Bryan,

I started writing this and realized that I was answering a question you weren't asking. Rather than delete my response I am going to leave it below for anyone that is interested in reading it.

The times that the origination charge would change due to a "Changed Circumstance" is probably very limited. I can think of some though. Say you order closing docs from your attorney and have them delivered to the title company. The borrower cancels the closing and decides to close in the next month. This results in a redraw fee from the attorney. This might be considered a "Changed Circumstance." If you provide a new GFE and keep documentation of the reason for the change I think you could charge the additional cost.

"Q: Are attorney‘s fees charged to prepare loan documents for the lender considered part of the charge for origination services disclosed on Block 1 of the GFE?"
"A:  Yes, attorney‘s fees charged to prepare loan documents for the lender are considered part of the charge for origination services disclosed on Block 1 of the GFE and should not be separately itemized."

Harlan

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The times an origination fee could increase is probably very limited. But the origination fee is not the only settlement service that is defined as an "Origination Charge." Look at #1 at the top of page 2 of the new GFE where it says "Our origination charge - This charge is for getting this loan for you." This can not change without a "Changed Circumstance" once the borrower has decided to accept the originator's GFE and proceed with the transaction as long as the GFE has not expired. (GFE expiration - gone past 10 days minimum or a longer period of the originators choosing.) This number includes not just the origination fee, but processing, admin, underwriting fees, lender fees, broker fees, doc prep, etc.

"Block 1, ‘‘Our origination charge.’’—The loan originator must state here all charges that all loan originators involved in this transaction will receive, except for any charge for the specific interest rate chosen (points) (or credit for YSP). A loan originator may not separately charge any additional fees for getting this loan, including for application, processing, or underwriting. The amount stated in Block 1 is subject to zero tolerance, i.e., the amount may not increase at settlement."

 See: http://www.hud.gov/offices/hsg/ramh/res/finalrule.pdf  Page 68253

The "Origination Charges" include the origination fee, but the origination fee is not the only "Origination Charges."

Hate to start a conflict here but it seems that the information in Harlan's post regarding not putting the ysp with lenders fees,underwriting fees, etc. in Box 1"Our Origination Charges" contradicts what Bryan provided in a prior post about lumping those together ( See page 1 ). Anyone care to address this?  

It's obvious that Harlan has given a lot of thought to this new GFE and his example of attorney's fees is excellent.  I was only thinking in terms of what the broker/lender receives.  I think that with his example he confirms that there are no changed circumstances that will allow the lender/broker to receive a higher fee. 

Bill Smith:

Hate to start a conflict here but it seems that the information in Harlan's post regarding not putting the ysp with lenders fees,underwriting fees, etc. in Box 1"Our Origination Charges" contradicts what Bryan provided in a prior post about lumping those together ( See page 1 ). Anyone care to address this?  

I don't believe that there is any conflict because what he is referring to is locking the interest rate after the GFE is provided and based on the rate the borrower selects they may pay discount points for a lower rate or receive credit for some YSP.  So the cost of locking is the only thing that can change.  A new GFE with that information will be provided when locking.  See if you agree when thinking of it in those terms.  Here is what he posted:

"Block 1, ‘‘Our origination charge.’’—The loan originator must state here all charges that all loan originators involved in this transaction will receive, except for any charge for the specific interest rate chosen (points) (or credit for YSP). A loan originator may not separately charge any additional fees for getting this loan, including for application, processing, or underwriting. The amount stated in Block 1 is subject to zero tolerance, i.e., the amount may not increase at settlement."

I questioned the lumping together of the ysp and lenders fees in Box 1; I have somewhat of a clarification on this subject from another forum that I have been following and will share with you. Thanks for your input.   http://messageboard.calyxsupport.com/Topic9637-11-1.aspx

I went back and read Bryan's post on page one. Rather than try and say what he might have meant I'll just say this.

http://www.hud.gov/offices/hsg/ramh/res/gfestimate.pdf

On the second page of the new GFE at the top is: "1. Our origination charge" this is all fees charged by the originator and/or the lender. It does NOT include any credit for YSP. After the buyer accepts the GFE this number can not change except for the very rare instance of a "changed circumstance." If there is a changed circumstance a new GFE would be provided. There is no tolerance for this number to be even one cent different from the GFE with what goes on the HUD-1 at closing.

Right below that is: "2. Your credit or charge (points) for the specific interest rate chosen"

There are 3 boxes below. Only one is chosen. If the lender is giving a credit for YSP the second box is chosen and the amount of YSP is credited to the buyer in that box.

 Then the credit for YSP in #2 is subtracted from the amount in #1 above and the result is entered into box "A   Your Adjusted Origination Charges"

So to use a simplified example on a $100,000 loan. Say the lender fees are $600, the broker wants $300 processing and 2% of which 1% was going to come from the lender paying 1% YSP and 1% as an origination fee from the buyer. With the old GFE the broker would get $2,300 ($300 + $1,000 origination + $1,000 YSP) and the lender would get $600 in fees and the buyer would expect to pay $600 lender fees + $300 broker processing fee + $1,000 broker origination fee = $1,900 in lender and broker fees.

