Hendricks Apprasial Services Blogosphere

June 28, 2010: Manufactured Housing-Foundation Requirements
May 28th, 2010 10:23 AM

MANUFACTURED HOUSING

FOUNDATION REQUIREMENTS

500. GENERAL. This section outlines general material and quality standards for all foundations in this manual.

501. EXCAVATION

501-1. FOOTING DEPTH. Excavation for footings or foundation walls shall extend below depth of soil subjected to seasonal or character-istic volume change to undisturbed soil that provides adequate bearing. Select the greatest depth required by any of the provisions below, reference Figure 5-1.

A. Maximum Frost Penetration Depth. The bottom of footings shall extend at least to the depth indicated on the map on page H-4.

B. Alternate Seasonal Wetting and Drying. This is especially important with ex-pansive soils. If expansive soils exist, consult a geotechnical engineer to obtain required foot-ing depth.

C. Footing Depth. The footings shall be deep enough to provide required uplift capac-ity. (This value may need to be determined for high wind areas after the calculations needed to determine footing bearing have been com-pleted.)

502. FOUNDATION MATERIALS. Footings and foundations shall be constructed of solid materials such as masonry, concrete, or treated wood, based on the Foundation Design Concept Selection (Appendix A) and Founda-tion Capacity Tables. (Appendix C) (For ma-sonry and concrete refer to CABO R-302.2, R-304.1 and R-304.3; for wood refer to CABO R-302.1 and R-304.5.)

503. STRUCTURAL REQUIRE-MENTS

503-1. FOUNDATION REQUIREMENTS. All exterior walls, marriage walls, marriage wall posts, columns and piers, must be sup-ported on an acceptable foundation system that must be of sufficient design to support safely the loads imposed, as determined from the character of the soil.

A. Height Above Grade. Foundation walls shall extend at least 8" above the finished grade adjacent to the foundation at all points. See Figure 5-1.

B. Minimum Foundation Wall and Wall Footing Thickness. For masonry or concrete construction, the minimum foundation wall will be 6 inches. The minimum reinforced concrete footing thickness will be 6 inches or 1-1/2 times the length of the footing projection from the foundation wall, whichever is greater.

503-2. PIER AND COLUMN FOOTING REQUIREMENTS. Footings for pier founda-tions shall be reinforced concrete and should be placed level on firm undisturbed soil of ade-quate bearing capacity and below the frost penetration depth. They can also be placed on engineered, compacted fill, approved by a li-censed geotechnical engineer.

A. Unusual Conditions. Where unusual conditions exist, the spacing of piers and pier size and the load bearing capacity of the soil shall be determined specifically for such condi-tions. 

B. Minimum Pier and Pier Footing Thickness. The minimum thickness for a pier is 8 inches. The minimum thickness for pier footings is 8 inches or 1-1/2 times the length of the footing projection from the pier, whichever is greater.

503-3. FOOTING REINFORCING (HORIZONTAL). Reinforce footings when the projection on each side of the wall, pier, or column exceeds 2/3 of the footing thickness, or when required because of soil conditions.

503-4. MASONRY PIERS AND WALLS. All masonry piers and walls shall have mor-tared bed and head joints. Reinforcing and grouting shall be in accordance with the foun-dation concept selected from Appendix A and designed in Appendix C.

503-5. CRAWL SPACE REQUIRE-MENTS (Basementless spaces) 

A. Height Requirement. Ground level must be at least 18 inches below bottom of wood floor joists and 12 inches below bottom of chassis beam. Where it is necessary to pro-vide access for maintenance and repair of me-chanical equipment located in the under floor space, the ground level in the affected area shall not be less than 2 feet below wood floor joists. (Refer to CABO, Section R-309.) 

