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Roger
Roger, Lawyer
Category: Real Estate Law
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Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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We are a direct lender. I have a loan that started off as

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We are a direct lender. I have a loan that started off as a non-owner occupied loan at a rate of 3.875% charging the client .75 discount points (at the time it was locked). As we were completing the underwriting process to go to docs the head of underwiting found a guideline that allows the property to be classified as a primary residence because the property is being purchased for the clients elderly mother to live in. This has allowed us to re-price the loan to 3.5% charging zero points, and providing the client with a $400 credit. Non 0f the other fees changed.
As a result of re-classifying the property from non-owner to owner occupied will we be required to re-originate the loan and re-issue disclosures to allow the client 10 days to review? OR would this be a change of circumstance? Or can we just move to closing?

Thank you,
Jim Olmsted
Mortgage Capital Partners XXX@XXXXXX.XXX
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Attyadvisor replied 1 year ago.

Hello and thank you for your question.

Is this a government funded loan?

Customer: replied 1 year ago.


This is not a VA or FHA loan, straight conventional financing. Loan amount is $352,000. We are just concerned that we do not violate RESPA by not providing the proper dosclosure timelines. That being said the byer and more importantly in this case the seller are ready to close this Friday (in 3 days).

Customer: replied 1 year ago.

this is not a VA or FHA loan, straight conventional financing. Loan amount is $352,000. We are just concerned that we do not violate RESPA by not providing the proper disclosure timelines. That being said the buyer and more importantly in this case the seller are ready to close this Friday (in 3 days).

Expert:  Attyadvisor replied 1 year ago.
New disclosures should be signed including the TIL even though the amounts have decreased the original documents were based on non-owner occupancy loan and do not reflect the new circumstances. There is so much scrutiny on the mortgage industry at this time.

You want your disclosures to be compliant with loan that the customer will actually receive.

It seems that you are wanting the loan to close on Friday.


Do you state anything on your anti steering documents regarding whether this is owner or non owner financing?
Customer: replied 1 year ago.

The anti-steering documents in the initial disclosures do not address occupancy only rate and cost adjustments. Given that the rate is dropping saving each month, and the costs are dropping I am not sure the anti-steering documents would play a roll here. And yes all parties want to close this Friday. The only place occupancy is mentioned is on the first and fourth of the application (form 1003).

Expert:  Attyadvisor replied 1 year ago.
You are right the anti-steering is unaffected. Since the costs are decreasing it may be prudent to have the borrower sign a new good faith estimate at the closing based on the new circumstances of this being owner occupied financing. You would not be in violation of RESPA either way.


I will opt out and have another attorney take a look at this question ans see if they have a different take on the matter. Please do not respond so another attorney can get back to you more quickly.
Customer: replied 1 year ago.

Thank you

Customer: replied 1 year ago.

Still waiting for a resolution to the question asked from last night. Please see above.

Expert:  Roger replied 1 year ago.

Hi - my name is XXXXX XXXXX X'X a Real Estate litigation attorney. Thanks for your question.

 

Changed circumstances are defined as:

 

  • Acts of God, war, disaster, or other emergency;
  • Information particular to the borrower or transaction that was relied on in providing the GFE that changes or is found to be inaccurate after the GFE has been provided;
  • New information particular to the borrower or transaction that was not relied on in providing the GFE; or
  • Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems.

 

This could likely be considered as a changed circumstance because you're using the client's mother - - which you weren't before - - to give you a better rate and no points.

 

Here's a very good link about the RESPA regulations and new changes: http://www.consumerfinance.gov/guidance/supervision/manual/respa-narrative/

 

The regulations do require a new GFE if the interest rates change, which shows the revised interest rate dependent charges and terms. All other charges and terms must remain the same as on the original GFE, unless changed circumstances or borrower-requested changes result in increased

costs for settlement services or affect the borrower’s eligibility for the specific loan terms identified inthe original GFE.

 

I think that best thing to do is have the borrowwer sign an new good faith estimate and RESPA BECAUSE the interest rate and points have changed - - even though it is for the best.


There is so much scrutiny and so many lawsuits that come out of lenders swapping things up too fast that it's not worth the risk. In this case, I could forsee that the borrower would say that he/she never knew that mom was going to claim residency, etc.


Even though it will cost you some time, it's worth it.

Roger, Lawyer
Category: Real Estate Law
Satisfied Customers: 26017
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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