Buyers, Good Faith Estimate     

 

 
 
 
 
 

THE INFORMATION BELOW IS FROM THE CALIFORNIA ASSOCIATION OF REALTORS LEGAL DEPARTMENT

Revised Good Faith Estimate and HUD-1 Statements :
Jan. 28, 2010

INTRODUCTION
The Good Faith Estimate (GFE) and HUD-1 disclosures are intended to give borrowers sufficient information to permit shopping for the best possible loan terms and closing costs.  Yet, since the passage of RESPA (Real Estate Settlement Procedures Act) 35 years ago, the GFE has been a disclosure without any clear binding effect. Now the Department of Housing and Urban Development (HUD) has promulgated new regulations mandating revised GFE and HUD-1/HUD-1A forms. These revised rules will require lenders to make accurate cost disclosures and stick to them at closing. The revised rules went into effect on Jan. 1, 2010.
The revised GFE is the key document in advancing HUD’s new rules. It is a three-page form that is now both streamlined in appearance, and clear and understandable in presentation. The first page includes a summary of loan terms and an estimate of total closing costs. The second page lists closing costs as subtotals of eleven categories of cost. And the last page states which charges are permitted to change at closing; information on the trade-off between the interest rate and the closing costs; and a shopping chart for comparing other GFEs.
Summary of amended rules
1.  Binding GFE 
The big difference in the revised GFE is found on the last page of the GFE where it explains which charges cannot increase at all, which charges may increase by up to 10%, and which charges may increase without violation. The revised rules make the estimates “binding” within the limits (HUD refers to these limits as “tolerances”). Whereas previously substantial changes in costs on the day of closing created little risk of liability for the lender or broker; under the revised rules, such charges may be violations and will require the lender to directly reimburse the borrower after closing. Also, the circumstances in which the loan originator may change the GFE midstream are limited.  
2.  Revised settlement statement
Crucial to the success of implementing the revised GFE is the revised HUD-1 which incorporates the GFE numbers. The revised HUD-1 is similar to the old one but with two important differences. On the second page of the HUD-1, the form allows the borrower to compare the actual closing costs with the estimates from the GFE. And on the last page of the revised HUD-1 there are three boxes that spell out the charges that cannot increase, the charges that may increase by up to 10% and the charges that may increase without violation. Each box compares the actual costs directly to the costs as stated on the GFE. The form then provides a place for the calculation of whether actual costs have exceeded the estimates and by how much. (Form HUD-1A applies when there is a refinance with all of the same rules in force).
3.  No charge prior to issuance of GFE
With the exception of the cost of a credit report, there can be no charge as a condition of issuing a GFE. This rule is aimed at facilitating shopping for loans.
4.  Origination charges are fixed including yield spread premiums
All origination charges that are to be received by the loan originator must be set at the time the GFE is issued--with the exception of points. This includes application fees, processing fees, underwriting fees and yield spread premiums. If a mortgage lender will pay a yield spread premium to a broker, the payment must be disclosed as a “credit” to the borrower for the particular interest rate. But should the borrower choose to pay points to lower the interest rate of the loan, the amount of the points must be disclosed as a “charge” to the borrower. The credit or charge is added to or subtracted from the origination charge to arrive at the adjusted origination charge. However, the GFE can only indicate a credit or a charge. There cannot be a credit for a yield spread premium and charge for discount points in the same GFE.
Note: A yield-spread premium is a bonus paid by a lender to a mortgage broker for getting the borrower to pay a higher rate than the lowest rate for which the borrower may qualify. This "bonus" was typically retained by the mortgage broker.  Neither the HUD-1 nor the GFE actually uses this term. The new approach by HUD attempts to bypass special deals between the lender and the mortgage broker by forcing brokers to state up front what they are getting as a net commission – emphasis on NET. So that if in the past a broker would have been entitled to a premium from a lender in the form of a yield spread premium, now that money goes to the borrower.
5.  Tolerances
Charges are divided into three categories. The first includes charges that may not increase at closing such as loan origination fees, points, transfer taxes and other charges under the lender’s direct control. In the second category are charges that may increase in total by at most 10%. These charges include charges for settlement services where the provider was either identified or selected by the lender. Lastly, the third category includes charges where the borrower chose not to use the lender’s identified company, as well as the initial escrow deposit account, daily interest charges and homeowner’s insurance. These charges can change without restriction. If the lender exceeds the tolerances at closing, the lender is required to cure the violation within 30 days by rebating the difference directly back to the borrower.