B. Interior vs. Exterior Ground Level. The interior ground level must be above the outside finish grade unless:

1. Adequate gravity drainage to a posi-tive out fall is provided, or

2. The permeability of the soil and the location of the water table is such that water will not collect in the crawl space, or

3. Drain tile and automatic sump pump system are provided.

C. Openings. Locations of crawl space openings and ventilation openings should be on long foundation walls. Avoid any openings on short foundation walls. Sill plates or other structural members should not be randomly cut to accommodate openings. Continuity of struc-tural members must be maintained.

503-6. FOUNDATION WALLS FOR BASEMENTS. The design and reinforcing of basement walls is NOT in the scope of this document. Refer to local codes and ordinances for guidance. Refer also to CABO, Section R-304: "Foundation Walls." Design the unit’s foundation based on soil conditions present at the site.

503-7. BACK FILL. Material used for back fill must be clean and free of wood scraps or other deleterious substances and must be placed carefully against walls.

503-8. STEEL BEAMS AND COLUMNS. The analysis and design of steel transverse girders, steel longitudinal girders potentially used under marriage walls to reduce the num-ber of steel pipe columns within a basement, and the steel pipe columns themselves are NOT within the scope of this document for system Types E5, E6 and E7.


Posted by Douglas E. Hendricks on May 28th, 2010 10:23 AMPost a Comment (0)

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May 20, 2010: Gas Water Heaters
May 20th, 2010 9:57 AM

 


Homes and Communities - www.hud.gov

Water Heaters


Chapter 1
Appraisal & Property Requirements
Page 1-27

Requirements:

1. All water heaters must have a non-adjustable temperature and pressure-relief valve.

2. The water heater must comply with local building codes regardless of its location.

3. Rental water heaters are not acceptable.

From what we have gathered, each municipality has different code requirements. However, it seems the City of San Antonio code paraphrased below is consistent with most Texas community codes: 

"Gas utilization equipment in residential garages and in adjacent spaces that are open to the garage and are not part of the living space of a dwelling unit shall be installed so that all burners and burner-ignition devises are located not less than 18 inches (450 mm) above the floor unless listed as flammable vapor ignition resistant."

For all FHA Appraisals, Hendricks Appraisal Services will require all gas water heaters not within the living area to be raised at least 18" from the floor with proper ventilation through the roof and door vent (if applicable).


Posted by Douglas E. Hendricks on May 20th, 2010 9:57 AMPost a Comment (0)

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May 5, 2010:Lead Based Paint; HUD-ML 2010-17
May 6th, 2010 2:18 PM

May 5, 2010

MORTGAGEE LETTER 2010-17

TO: ALL FHA APPROVED MORTGAGEES

ALL FHA ROSTER APPRAISERS

SUBJECT: UPDATED HUD REO LEAD-BASED PAINT APPRAISAL REPORTING REQUIREMENTS

The purpose of this Mortgagee Letter is to amend Handbook 4150.2, Valuation Analysis for Home Mortgage Insurance for Single Family One-to-Four Unit Dwellings, Appendix A. The amendment will affect how appraisers disclose defective paint in HUD’s real estate owned (REO) properties. This change is effective on all appraisals performed on HUD REO properties with an effective date on or after June 1, 2010. HUD will only order a lead-based paint evaluation for HUD REO properties constructed before 1978, and purchased with FHA-insured financing.

Handbook Change

Appendix A, Section A-3, bullet two is being replaced in its entirety with the language below:

If the appraiser observes defective paint in a home that was built before 1978, in the physical deficiencies or adverse conditions section of the appraisal report, the appraiser must enter an "X" in the "Yes" box, and note all areas affected. However, if the appraiser does not observe defective paint in a home that was built before 1978, an explanation is not required in the physical deficiencies or adverse conditions section of the appraisal report.


