28 Apr Updated Guidance from HUD regarding Loan Originator Compensation
On March 18th HUD issued important information pertaining to how mortgage loan originators comply with the Real Estate Settlement Procedures Act (RESPA) with regard to the Federal Reserve Board’s Loan Originator Compensation rule, effective April 1st. This information clarifies RESPA requirements related to proper disclosure on the GFE and HUD-w settlement statement.
The guidance addresses:
(1) mortgage broker transactions where the broker is compensated indirectly from the lender by means other than an amount that is computed based on the interest rate, such as by a flat fee or an amount that is based on any other computation;
(2) no cost transactions where the credit for the interest rate chosen covers third party settlement charges;
(3) using a credit/charge calculation prior to completing Block 2 on the GFE; and
(4) payments by lenders to borrowers to correct tolerance violations in transactions involving a mortgage broker.
Click Here to view the complete guidance.