6.  List of providers
Where a loan originator permits a borrower to shop for third party settlement services, the loan originator  must  provide the borrower with a written list, on a separate sheet of paper, of those service providers at the time GFE is issued.
7.  Average charge
As of Jan. 16, 2009, lenders are permitted to list the “average charge” for a settlement service and not necessarily the exact cost. The method of deriving this average charge is left to the discretion of the lender but may only be used in regard to third party vendors and not in regard to the lender’s own internal service providers. The average charge also cannot be used where the charge is based on the loan amount or value of the property.
8.  Changed Circumstances
Lenders wanting to reissue a different GFE, and thereby escape the binding estimates of any prior GFE, may do so but only if the event qualifies as a “changed circumstance.”  Please see Questions 33–42 as to when this is permissible.
9.  Enforcement and cure – PRIVATE RIGHT OF ACTION UNCLEAR
A violation of the revised rules results in a RESPA violation under Section 5 for the GFE and Section 4 for the HUD-1.  Although other provisions of RESPA create a private right of action, these sections do not, and enforcement is left to HUD or other financial regulatory agencies. But here in California a private right of action for the borrower may exist by allowing a plaintiff to roll the RESPA violation into a violation of the Unfair Business Practices Act (see Question 49 for details). Inadvertent or technical errors in the HUD-1 will not be deemed a violation of RESPA if a corrected HUD-1 is provided within 30 days after close.     
10.  Important Dates
Another significant feature of the revised GFE is the “Important dates” section on the first page which is designed to facilitate shopping. It lists key dates including the time and date the interest rate offer is good through; the date all other settlement charges is good through; and loan lock time frames. There is no minimum time for which the interest offer must remain open. Whatever time is stated, the interest rate may float thereafter if the loan is not locked. The settlement charges are a different matter however, and they must remain available for a minimum of 10 days. Within these time frames, the lender cannot alter these charges should the borrower elect to go forward with the loan process (See questions 10–16 for details in this regard).   In addition, the borrower must be told the maximum number of days within which the borrower must close once the loan is locked, as well as the minimum number of days after the interest rate is locked that closing can occur. That way, the borrower knows that the loan lock is not indefinite and will have an idea of how much time the lender will need before closing.   
11.  Elimination of FHA origination fee limitation
Effective Jan. 1, 2010, FHA-approved mortgagees may collect any fee to compensate them for expenses incurred in originating and closing a loan--not merely the 1 percent of the loan amount they were previously limited to. Of course, their fee is still subject to the overall RESPA rule against receiving unreasonable or unearned compensation. 
12.  Volume-based discounts
The preamble to the final rule states HUD’s position that discounts negotiated between loan originators and other settlement service providers, where the discount is ultimately passed on to the borrower in full will not under most circumstances constitute an illegal referral fee under RESPA.
13.  ESIGN o.k.
RESPA disclosures made electronically are acceptable if conducted pursuant to the Electronic Signatures in Global and National Commerce Act (ESIGN). 
ISSUANCE OF THE GOOD FAITH ESTIMATE
Q 1.  When do the new rules take effect?
A  Jan. 1, 2010 is when all loan originators must adopt the new form and are bound to the new rules. HUD did announce on Nov. 13, 2009 that “restraint” will be exercised in connection with enforcement of the new rules through April of 2010. But even though HUD has made this announcement and has also requested other federal and state agencies to exercise the same restraint, neither the announcement nor the request limit the ability of a private party to bring or maintain a claim in court. (See Question 49 below as to whether a private party can sue for damages under this rule.)
(Source:  HUD Announcement 09-215) 
Q 2.  Who must follow these rules?
A The GFE may be provided by either the lender or the mortgage broker (the “loan originator”) whenever there is a completed application. The revised rules have dropped any references to brokers as exclusive agents for the lender. So presumably, whether the broker is deemed “exclusive” or whether broker is shopping among a number of lenders, the broker may provide the GFE. In either event the lender is responsible for ascertaining whether the GFE has been provided.
(Source: HUD's Revised RESPA Rule FAQs Questions 7, 16, 18, 25 and 26 under “GFE – General”)    
Q 3.  When must the GFE be delivered?
A  Within three business days after the loan originator receives a complete application or any other information deemed necessary by the loan originator or information sufficient to complete an application (24 C.F.R. § 3500.7(a) and (b)).
