, 2010 19:26
Posted by: Rick Kabra

Now that over a month has passed, since the new RESPA Rule has gone into full effect and we have seen hundreds of closings processed with new GFE/HUD forms, it’s clear that the sky is not falling. Like any change, there’s always resistance in the beginning, but eventually all smart people figure out a way to cope with change.

Based on direct discussion with the countless settlement agents I have assisted in completing their HUD closing docs, here are the top challenges I see that settlement agents are facing:

  1. Charges which are normally paid by Seller are being shown on the GFE, which makes HUD preparation twisted: This is a big one. For example, sellers in many jurisdictions (e.g. New Jersey) pay transfer taxes, yet many lenders are showing them on the GFE. This complicates HUD settlement statement preparation unnecessarily.
  2. Lenders are asking that additional information to be shown on GFE-HUD comparison page: We have seen some outrageous demands from lenders to show additional details on GFE-HUD comparison sheet, which we believe are not required by the new rules. I guess lenders are just being overly cautious.
  3. The HUD-1A Settlement Statement (for refinance) might be a thing of past: Due to many practical reasons (e.g. any part of the lender’s itemization paid out of closing), the HUD-1 form is to be used even for refinance. Perhaps, it might be easier to always use the HUD-1 only.  It provides more space and avoids last minute surprises of moving from HUD-1A to HUD-1.
  4. In states where attorneys handle the closing, many lenders are asking that all legal fees be shown on 1102, regardless of whether the fee is considered a closing/settlement fee or not. We think it’s wrong to do so and that it will present complications, if the settlement agent is on the “lender identified list.
  5. Finally, we have seen many new GFE’s without an identified providers list. What happened to the requirement to include a provider’s list WITH the GFE? Are lenders having hard time finding providers who want to be on the list? It’s our understanding that if a list is not attached to the GFE, all providers are considered bucket-2 providers (part of the 10% tolerance group).

I am very pleased to report that our HUD software is able to handle pretty much anything that comes its way. Particularly, I’m pleased with the fact that since all output forms are fully editable, our customers have been able to meet strange requirements from the lender. When we were designing Easy HUD 3.0 software in early 2009, whoever proposed making all output forms editable, God bless him/her!

Please let me know your thoughts in the comments section below.



New RESPA Rule – There’s a Gray Area

Friday, January 22nd, 2010 17:41
Posted by: Rick Kabra

The new RESPA Rules are underway and real estate professionals are discovering that many questions they have fall into a gray area. Because real estate closings are done differently from region to region in order to comply with individual state laws, there isn’t always one hard and fast rule that works for all while preparing HUD settlement statements.

You’ll find presentation material everywhere, providing advice on settlement statement preparation. Since the announcement of RESPA reform, Easy Soft has been at the forefront of training for real estate professionals.

Because we field questions from thousands of our customers nationwide, we know the wide variety of stumbling blocks you encounter as you begin to implement the new Rule. Through careful research, our experts have formulated answers to help you, no matter where you live.

Easy Soft maintains a FAQ page on our website:
http://www.easysoft-usa.com/documents/FAQ/HUD300-FAQ.pdf

You will find answers for many tricky questions. For example, how to prepare the GFE-HUD comparison sheet, when the title agent is on the lender provided list, but the settlement agent is not (or vice versa!). Read on, and have fun!

Please let me know your thoughts in the comments section below.



New RESPA Rule – Do we have more disclosure or less?

Wednesday, January 20th, 2010 20:00
Posted by: Rick Kabra

HUD’s stated objective (well, at least one of the most important ones) with the new RESPA Rule is to bring about much needed transparency in the real estate closing process. While the GFE-HUD comparison sheet requirement certainly has pressed lenders and settlement services providers to quote their fee much more accurately, there is still an element of opacity.

