The Veridian Blog

Theodore is in the middle of a purchase escrow when he decides that he wants to put down more money and borrow less.  In regard to the new GFE disclosures, what steps will the broker/lender have to make? 

Under the new 2010 RESPA disclosure rules, in general, fees from the lender or broker cannot change unless there is a “Changed Circumstance” in which case a revised GFE must be provided within three business days after receipt of the information regarding the Changed Circumstance.  Only fees directly impacted by the Changed Circumstance can be added and/or increased and re-disclosed.  This excludes the broker compensation which can never increase.  Once actual fees are eventually determined, there is a maximum 10% tolerance level between actual figures and estimated figures disclosed in the GFE. 

Examples of a Changed Circumstance presently includes:

·         Act of God, war, disaster, or other emergency

·         Inaccurate information provided by borrower

·         Changed information such as loan amount or property value

·         Transactional circumstances – interest rate changes until rate lock, or expiration of GFE

When Theodore reduces his loan amount, it will trigger re-disclosure requirements and possibly additional disclosures depending on who the lender is.  Luckily, he is reducing the loan amount which won’t require another underwriting.  If the opposite were true, then the loan would almost certainly be delayed having to be re-underwritten due to the higher payment.  These are additional rules that brokers and borrowers have to be acutely aware of during the loan process, as the consequences of delay can be very significant.