GFE Estimates More Accurate Thanks to New RESPA Policies

Survey: Little Fee Movement with Respa Change

American Banker  |  Tuesday, November 9, 2010

By Austin Kilgore

Settlement service fees for mortgage originations have not budged much since the new Real Estate Settlement Procedures Act policies took effect at the beginning of the year, a survey concluded.

Ernst Publishing Co. of Half Moon Bay, Calif., surveyed 226 lenders from Oct. 11-16 to gauge price ranges in county recording fees and vendor-controlled and lender-controlled origination fees.   A majority (57.5%) of the survey respondents said that county recording fees had increased 5% or less during the past 12 months. And 55.7% said that vendor-controlled fees like appraisals, credit checks and title searches had increased by no more than 5%.  A smaller majority (51.4%) reported that lender-controlled fees did not increase by more than 5%.

Those responses contradict a common misconception — that the new good-faith estimate led to higher costs for borrowers, said Jan Dalton Clark, vice president at Ernst.  We heard outcry from our lender clients that the perception is that they have increased fees because of Respa, and borrowers are paying the price,” Clark said.  But in reality, she said, the estimates on the good-faith estimate are now more accurate. Previously lenders used baseline prices that generally underestimated fees.

Respa holds lenders accountable for cure violations between the good-faith estimate and HUD-1 closing document, and the lender must reconcile any settlement services that cost more than 10% of the price quoted on the good-faith estimate. “Before the new Respa regulations, borrowers would go to the closing table and find out they had $2,000 in charges that weren’t quoted correctly that they had to pay,” Clark said. “What we’re seeing now is that the fees are accurate on the GFE.”

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