Q 4.  When is the application complete?
A  A complete loan  application contains the following seven items: borrower’s name; borrower’s monthly income; borrower’s social security number to obtain a credit report; property address; estimate of value of the property; loan amount; and any other information deemed necessary by the loan originator. This definition allows the loan originator as a practical matter to delay delivery of the GFE until three days after the loan originator pulls the borrower’s credit report since a lender will likely deem a credit report “necessary.”
Note:  While the loan originator may require any other information before an application is deemed received, the loan originator may not require, as a condition for providing a GFE, that an applicant submit supplemental documentation to verify the information provided on the application.
(Source: HUD's Revised RESPA Rule FAQs Questions 4 and 25 under “GFE – General”; 24 C.F.R. § 3500.2 ("application" definition)   
Q 5.  If a loan originator issues a GFE without all of the above-mentioned information, are they still bound to it?
A  Yes, once the GFE is issued, the loan originator is deemed to have received a completed application.
(Source: HUD's Revised RESPA Rule FAQs Questions 23, 24 and 26 under “GFE – General”)
Q 6.  My client is a foreign national and has no social security number. Can they complete an application with a Tax Identification Number (TIN) instead?
A A lender is not required to use only a social security number but may rely on any “unique identifier” to determine a borrower’s credit worthiness including a TIN. 
(Source: HUD's Revised RESPA Rule FAQs Question 14 under “GFE – General”) 
Q 7.  Must the loan originator issue a GFE?
A No, the loan originator is not required to issue a GFE if, before the end of the three business day period, the loan originator denies the application or the loan applicant withdraws the application.
(Source: HUD's Revised RESPA Rule FAQs Question 1 under “GFE – Denial”)  
Q 8.  What fees can be charged before issuing a GFE?
A Prior to issuing a GFE, the loan originator may, at its option, collect a fee limited to the cost of a credit report.
(Source: HUD's Revised RESPA Rule FAQs Question 6 under “GFE – General”)
Q 9.  At what point can a loan originator charge a loan applicant fees for services other than the cost of obtaining a credit report?
A After a loan applicant both receives a GFE and indicates an intention to proceed with the loan covered by the GFE, the loan originator may collect fees beyond the cost of a credit report for origination-related services.
(Source: HUD's Revised RESPA Rule FAQs Question 10 under “GFE – General”)
GFE IMPORTANT DATES
Q 10.  In the “Important dates” section of the GFE, where it states “The interest rate for this GFE is available through ______,” does the loan originator have to leave the interest rate open for a specific amount of time, like 10 days?
A There are no restrictions on the amount of time the interest rate must remain available. The interest rate can be available for any period of time that the loan originator chooses, including for example, a period of time within one day or for several days.
(Source: HUD's Revised RESPA Rule FAQs Question 1 under “GFE – Important dates”)
Q 11.  In the “Important dates” section of the GFE, line 2, for how long must the estimate for all other settlement charges be available?
A The estimate for “all other settlement charges” in the “Important dates” section of the GFE must be available for at least ten business days.
(Source: HUD's Revised RESPA Rule FAQs Question 2 under “GFE – Important dates”)
Q 12.  What charges can change before the interest rate is locked?
A  With the exception of interest rate-dependent charges and terms, the charges and the terms for all settlement services on the GFE must be available for 10 business days from when the GFE is provided, or for such longer period of time as the loan originator provides in item 2 of the “Important dates” section of the GFE. The interest rate-dependent charges and terms cannot change before the expiration of the period indicated by the loan originator in item 1 of the “Important dates” section of the GFE. Between the period of time indicated in item 1 and item 2 of the “Important dates” section, only interest rate –dependent charges may change until the interest rate is locked. After the expiration of the period indicated in item 2 of the “Important dates” section, the loan originator is permitted to change all of the charges and terms on the GFE (assuming that the interest rate is no longer available, as indicated in item 1 of the “Important dates” section). Interest rate-dependent charges and terms include: (1) “Your charge or credit (points) for the specific interest rate chosen,” in Block 2 on page 2 of the GFE; (2) “Your adjusted origination charges” on Line A on page 2 of the GFE; (3) “Daily interest charges” in Block 10 of the GFE; and (4) interest rate-related loan terms, such as monthly amount owed.
(Source: HUD's Revised RESPA Rule FAQs Question 3 under “GFE – Important dates”)  
Q 13.  Must the lender offer a rate lock?
