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The below information was issued in the April edition of RESPA Roundup. We have previously identified some loan requests where the GFE was not sent timely. Based on this information provided by HUD, do we need to go back and reimburse our customers for fees over tolerance created by showing $0 in the GFE columns of the HUD? If so, how far back would we need to reimburse customers? Is this requirement described anywhere else in the Regulation? Thanks for your help.
III. Loan originator fails to issue GFE
If a loan originator fails to deliver a GFE in clear violation of 24 CFR § 3500.7(a) and (b), the loan originator will have significant potential tolerance violations at settlement. See RESPA § 3500.7(e).
Where the loan originator has not provided the consumer with a GFE, when completing the HUD-1 comparison chart the loan originator’s instructions to the settlement agent must indicate that the settlement agent must fill in the GFE columns with $0 and the HUD-1 columns with the actual charges from Page 2 of the HUD-1. If this results in one or more tolerance violations, the loan originator may cure the tolerance violation(s) by reimbursing the borrower the amount by which the tolerance was exceeded at settlement or within 30 calendar days after settlement.
As with other compliance areas, loan originators should adopt policies and procedures to ensure that GFEs are delivered timely, in accordance with the requirements of RESPA.The RESPA Roundup article refers to a total failure to deliver a GFE. We are aware of situations where the examiner has required the a total refund of fees for the failure to deliver the GFE within the required three business day period.
If an examiner orders a refund of excess fees they will expect you to go back to the date of their last examination, just as they do with Truth in Lending reimbursement. Regulation X provides that a violation may be cured at closing or within 30 days after closing. Beyond the 30 day period refunding fees to the customer does not cure the violation; you still have legal liability. But refunding the excess fees will likely appease the examiner.
This issue is not addressed in Regulation X or the Frequently Asked Questions.
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