Loan Officer Compensation: Good Faith Estimate (GFE)

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On March 18, 2011, the Department of Housing and Urban Development (HUD) issued its RESPA Roundup, this issue being devoted to completing the Good Faith Estimate (GFE) in order to disclose loan originator compensation pursuant to the new TILA Loan Originator Compensation rule (Rule). [75 F.R. 58509 (September 24, 2010)]

HUD's guidance addresses the following issues:

(1) Mortgage broker transactions where the broker is compensated indirectly from the lender by means other than an amount that is computed based on the interest rate, such as by a flat fee or an amount that is based on any other computation;

(2) No cost transactions where the credit for the interest rate chosen covers third party settlement charges;

(3) Using a credit/charge calculation prior to completing Block 2 on the GFE; and

(4) Payments by lenders to borrowers to correct tolerance violations in wholesale transactions.

I will simplify the technical aspects of this HUD issuance, in order to clarify how to complete the GFE.

Article Highlights:

(1) Mortgage Broker Transactions (Flat Fee Compensation)

(2) No Cost Transactions (Interest Rate Covers Originator

or Third Party Settlement Charges)

(3) Using a Charge or Credit Calculation Prior to Completing Block 2 of the GFE

(4) Payments by Lenders to Borrowers for Tolerance Violations in Wholesale Transactions

>Some Observations

Article provides illustrations and resources.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jonathan Foxx, Lenders Compliance Group | Attorney Advertising

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