A  No. There is no requirement that a rate lock be offered. If it isn’t, then the lender should state “Not Available” or “NA” in Lines 2 and 4 of the “Important dates” section of the GFE.
(Source: HUD's Revised RESPA Rule FAQs Question 5 under “GFE – Important dates”)  
Q 14.  How are the 10 business days calculated?
A  From the date of mailing. The lender should put the date the GFE is placed in the mail into the box for “Date of GFE.”
(Source: HUD's Revised RESPA Rule FAQs Question 8 under “GFE – Important dates”)  
Q 15.  If a revised GFE is provided due to changed circumstances or a borrower requested change, is it necessary to complete Line 2 of the “Important dates” section on the revised GFE if the shopping period has ended and the borrower has already expressed an intent to continue with the application?
A Yes, the loan originator must complete Line 2 in the “Important dates” section. The date entered must be at lease 10 business days from the date the revised GFE is provided to the borrower.
(Source: HUD's Revised RESPA Rule FAQs Question 13 under “GFE – Important dates”)
Q 16.  If a lender accepts a GFE issued by a mortgage broker, may the lender revise the information contained in the “Important dates” section on the GFE?
A No, after the lender has accepted the GFE issued by a mortgage broker, the lender may not revise the information contained in the “Important dates” section on the GFE, unless the revised GFE is issued in compliance with changed circumstances rules (See below for what constitutes changed circumstances).
(Source: HUD's Revised RESPA Rule FAQs Question 14 under “GFE – Important dates”)
ORIGINATION CHARGES
Q 17.  May the loan originator charge separately for an application fee, processing fee, administration fee, document preparation, wire, lender inspection, mortgage broker, loan handling, underwriting fee, yield-spread premium or other miscellaneous fees?
A  No. All compensation that the loan originator is to receive must be included under the origination charge in Block 1 of “Your Adjusted Origination Charges” -- with the exception of points.  This includes all compensation paid from the borrower as well as any yield-spread premium or other payment received by a mortgage broker from a lender. Note, that it is not necessarily illegal to charge all of those above-mentioned fees, only that they must all be included as a single charge under “Our origination charge.”
(Source: HUD's Revised RESPA Rule FAQs Questions 1, 2, 3, 4 and 5 under “GFE – Block 1”)  
Q 18.  If the loan originator contracts loan document preparation to a third party, is this a separate charge on the GFE and the HUD-1?
A  No, loan document preparation is a processing and administrative service in the origination of a loan and is included in Block 1 of the GFE, “Our origination charge”
(Source: HUD's Revised RESPA Rule FAQs Question 5 under “GFE – Block 1”)
Q 19.  If there is no lender, may the lender just charge points as an origination charge under Block 1?
A Yes.  Where the loan originator is the lender (as opposed to a mortgage broker) and the lender is charging points, there is the option of disclosing points under Block 2 or checking the first box under Block 2,  writing in  “0 %” and rolling the charge into the origination charge under Block 1.
(Source: Appendix C to 24 C.F.R. Part 3500 - Instructions for completing GFE form) 
Q 20.  May the loan originator check more than one box under Block 2 of “Your Adjusted Origination Charges.”
A  No. Only one of the boxes may be checked: a credit and charge cannot occur together in the same transaction. 
(Source: Appendix C to 24 C.F.R. Part 3500 - Instructions for completing GFE form)  
Q 21.  If a mortgage broker is earning a yield spread premium through the loan, how is the charge for discount points on the GFE shown?
A There may not be a credit for a yield spread premium and a charge for discount points in the same transaction. Only one box in the GFE Block 2, Your credit or charge for the specific interest rate chosen, may be checked.
(Source: HUD's Revised RESPA Rule FAQs Question 2 under “GFE – Block 2”)
Q 22.  How are “no cost” loans disclosed?
A  In the case of “no cost” loans, where “no cost” refers only to the loan originator’s fees, Line A must show a zero charge as the adjusted origination charge.  In the case of “no cost” loans where the “no cost” encompasses third party fees as well as the upfront payment to the loan originator, all of the third party fees listed in Block 3 through Block 11 to be paid by the loan originator (or borrower, if any) must be itemized and listed on the GFE. The credit for the interest rate chosen must be large enough that the total for Line A will result in a negative number to cover third party fees.
(Source: Appendix C to 24 C.F.R. Part 3500 - Instructions for completing GFE form)   
TOLERANCES AND IDENTIFICATION OF PROVIDERS
Q 23.  What charges may not increase at closing?