As part of the new rules, lenders and settlement service providers are no longer allowed to itemize “administrative fees.” The rule applies to all settlement service providers, whether they are on the lender provided list or not. Now, in the normal course of business, consumers would want to see an itemized list of charges, especially because the HUD Settlement Statement does not allow for itemization. If the goal is transparency, then breakdown of lender’s origination cost, title fee, closing fee, etc. must be visible.

What’s the solution? We believe we have the answer. Easy HUD software has a “Smart Itemization” feature. You can actually fill-in the itemization instead of entering a “lump-sum” charge on the HUD. And, you can print the itemization sheets separately. So, the bottom line is, HUD forms including the GFE-HUD comparison sheet will get a lump-sum value and yet you can provide clients with a breakdown! Isn’t this cool?

If you are a not a current Easy Soft HUD 3.0 user, see what you are missing. Download a trial copy at: http://www.easysoft-usa.com/hud-software.html

Please let me know your thoughts in the comments section below.



RESPA Final Rule and a Lender’s Perspective

Wednesday, November 18th, 2009 10:43
Posted by: Rick Kabra

On Nov 11, 2009, I attended the Real Property Section of the Essex County Bar Association (ECBA) New Jersey meeting on “2009 RESPA Changes.” Darcie Gore of Bank of America (BoA) was one of the guest speakers and John R. Dusinberre, Esq of ECBA was the moderator.

After giving 50 or so presentations myself about RESPA Rule implementation for settlement agents, it was nice to sit back and listen. It was also interesting to see a leading lender’s perspective, plans and guidance. Here’s my take from the meeting:

     » BoA’s go-live date for new GFE is January 1, 2010.

          • Talk about going down to the wire.

     » BoA wants settlement agents to submit a draft HUD for approval one-week prior to closing, so they can
        carefully review all fees prior to loan funding.

          • Interestingly, a draft HUD prepared a week ahead may not even have closing figures. Settlement agents
            typically don’t receive their final closing figures until the day of the closing.

     » BoA will make list of “lender identified service providers” (for the purpose of tolerances computation) online.

          • This seems problematic to me. First, RESPA rules require a list of service providers be given as an
            attachment “along with” the Good Faith Estimate (GFE.)

          • Secondly, an online list will continue to be refined/updated, surely a nightmare for settlement agents
            preparing a HUD. So, this will need further clarification from BoA.

     » If any last minute repair issues are discovered during the final walk-through, BoA will have to be notified as
         they will need to determine if the repair charges result in changed circumstances.

          • A final walk-through happens the day before the closing. It seems impractical to close an entire loop for
            minor repair work just hours before the closing.

          • Unless major issues are discovered, it seems like agreeing to a repair payment with a third party and
            showing it on the HUD with the seller incurring charges, would be the most appropriate.

     » BoA has set up a dedicated toll-free hot-line number and email to address any compliance related issues.

     » Because New Jersey is an attorney closing state, there was lot of discussion about how to record attorneys’ fees. John Dusinbere presented an approach separating fees on 1102 (the portion pertaining to conducting closing) and 1109 (the portion pertaining to other legal services). His method is in close alignment with our position at Easy Soft, which we’ve been advocating for almost a year for our customers. (I’ll address “recording attorneys’ fees” in an up-coming blog post.)

     » BoA considers the 1102 charge as one that affects the APR calculations, but they have not taken a position on the other legal services charge (likely on 1109) and whether it also affects the APR. Remember, the Mortgage Disclosure Improvement Act (MDIA) that went into effect July 30, 2009 requires a new Truth in Lending (TIL) disclosure statement be issued if the APR rises by more than 0.125% and starts a new 7-day waiting period. So, this can get tricky very quickly!

The Essex County Bar meeting was a strong indicator of the on-going issues residential real estate attorneys, title companies, closing companies and lenders still have to iron out before January 1, 2010.

In August, Easy Soft began offering webinars to help real estate industry professionals get ready for RESPA reform. We continue to offer our two popular RESPA webinars each week and invite you to attend. More details at: http://www.easysoft-usa.com/hud-software.html