Posted by Douglas E. Hendricks on May 6th, 2010 2:18 PMPost a Comment (2)

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April 27, 2010: FHA Case Numbers
April 27th, 2010 8:56 AM

April 20, 2010

MORTGAGEE LETTER 2010-15

TO: ALL APPROVED MORTGAGEES

ALL FHA ROSTER APPRAISERS

SUBJECT: FHA Case Number and FHA Roster Appraiser Assignments

This Mortgagee Letter provides guidance on ordering Federal Housing Administration (FHA) case numbers and selecting FHA Roster appraisers in FHA Connection. Specifically, this Mortgagee Letter:

1. informs mortgagees of changes to data entry requirements in FHA Connection;

2. permits mortgagees to obtain a case number in FHA Connection without first having to select an appraiser from the FHA Appraiser Roster and input the appraiser’s information in the Case Number Assignment screen; and,

3. requires that the effective date of the appraisal be after the case number assignment date except in certain limited circumstances.

Effective Date

Provisions in this Mortgagee Letter became effective for all case numbers assigned on or after February 15, 2010.

Case Number Assignment and Appraisal Logging Screen Changes

1. The Case Number Assignment screen in FHA Connection will no longer capture appraiser information (assignment choice, license ID and assignment date). However, the following information fields in the case number assignment screen will continue to require input:

General Information

"As Required" Fields (pertaining to streamline refinances, 203k loans and condo indicators, etc.)

ADP (automated data processing) Code Characteristics

Property Address

Compliance Inspection Fields (if applicable) 

Borrower Information

2. The Appraisal Logging Screen in FHA Connection will capture the appraiser information along with the following information fields:

Appraiser’s License ID

Property Information

Neighborhood Information

Site Information

Physical Improvement Information

Reconciliation Information

Note: Mortgagees are required to input the appraiser’s information, as well as the relevant appraisal information, into FHA Connection prior to loan closing.

Appraiser/Appraisal Eligibility

Mortgagees are reminded to ensure that the FHA Roster appraiser selected to perform an appraisal is listed as being active on the FHA Appraiser Roster at the time of selection.

FHA Roster appraisers are reminded that appraisals cannot be performed for purposes of FHA insured financing unless the appraiser is listed as being active on the FHA Appraiser Roster during the time period in which the appraisal is performed.

Mortgages predicated upon appraisals that are performed by appraisers who are not current on the FHA Appraiser Roster at the time of the effective date of the appraisal will not be insured.

The effective date of the appraisal cannot be before the case number assignment date unless the lender certifies, via the certification field in the Appraiser Logging Screen in FHA Connection, the appraisal was ordered for conventional lending, HUD REO or government guaranteed loan purposes but was performed by a FHA Roster Appraiser and is being converted to a FHA-insured mortgage. The mortgagee must retain documentation in the case binder substantiating conversion of the mortgage to FHA.

If the appraisal was ordered for conventional lending or government guaranteed loan purposes but was performed by a FHA Roster Appraiser, the mortgagee must ensure that the appraisal was performed in accordance with FHA appraisal reporting requirements as detailed in Handbook 4150.2, CHG-1, Valuation Analysis for Home Mortgage Insurance for Single Family One – to Four – Unit Dwellings, and subsequent mortgagee letters. Ensuring compliance with this requirement may entail a re-inspection of the property by the appraiser.

If you should have any questions concerning this Mortgagee Letter, please call the 3

FHA Resource Center at 1-800-CALLFHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).

Sincerely,

David H. Stevens

Assistant Secretary for Housing-

Federal Housing Commissioner


Posted by Douglas E. Hendricks on April 27th, 2010 8:56 AMPost a Comment (0)

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April 22, 2010: Utilities, FHA Loans and REO Properties
April 22nd, 2010 3:03 PM

Who is responsible for turning on utilities of REO/Bank Owned properties for FHA loans? Since there is no occupant, utility companies are hesitant to turn utilities on. Therefore, in some cases no one is responsible.

Does HUD require the utilities to be on for REO/Bank Owned properties? HUD understands that there are instances when properties are winterized and/or bank owned which will make it near impossible to have utilities turned on. In such cases the underwriter is responsible for clearing these conditions.