A The stated origination charge; the credit charge (points) while the borrower’s interest rate is locked; the adjusted origination charge while the borrower’s interest rate is locked; and transfer taxes. None of these can increase at settlement. If any of these charges, whether individually or in the aggregate, increase at closing the lender is in violation. 
(Source: GFE, p. 3.) 
Q 24.  What charges may not increase by more than 10% in total at closing?
A  When the lender DOES IDENTIFY the settlement service provider, then any required service that is selected by the lender, title services and lender’s title insurance, the owner’s title  insurance and lender-required services that the borrower can shop for may not increase above 10% without penalty to the lender. Also, government recording charges may not increase above 10% and are included as part of the above calculation. The total of these charges can increase up to 10% at settlement.
(Source: GFE, p. 3.)  
Q 25.  What does it mean for the lender to “identify” a settlement service provider?
A Any time the lender provides the name of a particular provider whether or not the borrower has requested it; whether or not the provider’s name has appeared on a list for the borrower to choose from;  or whether or not the list is exclusive. In all of those cases the lender has “identified” the provider and, thus, will be subject to the 10% limit.
Q 26.  When do loan originators have to provide the borrower with a written list of identified providers?
A  When a loan originator permits a borrower to shop for third-party settlement services, the loan originator must provide the borrower with a written list of settlement services providers at the time of the GFE, on a separate sheet of paper.
(Source: HUD's Revised RESPA Rule FAQs Question 1 under “GFE – Written list of providers)
Q 27.  In lieu of providing the “written list” of providers, may the loan originator just tell the borrower to contact them if they have trouble finding a settlement service provider on their own?
A No. Where a loan originator permits a borrower to shop for third party settlement services, the loan originator must provide the borrower with a written list of settlement service providers at the time of the GFE, on a separate sheet of paper.
(Source: HUD's Revised RESPA Rule FAQs Question 6 under “GFE – Written list of providers)
Q 28. Does the borrower have to select a settlement service provider from the written list?
A No, as long as the buyer is not required to use the provider but is permitted to shop for one, the borrower may choose a qualified provider that is not on the written list.
(Source: HUD's Revised RESPA Rule FAQs Question 2 under “GFE – Written list of providers)
Q 29.  Can the lender be over 10% on some charges as long as the total of all charges is less than 10%?
A Yes. The 10% limit is not on a charge by charge basis but includes all charges noted in the question 24 above if they have increased -- when added together -- by more than 10%. 
(Source: HUD's Revised RESPA Rule FAQs Question 2 under “HUD-1 page 3)   
Q 30.  What charges may increase by more than 10%?
A When the lender does NOT identify the settlement service provider, then lender-required services that the borrower may shop for, title services, required title insurance, and the owner’s title insurance may increase by more than 10%.  Additionally, the initial deposit into the escrow account, daily interest charges and homeowner’s insurance costs may increase by more than 10% without penalty to the lender.
(Source: GFE, p. 3.)  
Q 31.  What if the lender permits the borrower to shop for third party settlement services, but in fact never issues a written list of identified providers?
A  It is unclear what the result of this would be. Potentially, the lender could be liable for any difference in cost between the estimates and the actual costs incurred by the borrower.
Q 32. What if the escrow and title are different companies. How should the fees and providers for these services be listed on the GFE?
A The lender may simply separate the services on the written list of providers into escrows and providers of lender’s title insurance and related services. This will then appear on the GFE under Block 4 in two categories of providers that conduct settlements (escrows) and providers of lender title insurance and the related services.
(Source: HUD's Revised RESPA Rule FAQs Question 6 under “GFE – Written list of providers) 
CHANGED CIRCUMSTANCES PERMITTING REISSUANCE OF GFE
Q 33.  After delivery of the GFE, in what circumstances may the lender reissue the GFE? In what circumstances is the lender not bound by the GFE at all?
A There are six circumstances in which the lender is not bound by the existing GFE or is entitled to issue a new or revised GFE.  Unless a new GFE is provided prior to settlement consistent with these six reasons, the loan originator is bound, within the limits, to the settlement charges and terms listed on the GFE. If a GFE is revised, the loan originator must document the reason that a new GFE was provided. The six circumstances are:
1. When the borrower requests a change to the loan.
2. When the interest rate is not locked or a locked rate has expired. If this is the case, the charge or credit for the interest rate chosen, the adjusted origination charges, per diem interest and the loan terms related to the interest rate may change. If the borrower later locks the interest rate, a new GFE must be provided. All other charges and terms must remain the same.
