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Apr 07, 2010
Categories: Consumer Lending Home-Secured Lending

HUD Happenings

Posted by Anthony Demangone

More than three months into the new GFE and HUD-1 forms, HUD continues to issue new guidance to address questions from the industry.  HUD has updated its RESPA FAQ document again. 

This time, they did provide a short guide highlighting where the major changes occur:
  • GFE – General, #33 
  • GFE – Important dates,  #5  
  • GFE - Block 1, #7 and #8 
  • Sections 4 and 5 – Right to cure and tolerance violations, #9 and #12  
Here's one "question and answer" that caught my eye:

Q: Can a loan originator provide a GFE without a property address?

A: Yes, a loan originator can determine that a property address is not one of the required pieces of information that the loan originator needs in order to issue a GFE. It is important to note that a loan originator must consistently apply its policy on the information it deems necessary to issue a GFE, and the RESPA rule requires a loan originator to issue a GFE whenever it receives information sufficient to complete an application for a GFE. As a result, if a loan originator received an application for a preapproval and that application included all of the pieces of information that the loan originator requires to issue a GFE, the loan originator must issue a GFE and all of the rules that govern the GFE process would apply. In addition, if a GFE is issued without a property address, the future receipt of the property address is not a changed circumstance that would allow the loan originator to issue a revised GFE.   (Emphasis added.)

Wow.  So, if you choose to issue a GFE without a property address, you're stuck with the GFE's rules.   In addition, when the member ends up telling you where the property is, the receipt of the address is not a "changed circumstance" that would allow you to issue a revised GFE.  Even if you find out the property is in Centralia, Pennsylvania.   (I drive through there on the way to my parents occasionally.  Eerie place.)

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On Monday, HUD announced new FHA rules designed to strengthen risk management.  The rules increase net worth requirements for FHA lenders.  So, if you are an FHA lender, give the link above a quick read.

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