The US Department of Housing and Urban Development published Mortgagee Letter 2009-53 which clarifies how fees and charges for Federal Housing Administration (FHA)-insured loans must be disclosed on the new Good Faith Estimate and HUD-1 Settlement Statement.
According to the ML, HUD is removing the origination fee limit to 1 percent of the mortgage amount for its standard mortgage insurance programs. However, both FHA’s reverse mortgage product (HECM) and Section 203(k) Rehabilitation Mortgage Insurance Programs retain their statutory origination fee caps.
In addition to clarifying the fees and charges, ML 09-53 states that the new forms must be used for mortgages that close on or after January 1, 2010. However, Reverse Vision sent an email to RMD pointing out that HUD’s RESPA FAQ contradicts ML 09-53:
If a GFE is issued on the old form prior to January 1, 2010, then the old HUD-1 form must be used even if closing will occur after January 1, 2010. For GFEs issued on the old form, the loan originator has the option to reissue the GFE (with the same terms and charges) on the new form, in which case the settlement agent must complete the new HUD-1 form.
Its not clear which “guidance” HUD is requiring lenders to follow and an email to HUD asking for clarification had not been responded to at press time. Update: HUD’s original ML had an error, the new forms must be used for mortgages that are originated on or after January 1, 2010.
ML 09-53 also states that lenders must now include the GFE in the case binder on the right hand side when the loan is submitted for insurance endorsement. When more than one GFE is issued, all prior GFEs must also be contained in the case binder.