In essence, HUD is working to bring all lenders up to the same standard of excellence in reporting closing costs that I have always adhered to, estimating realistic fees that a buyer should expect to pay at closing with no last minute surprises.
Some important facts to know:
- All fees paid to the lender/broker are to be consolidated in one line, including processing fees, origination fees, etc. These charges cannot change from the original estimate without a material change to the loan requested.
- In the event fees are being charged to obtain a lower rate, these are to be broken out and itemized for the borrower’s ease of comparison to other loan programs.
- Estimates for fees from government recording charges and third party settlement providers we suggest are to be itemized and the lender is held to a tolerance of 10% for their accuracy. In the event the estimated charges exceed the amount listed by the allowable tolerance, the lender will be responsible for making up the difference.
- Estimates for services that the buyer can shop for and do choose can change at settlement without the lender being held accountable. This can include title charges, homeowner’s insurance, and initial deposits for an escrow account.