HUD made the change to remain consistent with the Real Estate Settlement Procedures Act (RESPA), which will require mortgage lenders to disclose to borrowers a single origination fee on the Good Faith Estimate (GFE) and the HUD-1 Settlement Statement.   The regulations go into effect Jan. 1, 2010

Under RESPA, the single origination charge on the GFE and HUD-1 must include all administrative and processing fees related to the origination of the loans, including compensation for both the mortgage lender and broker. HUD recognized the bundled charge would exceed the 1% cap, according to a statement from the law firm K&L Gates.

To match the changes of FHA regulations, HUD will no longer limit the amount of the origination fee charged to FHA borrowers.

Great the new changes RESPA has rolled out allow the lenders/brokers to jack up the Origination Fee.  Now brokers can whack you a few points for origination AND pick up some Yield Spread kickbacks.  This makes me sick.

The FHA will expect lenders to charge “fair and reasonable” fees and will monitor them to ensure FHA borrowers are not overcharged, and FHA commissioner David Stevens intends to issue additional guidance on fee limitations, according to the letter.

Yeh right, fair and reasonable.  I have looked at well over 1,000 HUD settlements statements where brokers were supposed to be “fair and reasonable” but in fact they were limited by law to the amount they could charge for some types of loans.  You know what we found…they don’t care and many look for any angle to skirt the law.  Wow, no need for that anymore, now we don’t have a limit.

Thanks to Jon Prior @ HousingWire for this tip.

- The Bank Slayer

A mortgage audit is a forensic analysis of your Loan Application, the Good Faith Estimate, the Truth in Lending Statement, Note, Deed of Trust, HUD-1 closing statement and other documents to determine if there were errors or misrepresentations in the lending process.   Even a simple error in the APR or failure to meet the statutory date requirements can yield the leverage needed to win a mortgage rescission, a reduction in principal for a loan modification or add firepower to a short sale.

Even if you are current on your mortgage but wonder if you were the victim of predatory lending or if you have an adjustable rate mortgage which you want the bank to convert to a better fixed rate plan a mortgage audit is the start point for any battle plan.

Call our office at 713-595-8200 today and take advantage of the valuable and free offer for veterans.

- The Bank Slayer