Is the appraiser required to inspect utility components for REO/Bank Owned properties? Absolutely, just as the appraiser would for any other standard FHA appraisal inspection.

Is the appraisal subject to utility inspection for REO/Bank Owned properties? Absolutely, just as the appraiser would for any other standard FHA appraisal inspection.

Is there anything the lender/underwriter can do? According to Mortgagee Letter 00-27, yes the underwriter is responsible for clearing these conditions.

Please read the email string below for clarification:

From: Douglas E. Hendricks [mailto:dhendricks@hendricksappraisal.com] Sent: Thursday, April 22, 2010 11:15 AM

To: HUD

Subject: Utilities for REO properties

Hello, I am aware that the utilities for REO or bank owned properties has been addressed in a previous mortgagee letter. However, I cannot recall which one specifically. Regardless, I am running into the same issue quite often and would appreciate your clarification or confirmation. I have had lenders/underwriters demand and require me to go back to the property in order to complete the utility inspection and when I get there the utilities are still turned off. A few days later I am told to go back out again and end up with the same results. Again, this is specific to REO properties. From what I understand, the appraiser is always required to perform all standard FHA inspections regardless of the owner or if vacant. All inspection results are to be disclosed in the appraisal report. However, if the property is a REO/Bank Owned property and the dwelling has been winterized or utilities are not on then the appraiser is to request a copy of the Home Inspection if available and rely on it to address utility items. If the home inspection is to available or not produced within a reasonable time, then the appraiser is to address and explain the steps taken in the report. At which point the lender/underwriter may override due to the fact that it is a REO property and there will be no one responsible for connecting the utilities. Will you please shed some light on this for me? In addition to how I can address with the lender and point them in the right direction for clarity and confirmation as well.

Respectfully,

 Douglas E. Hendricks

------------------------------------------------------------------

Response from HUD:

Mr. Hendricks,

Mortgagee Letter 00-27 pertains specifically to HUD REO properties. Pursuant to Handbook 4150.2, Valuation Protocol Appendix D, the appraiser is required to check all mechanical, plumbing, and electrical systems in the subject property.

For REO properties that have been winterized, the appraiser cannot rely on a Home Inspection; therefore, the appraisal should be completed subject to verification or inspection the systems are in functioning condition. The underwriter will be responsible to clear the condition. For future questions, please submit via info@fhaoutreach.com

Sincerely,

Department of HUD Denver Homeownership Center

Technical Support Branch


Posted by Douglas E. Hendricks on April 22nd, 2010 3:03 PMPost a Comment (0)

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April 19, 2010: Comparable Listings
April 19th, 2010 10:22 AM

From: Douglas E. Hendricks [mailto:dhendricks@hendricksappraisal.com]
Sent: Thursday, April 15, 2010 10:41 AM
To: HUD

Question sent to HUD,

We had an underwriter require us to make a list to sales price ratio adjustment to our Comparable Listings stating that all listing require a list/SP ratio adjustment or they will not close the loan. However, as indicated by the 1004MC it appears the ratio is over 100% therefore not warranting an adjustment for the listings. Everyone needs to keep in mind that any time delays will only frustrate my client and influence them to not do business with me since most other appraiser will just submit to their demands.

Respectfully,

Douglas E. Hendricks

=================================================

From: HUD
Sent: Thursday, April 15, 2010 12:54 PM
To: 'Douglas E. Hendricks'

Mr. Hendricks,

In response to our discussion regarding application of adjustments for list to sale price discounts for active listings and/or pending sales, please review the following:

FHA does not have a policy regarding “mandatory” application of list to sale price discounts for active listings and pending sales for all appraisals; however, pursuant to Mortgagee Letter 05-02 and your signed appraisal certification, the appraiser is required to make market-based adjustments to the comparable sales.