3. When the loan involves a new home purchase and settlement is anticipated to occur more than 60 calendar days from the date of the GFE.
4. When the good faith estimate has expired. Note that although no minimum date is required for box one, box two must give the borrower a minimum of ten business days from the date the GFE is provided. Once this time period has elapsed, without the borrower expressing an intent to continue with the application, the lender is no longer bound by the GFE.
5. When there are changed circumstances affecting settlement costs.
6. When there are changed circumstances affecting the loan. 
(24 C.F.R. § 3500.2 ("changed circumstances" definition).)
See Question 36 below.
Q 34.  When does a GFE expire?
A If a borrower does not express an intent to continue with an application within ten business days after the GFE is provided (or such longer time period specified by the loan originator), the loan originator is no longer bound by the GFE.

(Source: HUD's Revised RESPA Rule FAQs Question 1 under “GFE – Expiration”)
Q 35.  If the availability of the interest rate (show in item 1 of “Important dates” on page 1 of the GFE) expires, does a revised GFE have to be issued if the borrower locks a different interest rate before the expiration of the estimate for the settlement charges (shown in item 2 of the “Important dates”)?
A  If the interest rate offer on the GFE expires and the borrower later locks the interest rate, before the expiration of the estimate for the settlement charges, a revised GFE must be issued if any interest rate dependent charges and terms change. If a revised GFE is issued only the following changes may be made: “charge or credit (points) for interest chosen”; “adjusted origination charges”; “”daily interest charges”; and other interest
(Source:  HUD's Revised RESPA Rule FAQs Question 1 under “GFE – Interest rate expiration”; )
Q 36.  Once a GFE is issued are there any circumstances under which the loan terms or charges can change?  (This question elaborates on item 5 & 6 of Question 22 above.)
A  Yes. The loan terms or settlement costs can change in the event that there are changed circumstances. Changed circumstances are defined as:
1. Acts of God, war, disaster or other emergency;
2.  New information particular to the borrower or transaction that was not relied on in providing the GFE;
3. Various circumstances that are particular to the borrower or transaction including boundary disputes, the need for flood insurance or environmental problems;
4.  And finally, “information particular to the borrower or transaction that was relied on in providing the GFE and that changes or is found to be inaccurate after the GFE has been provided. This may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property, or any other information that was used in providing the GFE.”
None of the information collected by the loan originator prior to issuing the GFE may later become the basis for a “changed circumstance” upon which a loan originator may offer a revised GFE, unless the loan originator can demonstrate that there was a change in the particular information or that it was inaccurate, or that the loan originator did not rely on that particular information in issuing the GFE. In addition, the loan originator is presumed to have relied on the borrower’s name, the borrower’s monthly income, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any information contained in any credit report obtained by the loan originator before providing the GFE. The loan originator cannot base a revision of the GFE on this information, unless it changed or is later found to be inaccurate.
 (Source: HUD's Revised RESPA Rule FAQs Question 1 under “Changed circumstances”)
Q 37. If circumstances change, may a loan originator issue a revised GFE with changes to all of the charges and terms related to the loan?
A  No, the loan originator may only change those charges and terms that are affected by the specific circumstance
(Source: HUD's Revised RESPA Rule FAQs Question 5 under “Changed circumstances”)
Q 38.  If the lender is entitled to issue a new GFE, when must they do it?
A  In cases where the lender is entitled to issue a new GFE for changed circumstances or borrower-requested changes, the lender must provide the new GFE within 3 business days after receiving information sufficient to establish changed circumstances or within 3 business days after the borrower’s request. In other cases where the borrower does not express an intent to continue with an application within 10 business days after the GFE is provided (or longer if so specified pursuant to item 2 of the GFE under “important dates”), then the lender is no longer bound by the GFE.
(24 C.F.R. § 3500.7(f).) 
Q 39.  Information constituting a changed circumstance or borrower-requested changes might become available to the broker and lender at different times. When is the time for providing a revised GFE triggered?
A  If a revised GFE is to be provided, the loan originator must do so within 3 business days of receiving information sufficient to establish the changed circumstance. The 3 business days is triggered from the time of receipt by whichever loan originator, either the mortgage broker or the lender, receives the information first.
