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We just received a good faith estimate for an FHA 4.085% apr loan where the loan is for $181600 for a purchase, and the origination fees are $4817.50 as listed on page 1 box A of the Good Faith Estimate introduction pages, but totally don't match what's in the lines of the GFE.
I feel like this is ridiculously high? How can I tell where that comes from?
You probably having something that says "adjusted origination fees". The adjusted amount takes into consideration a credit they're giving you for the loan to cover the fee, hence a higher interest rate than if you paid a loan origination fee at closing.
I have to believe this is a mistake. I was under the impression you could only charge 2% on any loan. The highest any premium that can come back to the broker in this case is $3620 or thereabouts.
The buydown has its own slot. The YSP credits have their own slots.
If I were you, I would call the broker asap and ask them to fix the mistake.
There's no limit on what can be charged on a loan. (btw, the APR on an FHA loan means squat, the upfront MIP and the monthly MIP substantially skews the APR).
What really matters is what is in blocks 1 & 2 on page 2.
What I don't see are your 900's and your 1000's.
The 1200's are county and state recording taxes.
Everything listed there looks fine, it's blocks 1 & 2 on page 2 that are the key to your transaction.
Welcome to the new improved GFE mandated by our federal government in 2010, the POS form that doesn't provide the cash needed to close, nor does it give the monthly payment. But by God, if the lender screws up, they'll make sure they pay......so what does the lender do?......over-estimate everything. And then when you try to report a lender for improper disclosure (as in flat out incorrect, wrong by a mile), the regulatory agencies all throw their hands up asking what should they be expected to do?
Okay, now that I am off my rant on the form (which is due to be revamped again this year), the intent of the form is solid. Your loan officer should explain it to you in detail until you are comfortable with the charges.
There's no limit on what can be charged on a loan. (btw, the APR on an FHA loan means squat, the upfront MIP and the monthly MIP substantially skews the APR).
What really matters is what is in blocks 1 & 2 on page 2.
What I don't see are your 900's and your 1000's.
The 1200's are county and state recording taxes.
Everything listed there looks fine, it's blocks 1 & 2 on page 2 that are the key to your transaction.
Welcome to the new improved GFE mandated by our federal government in 2010, the POS form that doesn't provide the cash needed to close, nor does it give the monthly payment. But by God, if the lender screws up, they'll make sure they pay......so what does the lender do?......over-estimate everything. And then when you try to report a lender for improper disclosure (as in flat out incorrect, wrong by a mile), the regulatory agencies all throw their hands up asking what should they be expected to do?
Okay, now that I am off my rant on the form (which is due to be revamped again this year), the intent of the form is solid. Your loan officer should explain it to you in detail until you are comfortable with the charges.
Im going to disagree with this. Where do you get this from?
After reading up, I see you are most likely referring to a 2% max? That must be either an old "overage limit" lenders use to have before Dodd-Frank legislation (the maximum you could charge over the cost of the loan) or a state limit. So if the actual rate was 3.5% with 0 points and the lender collected 2 points, that extra was referred to as overage that the loan officer got a portion of. That was outlawed in 2010.
But more than 2 points are entirely legal. For example, the State of Virginia has a bond program with 3 points in it.....my rate sheet has at least half a dozen rates with 3 points or more associated with below market rates, both conventional fixed and government loans. Reverse mortgages have several points, as do 203K loans.
Some states may have some regulations - and brokers may be limited to collecting two points in their pocket, but banks can certainly offer lower rates where points in excess of 2 are required.
And here I was hoping you were going to disagree on this POS Good Faith Estimate we've had to live with for over 2 years.
After reading up, I see you are most likely referring to a 2% max? That must be either an old "overage limit" lenders use to have before Dodd-Frank legislation (the maximum you could charge over the cost of the loan) or a state limit. So if the actual rate was 3.5% with 0 points and the lender collected 2 points, that extra was referred to as overage that the loan officer got a portion of. That was outlawed in 2010.
But more than 2 points are entirely legal. For example, the State of Virginia has a bond program with 3 points in it.....my rate sheet has at least half a dozen rates with 3 points or more associated with below market rates, both conventional fixed and government loans. Reverse mortgages have several points, as do 203K loans.
Some states may have some regulations - and brokers may be limited to collecting two points in their pocket, but banks can certainly offer lower rates where points in excess of 2 are required.
And here I was hoping you were going to disagree on this POS Good Faith Estimate we've had to live with for over 2 years.
I was in loan mods for the last 3 years and now have just been re licensed for my own net branch. With loan mods I was with a major bank on salary so this section of Dodd Frank was irrelevant to us. We did them no closing cost.
Thanks for the info dude. Sounds like you know the inside baseball. I dont charge anymore than 102 unless its then to beat down the closing costs.
Jumbo I go 101
Edit: I am capped at 2% but the borrower can buy down or get 5 points yield but it must be credited to the borrower to closing costs.
Thanks for the info
Last edited by thomasdavie; 12-29-2012 at 12:28 PM..
Reason: more info
When we bought a house our Realtor checked the closing papers . She wanted to see how much the mortgage broker charged because there is a legal limit the closing costs can be . They cant charge an unlimited amount .
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