If the property is located in a declining market based on the results of the 1004MC, the appraiser is required to provide a minimum of two active listings and/or pending sales. Active listings should be adjusted to reflect the list to sale price ratio. In reconciliation, if the adjusted sale price of the comparable sales is higher than the adjusted price of the active/pending sales, the appraiser must determine if a market condition adjustment is warranted.

For your reference, I have attached the mortgagee letters with additional explanation.

Sincerely,

HUD

Denver Homeownership Center

Technical Support Branch


Posted by Douglas E. Hendricks on April 19th, 2010 10:22 AMPost a Comment (0)

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April 16, 2010: Myths about Comparable Bracketing
April 16th, 2010 4:46 PM

According to: The Dictionary of Real Estate Appraisal; Appraisal Institute

Definition of Bracketing: A process in which an appraiser determines a probable range of values for a property by applying qualitative techniques of comparative analysis. The array of comparables are divided into two groups-those superior to the subject and those inferior to the subject. The adjusted sales prices reflected by these two groups limit the probable range of values for the subject and identify a bracket in which the final value estimate will fall.

Have you ever been told by a lender, investor, underwriter, processor or reviewer of a mortgage loan transaction that FHA requires the subject's purchase price to be bracketed by the comparable sales utilized in the appraisal report or the loan will not close? How about bracketing the square footage?

And if the client give you enough time to confirm with HUD, does HUD always seem to give conflicting answers? Don't forget this question, but don't answer it until you have read down further.

Well, we finally got to the bottom of it for you. According to USPAP the purchase price should never play a role in analysis and conclusion of an appraisal report, which is exactly what the client is attempting you to do when mandating bracketing. Never overlook a perfectly good comparable just to satisfy bracketing desires of the client, doing so may cause you not to be in compliance with USPAP.

Bracketing as defined above is a common methodology utilized by appraisers, however, it should not and is not mandatory. The definition describes the two groups to be superior and inferior to the subject. Do not mistake this to mean a higher sales price and a lower sales price, this would get you into trouble. As most of you are aware, there will be occasions when bracketing is simply not possible without misleading the intended user. In these cases, HUD simply asks for an explanation as to why bracketing was not utilized.

Please feel free to read and/or refer to the email string below concerning this topic should you find yourself in a similar predicament.


From: HUD

Sent: Thursday, April 15, 2010 12:54 PM
To: 'Douglas E. Hendricks'

Mr. Hendricks, in follow-up to our discussion regarding bracketing, the following is provided. Pursuant to Handbook 4150.2, Appendix D, Valuation Protocol, p. D-6 “At a minimum, comparable selection should be based on properties having the same or similar locational characteristics as well as physical characteristics which includes: style, age, size, utility and condition. Comparable sales should never be selected based on sales price.

In selecting comparables, use the bracketing method. Bracketing, as defined in The Dictionary of Real Estate Appraisal, Fourth Edition, Appraisal Institute, is “a process in which the an appraiser determines a probable range of values for a property by applying qualitative techniques of comparative analysis to a group of comparable sales. The array of comparable sales may be divided into two groups – those superior to the subject and those inferior to the subject. The adjusted sales prices reflected by these two groups limit the probable range of value for the subject and identify a bracket in which the final value opinion will fall.” It is advisable to bracket sales using both dwelling size and sales price whenever possible. If bracketing is not possible, the appraiser should explain why. “

Remember the question above? Now is a good time to give your answer.

To: HUD

Sent: Thursday, April 15, 2010 12:54 PM
From: 'Douglas E. Hendricks'

To Whom it May Concern:

I have a question/concern about bracketing that just came up 5 minutes after our call. Bracketing the sales price has never set well with me per USPAP appraisers are not suppose to base opinions or comparable selections on the subject’s sales price. Who do I refer her to? Everyone needs to keep in mind that any time delays will only frustrate my client and influence them to not do business with me since most other appraiser will just submit to their demands. 