(Source: HUD's Revised RESPA Rule FAQs Question 11 under “changed circumstances”
Q 40.  What are some examples of changed circumstances that might be sufficient to permit a lender to reissue a GFE?
A  The following are examples of changed circumstances that DO require reissue of a GFE:
.  Where the property address provided by the applicant turn out to not be the correct legal address;
.  Where during the transaction it is determined that the property use may change, especially where the change is from owner-occupied to rental;
.  Where it is determined that a party will be using a POA to sign, which may require additional work and fees;
.  Where it is determined that an additional service such as an additional pest, structural or other inspection, upgraded appraisal, certification, survey or other requirement is required by the loan originator in connection with transaction;
.  Where the borrower’s credit score changes;
.  Where GSE, FHA or Mortgage Insurance program changes and the lender had no notice of such prior to issuance of the GFE;
.  Where parties are added to or removed from the title or the property is moved into or out of a trust.
(Source: HUD's Revised RESPA Rule FAQs Question 8 under “Changed circumstances”) 
Q 41.  What are some examples of changed circumstances that are likely to NOT constitute changed circumstances sufficient to permit a lender to reissue a GFE?
A  The following are examples of changed circumstances that DO NOT require reissue of a GFE:
.  Where a mortgage broker issues a GFE that a lender does not accept and the lender does not receive the application within three days of the date the broker received the application;
.  Where a GFE is issued without a property address, but then is subsequently identified;
.  Where a mortgage broker issued a GFE based on one lender’s loan products and origination fee, but places the loan with a different lender;
.  Where the borrower selects a service provider that was not selected or identified by the loan originator;
.  Where the borrower initially selects a service provider not on the loan originator’s written list, but then chooses to use a service provider identified by the loan originator;
.  Where settlement charges increase due to market fluctuations.
(Source: HUD's Revised RESPA Rule FAQs Question 8, 9, 13 and 14 under “Changed circumstances”)  
Q 42.  If the loan does not close by the close date in the original Purchase Agreement provided to the lender, would this qualify as a changed circumstance?
A  Unclear. The particular facts of each situation must be examined. Presumably there would have to be something more than just the bare fact that the loan did not close.     
RIGHT TO CURE and REMEDIES
Q 43.   What happens if the lender exceeds the limits at close of escrow in violation of the GFE?
A  The loan originator may cure the violation by reimbursing the borrower for the amount that the charges exceed the limits. This payment must be made within 30 days after settlement. If not, there is a violation.  (24 C.F.R. § 3500.7(i).)  
Q 44.  If there is an inadvertent or technical error on the HUD-1, is this considered a violation of Section 4 of RESPA?
A  No, as long as a revised HUD-1 is provided to all parties within 30 calendar days after closing, it would not be considered a violation of RESPA section 4.
(Source: HUD's Revised RESPA Rule FAQs question 1 under “Right to cure and tolerance violations”)
Q 45.  Who is responsible for any tolerance (i.e., over-limit) violations?
A  The lender is responsible for curing tolerance violations.
(Source: HUD's Revised RESPA Rule FAQs Question 2 under “Right to cure and tolerance violations”)
Q 46.  What happens if the charges are not properly calculated on the GFE and later result in a tolerance violation? Will the settlement agent be responsible for paying the difference to the consumer?
A  The lender is responsible for curing all tolerance violations: not the settlement agent. The lender must cure the violation at closing or within 30 days after settlement.
(Source: HUD's Revised RESPA Rule FAQs Question 5 under “Right to cure and tolerance violations”).
Note:  if an escrow officer is negligent in calculating closing costs, the escrow will also likely be liable to the borrower as well as the lender.
Q 47.   Can the loan originator pressure the broker, escrow officer or agent to reduce their charges or to ‘cover the difference’ to bring the costs into compliance?
A  If the loan originator (or any settlement service provider) pressures any other broker, escrow officer or agent in this way as a condition of receiving future referrals then it may  be an illegal referral fee in violation of RESPA.  Recall that RESPA makes most referral fees illegal and defines “fee” in extremely broad terms.
(Source: HUD's Revised RESPA Rule FAQs Question 5 under “Right to cure and tolerance violations”)
Q 48.  What if the lender does not cure all tolerance violations and therefore violates the rules?