With the new GFE line one above would have $2,900 for the origination charge. The lender would get $600 and the Broker would get $2,300 just like above on the old GFE. Line 2 would have the second box checked and a credit of $1,000 would be entered.

Box A would have the "Adjusted Origination Charges" equal to Line 1 plus the credit on line 2 = $2,900 + (-$1,000 YSP) = $1,900. This is how much the borrower is paying out of pocket for broker and lender fees ... the same amount the borrower is expecting to pay in lender/broker fees in the old GFE above.

Lets say that using the same example as above the borrower chose to go forward with the loan and the interest rate was not locked. Line 1 "Our Origination Charge" could not change under almost all situations. The broker could make $2,300 as above, but no more -- whether rates increased or decreased and whether YSP increased or decreased. however the amount of YSP can change on line 2. If it did change and the borrower agreed to lock-in a revised GFE would be issued. Line 2 in the revised GFE could be more or less than it was originally based on nothing different than the market. If the YSP decreased the borrower would have to pay more at closing. If the YSP increased the borrower would pay less at closing. But line 1# can not be increased and the broker can not take advantage of an increase in YSP to increase their revenue on the transaction.

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I read some of the post regarding the new GFE and it's affect on APR. With the patchwork of regulations that must be followed it is no surprise that people are confused on this, but the GFE is a RESPA disclosure while the APR calculation is part of the TIL Act. Regardless of how fees are disclosed on the GFE the APR should not change. I imagine that the Federal Reserve will have to issue an opinion (they're not going to take mine) but I would think that the credit from a lender in the form of YSP should reduce the prepaid finance charge and leave the APR the same whether the new or old GFE is used to disclose for RESPA purposes.   

How's everybody doing in getting prepared for the new GFE?  I have sat through a few different webinars now and have seen many contradictions depending on who's doing the training and a lot is still unclear.  For example, originally we were told any changed circumstance such as a different prop address will negate the GFE, with no explanation about how the fees were to be handled.  Since then we've found out that only those fees connected to the changed circumstance will be allowed to be changed, such as a flood insurance if the prop has been changed and is now in a flood zone.  No other fees would be able to be changed in this situation.  So if you issue a GFE, make sure your fees are accurate.

What about the YSP?  I'm still confused on that.  It appears it will be credited to the borrower and if we still want to be compensated for it than we'll have to charge it as part of the Origination fee.  But isn't that just extra out of pocket money the buyer will have to come up with now?  I do plenty of FHA business with people who need the 3.5% down payment and there will not be extra money available to pay anything like that. 

Are we going to be forced out of business because of this?  I typically try to keep upfront costs low and make a little on the back but not sure how these new rules will play out.

With 51 pages of explanation there is a lot of room for individual companies interpretation of these new rules.  Since the the broker must issue a GFE within 3 days the lender is forced into accepting the brokers GFE or not accepting the loan because there are very limited circumstances in which Changed Circumstances can be used.  

Ralph Meyers:

What about the YSP?  I'm still confused on that.  It appears it will be credited to the borrower and if we still want to be compensated for it than we'll have to charge it as part of the Origination fee.  But isn't that just extra out of pocket money the buyer will have to come up with now?

On Page 2 Block 1 the total of all Origination Charges are lumped together.  So assume $1,000 broker fee, 600 lender UW fee and $900 YSP.  So the total in Block 1 is $2,500.  So $1,900 goes to your company as the lender will receive $600.  But to reduce the buyers out of pocket expenses by $900 you check the 2nd box in Block 2 You receive a credit of $900 for this interest rate of ...... So now your adjusted Origination Charge is $1,600 and that is carried over to the 1st page.  So now the lender is paying you $900 and the borrower is paying $1,600 for a total Origination fee of $2,500.

Thanks for the quick reply Brian, I hit the panic button a little to quickly there on the YSP, I ended up going through and completing a new GFE and realized that the end result is the same to me and the borrower as before, just spelled out differently. 

Do you or anybody else think that having to disclose this YSP for brokers will be a disadvantage against banks?  With all else being equal, the final result (cash to close, interest rate) may still be the same no matter which way the customers go, so not sure it will really matter in the end.  I have some friends who work retail and they're strutting around like roosters, but I think this GFE is more confusing than the last one and will focus more explanation on the Details of Transaction page from the 1003 (showing cash to close) and the old GFE (but call it something else).

Ralph Meyers:

Do you or anybody else think that having to disclose this YSP for brokers will be a disadvantage against banks?

I have been disclosing YSP for years and it's never been a problem so I don't see it as a competitive disadvantage.  The competitive disadvantage is to the banker who doesn't disclose YSP on the GFE up front and then decides that they need to broker the loan for some reason.  They will be limited to the compensation disclosed on the original GFE because changing lenders is not a Changed Circumstance.  So they won't be eligible to receive any YSP if they didn't disclose it on the original GFE.

To me the disadvantage to the broker might be when there is a Changed Circumstance.  It appears that the lender will be disclosing when there is a Changed Circumstance.  And this is just because of timing and potential delays.