Mortgage estimate errors may prove costly for bankers

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Mortgage estimate errors may prove costly for bankers
New federal regulations aim to increase accountability, transparency                                       issuing an adjusted good faith estimate within                                                            But that aspect also worries scriveri.
                                                                                                           three business days.”                                                                                     “If we have to list service providers, some
               By Martin C. daks                                         Banking                                  under the new rules, a lender generally has                                                   consumers may think that we’re endorsing
New mortGAGe regulations handed down                                                                       to list at least three providers for each buyer-paid                                                 these companies,” she said. “then, if something
by the u.s. Department of Housing and urban              ance, but then it turns out that there are 15 tax service that it requires. the estimate variance                                                      goes wrong, we may be sued by the consumer.
Development could add nearly $1 billion a                and other liens outstanding that the lender had penalty generally only applies to those required                                                       I’m all for transparency, but does this really
year to bank operating costs. New Jersey bank-            PS11917_HBC09023_Komen_7_5x10 6/5/09 11:52 AM even 1
                                                         no reason to suspect existed. In that case, the services — and Page then, only if the buyer uses                                                       help anyone?” u
ers fear the far-reaching rules also could put           bank could cure [or correct] the situation by one of the providers suggested by the lender.                                                                                            E-mail to
them on the hook for costly errors made by
third-party providers.
      “our members have expressed significant                                                                            BUSINESS OWNERS ON HEALTH CARE SERIES: No. 1
concern about resPA,” said James Silkensen,
co-chief executive officer of the New Jersey Bank-
ers Association, in cranford, referring to changes
to the real estate settlement Procedures Act,
which are effective Jan. 1. the new rules will be
the subject of a Dec. 3 association conference.
      Designed to “simplify and improve the
process of obtaining home mortgages and to
reduce settlement costs for consumers,” the
modifications include many arcane back-
office and reporting requirements, according
to HuD’s 517-page regulatory impact analysis.
But at a time when banks are coping with a
slow economy, bankers said they’re particularly
chilled by two issues: the cost of compliance,
and a rule that can make them ante up cash if a
mortgage’s actual closing costs exceed the good
faith estimate, or GFe, a bank is required to pro-
vide before a closing.
      “If we’re off by more than 10 percent on cer-
tain GFes, we may have to refund the difference
to the homebuyer,” said Diane Scriveri, chief
lending officer at Bogota Savings Bank. GFes
typically lay out items like the lender’s origina-
                                                                              Horizon Blue Cross Blue Shield of New Jersey                                                ensure good doctors are there for you to help save your
tion fee, points, escrow and other charges.
                                                                              interviews Nancy Healey, Executive Director of                                              life, but it eliminates a lot of the stress of your diagnosis.
      In its analysis, HuD argued that more trans-                            Susan G. Komen for the Cure Central and South
parency and accountability in the estimates will                                                                                                                          Q: What is your health insurance? And why?
                                                                              Jersey Affiliate.
let consumers more easily compare the total cost                                                                                                                          NH: Well, clearly my responsibility is to find the best
of mortgages offered by different banks, and will                             Q: How prevalent is breast cancer for women?                                                health care at the lowest cost for the women of this office.
likely spur title search and other mortgage service                           NH: One in eight women will be diagnosed with breast                                        I work with a broker who helps me look at different plans,
providers to reduce their prices, for an estimated
                                                                              cancer in their lifetime. And while there is a lot of information                           and he submits a wide variety of different plans and different
$8.35 billion a year in consumer savings.
                                                                              about high risk factors, less than 10% of all breast cancer                                 options, and it has been Horizon Blue Cross Blue Shield
      But financial institutions are likely to have to
Description: Designed to "simplify and improve the process of obtaining home mortgages and to reduce settlement costs for consumers," the modifications include many arcane backoffice and reporting requirements, according to HUD's 517-page regulatory impact analysis. "If there's a change in circumstances, or information that the lender did not have at the time it produced the good faith estimate, the institution maybe able to reissue the GFE," said Riley, who counsels real estate brokerage, title, mortgage and other settlement service industry clients.
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