Posted by Douglas E. Hendricks on April 16th, 2010 4:46 PMPost a Comment (0)

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April 13, 2010: First Time Home Buyers Tax Credit
April 13th, 2010 6:52 PM

Calling all realtors, Hendricks Appraisal Services wants you to maintain the forward momentum!

April 13, 2010—CNN reported last September that 1.4 million Americans had already taken advantage of the first time home buyers tax credit. It is reasonable to conclude that number now exceeds 2 million. With the tax credit being an engine for that many sales and as the date for the expiration of the program rapidly approaches many concerned agents are asking, “Now, what?”

 

A few agents fault the banks need to improve as a reason for not participating.

According to an online newsletter: “Most of my buyers have elected to not even view short sales. The banks need to get their act together first!”

Apparently the idea that patience and persistence might be necessary to achieve a huge cost savings is an alien idea to this agent. Instead the realtor should consider adjusting buyer’s outlook on this. After all, if 50% of sales are REO and Short Sales, refusing to look at them wipes out a 50% chance to sell a home! Short sales can be frustrating but when they work, they’re home runs. It’s not just the banks, but rather people who need to get their acts together.

What can agents do to replace the first time buyers’ credits as a key part of their marketing plan?

It might be a good idea to target distressed property buyers and to do it online. It might be a good idea to remember that speed in response is of the essence. 

Realtors and Appraisers alike had it really good for a long time and many still haven’t realized that the same old way will not yield the same ole results. Clients must be answered immediately, leads must be treasured, opportunities must be taken, new markets must be aggressively pursued. If you want to spend the summer selling homes instead of having no one to call on, try going after distressed property buyers and REOs.

Don’t turn up your nose at REOs. Don’t turn up your nose at any market segment that accounts for 50% of sales. Follow the money trail and at the end of the day you will find yourself at distressed properties.

April 9, 2010 a news article read: “Distressed Sales Gain Greater Market Share” – First American CoreLogic reports that distressed properties accounted for 29% of all U.S. home sales in January. Also, real estate-owned sales rose to 22% of homes sales from 19% in December, and short sales rose to 8% from 7%.

Average sale prices in January were $161,600 for distressed homes, compared to the average non-distressed sale price of $247,700, $141,900 for REO properties, and $215,300 for short sales.”

After all, the quicker distressed properties are taken off the market the faster the Real Estate Confidence Index (RECI) will rise. This will be good for all Americans.


Posted by Douglas E. Hendricks on April 13th, 2010 6:52 PMPost a Comment (0)

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April 9, 2010: GLB Act
April 9th, 2010 11:46 AM

Believe it or not, we have had several clients who are not familiar with the Gramm-Leach-Bliley Act. There are still concerns of the appraiser/appraisal report disseminating confidential material. We do not have interest in sharing such information nor is it legal. Below is the USPAP definition of confidential information:

CONFIDENTIAL INFORMATION: information that is either:

? identified by the client as confidential when providing it to an appraiser and that is not available from any other source; or

? classified as confidential or private by applicable law or regulation*.

*NOTICE: For example, pursuant to the passage of the Gramm-Leach-Bliley Act in November 1999, some public agencies have adopted privacy regulations that affect appraisers. As a result, the Federal Trade Commission issued a rule focused on the protection of “non-public personal information” provided by consumers to those involved in financial activities “found to be closely related to banking or usual in connection with the transaction of banking.” These activities have been deemed to include “appraising real or personal property.” (Quotations are from the Federal Trade Commission, Privacy of Consumer Financial Information; Final Rule, 16 CFR Part 313.)

We hope this clears up any confidential concerns. Hendricks Appraisal Services is always ready and willing to help in whatever way possible. Please do not hesitate to call us at 210.946.6868.


