The Federal Reserve on Monday issued new rules pertaining to mortgage financing, announcing the prohibition of Yield Spread Premiums as they are known today.  In fact, any compensation based on loan terms is prohibited.  Effective April 2011, only direct compensation based on loan amount is permitted.  For an overview of these and other proposed changes, check out Housing Wire's coverage.  Full text of the final rule regarding yield spread as we

In a Change Circular dated August 6, 2010, the VA clarified the intent of its language in the July 30 circular.  In it the VA states that itemizations should occur on an addendum or attachment to the HUD-1 form and not on the HUD-1 form itself.  Some language in the original release caused confusion.

The VA recently announced its updated requirements, synchronizing VA closings with the 2010 RESPA Reform changes.  In its July 30 circular, the Veterans Administration called for itemizations of pertinent fees (801, 1101 and lump sum borrower credits in the 200 section) to appear on an addendum or attachment to the HUD-1 form.  There is no specific format of addendum or attachment required and the administration noted that lenders could expand the Loan Origination Statement - which already item

Hud issued its first RESPA Roundup newsletter to help industry professionals get answers to today's hot RESPA topics.  In this volume, you'll find answers to questions regarding the GFE & HUD-1 forms including topics such as the lender provider lists and how to handle a service that was quoted on the GFE but not charged at the settlement.  You'll also find an overview of the new Interpretive Rule regarding compensation for real estate agents and brokers from Home Warranty Plan companies.  You can always

For those of you following the path of the financial reform bill in Congress...the Senate passed the final version this afternoon 60-39.  It now goes to the President for signature.  This is mammoth legislation that our industry will be implementing for years to come.  Here's a summary of HR 4173's provisions.

Yesterday, the U.S. Senate approved an amendment that would extend the timeframe for eligible closings to Sept 30. The industry anxiously awaits progression of the full bill through the Senate and hopes the House will follow similar measurers. At this week's joint National Settlement Services and Compliance Summit, hopes prevailed that extensions will be granted for transactions that met the "under contract" deadline but for a variety of reasons were having difficulty in meeting the June 30th closing deadline. The complex nature of REO and short sale inventories were identified as the key reasons extensions are sought. See this article for more information about yesterday's action in the Senate.

We've heard some discord over what exactly is the proper method for calculating the total monthly payment in the Loan Terms section on page 3 of the new HUD-1. Some lenders show the total monthly payment in the final box as PIMI + all monthly escrow amounts (including MI) ...resulting in a doubling of MI amounts in the total payment figure. When asked to explain their math, lenders point to the example Loan Terms section in HUD's Settlement Cost Booklet.

The handling of YSPs under RESPA Reform have created quite a storm of controversy.  Nearly everyone understands the rule to say that any YSP amounts are to be credited to the borrower on line 802 of the HUD-1.  Many settlement agents took that to mean they would no longer be funding items described as YSP to a mortgage broker.  Yet often a lender's closing instructions will direct a settlement agent to pay certain compensation to the mortgage broker including an amount for YSP, leaving questions surrounding whether YSP as broker compensation is truly a thi

Here's a link to the latest FAQs from HUD.

Today HUD announced in its live webcast that the new HUD-1 form is no longer a disbursement ledger for the transaction. Of course, we knew this because there is not an itemization of each component of every fee.