A  The lender is in danger of sanctions being imposed by the lender’s supervisory agency. HUD receives statistical reports of violations from the various supervising agencies. As the number of perceived violations increases, so does the possibility of sanction. This sanction can range from counseling to termination of the lender’s participation in the agency’s program. As an example, the Mortgagee Review Board may take administrative actions against HUD/FHA approved mortgagees who are found to have violated the FHA requirements, among other laws and regulations. The board may issue a letter of reprimand, place a mortgagee on probation, or suspend or withdraw the HUD/FHA approval of the mortgagee. This is why HUD’s announcement to exercise restraint in its enforcement is important. (See Question 1.) If you suspect that someone is violating any provision of RESPA, HUD encourages you to contact them directly at 1 (202) 708-0502 or send a complaint to them directly at their Washington office either by mail or online.
(24 C.F.R. § 3500.19.) 
Q 49.  If the lender does not cure the violations, can a private party maintain an action against the lender for the cure amount?
A  Maybe. The case law has generally found no private right of action based upon RESPA disclosure violations in general (Sections 4 and 5 of RESPA). Despite this, two additional factors must be considered. First, no court has directly addressed the issue of whether a private right of action exists based specifically upon GFE and HUD-1 disclosures. Second, California has a particular law that bypasses the entire question of whether RESPA contemplates a private right of action for GFE and HUD-1 disclosures. That law is 17200 of the Business and Professions Code “The Unfair Business Practices Act” and basically creates an additional private cause of action for any individual whenever any law affecting a business is broken. In fact, at least one court in California, in an “unpublished” opinion, has relied upon this law to examine an allegedly faulty HUD-1. 
Q 50.  If the lender exceeds the limits in violation of the GFE, can the borrower refuse to close?
A  Nowhere does RESPA or the new rules address this issue.
In general, the buyer/borrower must consider two issues: his contractual obligations to the lender and his contractual obligations to the seller. If the buyer has gone far enough in the process to view the final HUD-1, then it is very likely that he will have no right to cancel his purchase agreement whether or not he has removed contingencies. This is because the buyer has been offered a loan, and if the loan is within the loan terms as spelled out on the purchase agreement, his loan contingency has been fulfilled. He would therefore have no cancellation right as to the purchase agreement.  
But supposing the buyer has a right to cancel his purchase agreement, then whether he may refuse the loan will depend upon any agreement in writing that he has signed with the lender. If the borrower has not signed loan documents, then the borrower may cancel. This will be the case most of the time since the borrower will have an opportunity to review an estimated HUD-1 prior to signature.
If the borrower has signed loan documents, then whether he has a right to cancel will depend on whether the representations in the GFE were material misrepresentations. In this regard, any law that seeks to protect the consumer may come into play, and this would again include 17200 of the California Business and Professions Code among other laws (See the immediately preceding question). So should the costs exceed the limits by a “substantial” or “material” amount, a court would likely permit the borrower to cancel any loan obligation without breach. In this regard, keep in mind that the GFE is not a loan commitment, but only an estimate of settlement charges a borrower is likely to incur to obtain a specific loan. So the right to cancel would have to be based upon the lender’s wrong doing.  
FURTHER INFORMATION
Q 51.  I’ve noticed that many questions are taken from the HUD’s Revised RESPA Rule FAQs. What is it and where can I view this myself?
A  The FAQs are intended to give lenders, brokers and industry professionals direction on how the revised regulations should be implemented in regard to the GFE and the HUD-1. They are not law or legally binding as a regulation is. However, since HUD writes the FAQs, and since HUD is the enforcement agency for various lenders, and since other enforcement agencies will defer to HUD’s lead, it behooves all lenders to take the FAQs seriously; and thus, they are quite influential in determining industry practice. In fact, even judges in civil courts have sometimes quoted HUD’s FAQs as part of a legal opinion. (See Spicer v. Ryland Group, Inc., 523 F. Supp. 2d 1356.)
The “Revised RESPA Rule FAQs” comprise 49 pages of FAQs, so only a small portion of them have been reproduced here. They can be found on HUD's website at http://www.hud.gov/offices/hsg/ramh/res/resparulefaqs.pdf .
Q 52.  What other information is available to assist in understanding the GFE?
A  Along with the GFE, lenders are required to deliver a copy of HUDs settlement cost booklet, Shopping for Your Home Loan . The booklet is required to be delivered to the borrower within three days of applying for a loan.  Nineteen pages of this booklet (out of total of 49 pages) are devoted to explaining the GFE and the HUD-1.  The booklet gives a line by line description of these forms in clear language. If your client has a specific question about  the GFE, this booklet is a good starting point in trying to assist them.
 
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