Good Faith Estimate Part 5: Your Charges for All Other Settlement Services

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Are you still with me?  I hope so.  I've been writing a detailed review of HUD's new Good Faith Estimate.  This post will cover the "other settlement charges" as shown on page 2 of the GFE (below).

GFESettlementCharges

Block 3 "Required services that we select" is where fees specific to government loan programs, such as the VA Funding Fee and (I'm assuming, since it is not specifically addresses in the FAQs) FHA Upfront Funding Fee or USDA Funding Fee.  This has been reflected under prepaids on the existing good faith estimate (see the last photo on this page, lines 902 and 905 of the old GFE).

Block 4 "Title services and lender's title insurance" is where the lenders title policy (typically paid for by the buyer) and where the escrow companies fees will go.  Below is a shap shot of our current–soon to be retired GFE section.  The escrow company fee is line 1101 and the lenders title insurance policy is line 1108.   Now it appears these items will be lumped together.   NOTE: the total closing costs shown below also include the Section 800/Lender Fees aka Origination  Charges.

SampleTitleGFE

Block 5 "Owner's title insurance".  This is the policy that typically, the Seller pays for–not the buyer.  Why it's on the buyers good faith estimate beats the heck out of me.

Block 6 "Required services that you can shop for".  Finally as the consumer you do have an official say in who your title and escrow provider may be. Some companies may offer a discount when you use both their title and escrow services.  However, should you decide not to use who is recommend by the lender, then the 10% limit on how high the fee may adjust come settlement time is waived. 

Block 7 "Government Recording Fees" is simply that…the cost to record your new documents

Block 8 "Transfer Tax".  I wonder if we are really suppose to include what the excise tax is on a purchase–again, this is a Seller cost and not a Buyer cost.

GFEreservespp

Block 9 "Initial Depost for your escrow account" is the cost associated with starting your reserve account including your home owners insurance and property taxes.   This is section 1000 of the old GFE.

Block 10 "Daily Interest Charge" is simply your prorated interest.  I do like the description provided on the new good faith estimate.  Shown on line 901 of the old GFE.

Block 11 "Homeowner's Insurance".  This provides a block for you to shop and I leave this task for my clients.  This cost does fall under those that can change at settlement if the borrower is not using the company the lender selects.

Our old GFE that will be in use until the end of this year (unless lenders require the new one in advance–which will not surprise me) has the reserves and prepaids reflected as photod below.

SamplereservesPP

This section is being replaced with Blocks 3, 9, 10 and 11.

TMI:  I've got a case of heart burn…perhaps it's time to wrap up this post and tackle page 3 of HUDs new GFE another day!

Comments

  1. With all of these changes, you would think it is to help the consumer, but who knows if they will be even more confused. thanks for the blog

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