Posted by Douglas E. Hendricks on April 9th, 2010 11:46 AMPost a Comment (0)

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April 6, 2010: Revamped GFE
April 6th, 2010 2:44 PM

Revamped Good Faith Estimate Criticized as Impeding New Mortgages

If you’re a prospective home buyer exploring real estate this spring, there’s plenty to learn about, from bank-owned properties to the strict criteria for getting a mortgage these days. And now the federal government has added something to the mix, aimed at helping buyers shop for loans: the revamped Good Faith Estimate.

 

Designed by the U.S. Department of Housing and Urban Development (HUD) to help borrowers better understand the terms of their loans, the new three-page form has been a required part of the mortgage application process since Jan. 1, 2010.

Many in the mortgage industry—whom opposed the development of the new form—say it is causing so much confusion it’s actually spawning additional, explanatory forms, causing delays in some transactions, and leaving some borrowers worried about signing papers that don’t reflect what they’ll really have to pay.

Theoretically, standardized terminology and a fuller disclosure of fees benefit borrowers. However, there are equally as many problems it has created. Mortgage brokers have developed a long list of complaints about the new form. For example, there’s nowhere to show how much the borrower will pay in pro-rated property taxes. And brokers have the incentive to inflate the estimate of their fees, because once they’ve issued the good faith estimate, they can’t boost those fees, even if subsequent changes to the loan package cut into their compensation.

Before the form was redesigned, good faith estimates had no real recourse on lenders or brokers who pumped up their fees between the time a customer applied and closed the loan.

But the new form stipulates that some charges—such as the loan origination fee—can’t change at all after they’ve been quoted to a customer on a good faith estimate. Other charges, such as those for some title company services, can only increase 10%. If those fees increase more than 10% after the good faith estimate is issued, the lender must pay the difference.

In addition, the good faith estimate has a section written in straightforward language that spells out each loan’s basic terms. For example, one line says “Can your interest rate rise?” Followed by check-boxes for “No” and “Yes, it can rise to a maximum of… The first change will be in…”

But HUD, which redesigned the decades-old form in the wake of the subprime mortgage crisis, says that those who are complaining about the new procedure misunderstand its intent. A document on the HUD website devotes 31 pages to explaining the form. Designed to be a shopping document, to allow borrowers to be able to select the very best loan available to them.

Still, some borrowers end up confused, expecting a document that says “total estimated settlement charges” at the bottom will, well, provide an estimate of total settlement charges.

But, because of what’s included—and omitted—from the three-page form, the amount shown on the bottom line is often significantly different from what the customer will actually have to pay to close the transaction. For example, in the San Francisco Bay Area, the “transfer taxes” that are due when property changes hands are typically paid by sellers. But they must be reflected on the GFE form, and can amount to thousands of dollars, prompting some borrowers to assume the amount shown on the form is one they must pay.

When Warner de Gooijer applied for a loan to buy a home in San Jose recently, he was confounded by the huge dollar figure looming at the bottom of the good faith estimate, which must be provided to borrowers within three business days of when they apply for a mortgage. Then his loan officer explained that he wouldn’t actually have to pay the amount shown at the bottom of the good faith estimate. “But do I trust my loan officer or the paper I’m signing?” said de Gooijer, who nervously wondered whether he’d be liable for the large amount anyway.

The overhauled GFE is intended to help borrowers compare loans and costs for loans. The real question for borrowers is to know what they can expect to write a check for at the closing table. The new GFE does not have any place that captures that.

The change is prompting some lenders to develop new worksheets of their own, so they can show the customer what he or she might really have to fork over at closing.

Hendricks Appraisal Services located in San Antonio, Texas is here to help you in whatever way we can within our means. Serving Bexar, Comal, Guadalupe, Wilson, Atascosa, Medina, Bandera and Kendall Counties since 1993. Please give us a call and one of our friendly and knowledgeable staff will assist you immediately.


Posted by Douglas E. Hendricks on April 6th, 2010 2:44 PMPost a Comment (0)

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