Wednesday, January 27, 2010

New Good Faith Estimate (GFE) Form Required for use by California Mortgage Lenders

As of January 1, 2010, California brokers who arrange federally-related mortgage loans (generally, loans provided by institutional lenders secured by residential one-to-four properties) are required to use the new Good Faith Estimate form in addition to the Mortgage Loan Disclosure Form (as required by California Business and Professions Code Section 10240).

Brokers in California who previously used the combined Mortgage Loan Disclosure Statement/Good Faith Estimate form, DRE Form RE 883, must now provide two separate disclosure forms to borrowers when arranging federally related mortgage loans.
 
The California DRE Form RE 882 or C.A.R. Form MS, Mortgage Loan Disclosure Statement, and the new Good Faith Estimate required by HUD will together meet the disclosure requirements of the US Real Estate Settlement and Procedures Act (RESPA) and the California Real Estate Law.
 
The disclosure forms must be provided to the borrower within 3 days of receipt of a loan application.

The California DRE is in the process of obtaining HUD’s approval for a combined Mortgage Loan Disclosure Statement/Good Faith Estimate form that can be used by brokers to comply with the state and federal disclosure requirements.  The combined form will be made available on the DRE’s Web site when approval is received from HUD.

California Brokers who arrange non-traditional mortgage loans are reminded they must provide borrowers with the Mortgage Loan Disclosure Statement/Good Faith Estimate, RE 885.
 
Brokers in California must be aware, however, that the Good Faith Estimate portion of the form is no longer sufficient to comply with the new federal requirements.  The RE 885 must also be accompanied by the new Good Faith Estimate form for all federally related non-traditional mortgage loans.

Contrary to some characterizing that HUD will delay enforcement of RESPA until April 2010,  HUD had announced a “restraint” in enforcement by its Mortgagee Review Board (MRB) staff for FHA lenders, if they can demonstrate a “good faith effort” to comply with RESPA’s new requirements.

For additional information about the Good Faith Estimate form and instructions, HUD-1 form and instructions, click here.

For a copy of the Good Faith Estimate form, click here .

For a copy of the HUD-1 form, click here . 
 
 
 
 

Posted via email from Explore OC Homes

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