융자지식 254- CONVENTIONAL LOANS

by usezloan | Nov 29, 2021 | Financial study

융자지식 254- CONVENTIONAL LOANS

4.1 CONVENTIONAL LOANS
Most real estate loans are not backed by an agency of the federal government and have a first lien
position. Conventional loans are conforming loans that limit loan amounts of single-family residences
to the current limit of $510,400.
Loans that exceed the conforming loan limit are called non-conforming or jumbo loans. Conforming
loans must meet the eligibility requirements of either the Federal National Mortgage Corporation
(Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac).
Conventional loans that do not exceed the loan limits established by the secondary market are
conforming loans and are eligible for purchase by Fannie Mae and/or Freddie Mac, known as
Government Sponsored Enterprises (GSE).
Conventional Conforming Loan Limits
The Federal Housing Financing Agency (FHFA) has issued the maximum loan limits that will apply to
conventional loans to be acquired by Fannie Mae in 2020.
One-Family Properties: $510,400
Two-Family Properties: $653,550
Three-Family Properties: $789,950
Four-Family Properties: $981,700
Standard Fannie Mae Conforming Guidelines
A conventional mortgage is a mortgage NOT obtained through the Federal Housing Administration
(FHA), the Department of Veterans Affairs (VA) or the US Department of Agriculture (USDA). There are
two types of conventional mortgages: conforming and non-conforming.

A conventional (conforming) mortgage conforms to loan limits, down payment requirements,
borrower income requirements, debt-to-income ratios, and other underwriting guidelines established
by Fannie Mae and Freddie Mac.
Income Qualifications for Conforming Mortgages
Conforming loan programs require comprehensive income qualifications. Each borrower’s income
must meet standards and guidelines relevant to the loan program. Some general qualification
guidelines include:
● Standard income documentation for salaried and hourly individuals typically includes pay
stubs for the most recent 30-day period and W-2s for the most recent two-year period.
● Individuals earning more than 25% of their income in commission must provide up to two
years’ tax returns.
● Individuals who own more than 25% of a business are required to provide up to two years tax
returns.
● Individuals who earn non-taxed income such as Social Security, public assistance or disability
must provide comprehensive documentation relevant to the type of income. However, they
are permitted to “gross up” those earnings by 25% (i.e. multiply the income by 125%).
● Commissions – average of the most recent two years income.
● Bonus/Overtime – average income for the last two years.
● Student and Installment loans – Qualifying borrower’s when no monthly payment is reflected:
1% student loan balance 5% installment debt amount.

융자지식 253- Closing Disclosure

by usezloan | Nov 26, 2021 | Financial study

융자지식 253- Closing Disclosure

2.44 Closing Disclosure
The Closing Disclosure replaces the HUD Settlement Statement and (if applicable) the final TIL
disclosure that was provided to borrowers at closing. The new form is used to help consumers
understand the final costs and terms of the transaction. It must be provided in all transactions that (i)
require the issuance of a Loan Estimate, and (ii) have reached the closing stage.
Copies of the Closing Disclosure must be kept by the creditor for at least five (5) years. If the creditor
sells the loan or transfers servicing to another entity, the other entity must receive a copy of the form.
At that point, both the creditor, the new owner and/or the new servicer must keep their copies for at
least five (5) years from the time of consummation.
Delivering the Closing Disclosure – Creditors are ultimately responsible for giving the Closing
Disclosure to the borrower no later than three (3) business days before consummation.
Once again, it is important for us to understand the definition of “business day” within its proper
context. The Closing Disclosure must be given to the borrower no later than three (3) business days
prior to consummation. For the purposes of this deadline, a business day is any day except Sundays
and federal holidays. Remember, this definition is not the same as the one used to determine timely
delivery of the Loan Estimate form.
The Closing Disclosure can be provided to the borrower in person, or it can be mailed physically or
electronically. If it is mailed, the borrower is deemed to have received it three (3) business days after
the mailing date. If it is sent electronically (email), the consumer is deemed to have received it three
business days after electronic delivery.
Like the waiting periods associated with the Loan Estimate, the three-day requirement for the Closing
Disclosure can be waived by the borrower (and the loan can be consummated) if there is a bona fide
personal emergency.
The Role of Settlement Agents – Creditors might utilize settlement agents in order to complete
certain tasks or monitor the status of a transaction. For example, settlement agents might ensure that
all necessary documents have been signed by consumers and that all fees, charges and other kinds of
payments have been made prior to the end of a transaction. The TILA-RESPA Integrated Disclosure
rule allows creditors to use settlement agents for the purpose of completing and/or delivering the
Closing Disclosure. However, the creditor is responsible for the accuracy of the form and ensuring that
it is delivered in a timely manner.
2.45 Revised Closing Disclosure
Revised Closing Disclosures – When changes result in different amounts being charged than what
appeared on the Closing Disclosure, a revised form must be provided to the borrower. The deadline
for providing a revised form will depend on the type of change and the time it occurs.
If any of the following changes occur after the issuance of the Closing Disclosure but prior to
consummation, the creditor must provide a corrected Closing Disclosure to the borrower no later
than three (3) days before the consummation (in other words, a new three-day period is required):
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• An increase in the APR by more than 0.125% (for most loans) or 0.25% (for “irregular” loans
with nontraditional payments or periods).
• A change in the loan product.
• The addition of a prepayment penalty.
If other changes occur, creditors must ensure that the consumer receives a corrected Closing
Disclosure at or before consummation.
If a settlement is scheduled during the waiting period, the creditor generally must postpone
settlement, unless a settlement within the waiting period is necessary to meet a bona fide personal
financial emergency.
Consumers may waive or modify the three-business-day waiting period when the following criteria is
met:
1. The extension of credit is needed to meet a bona fide personal financial emergency.
2. The consumer has received the Closing Disclosure; and
3. The consumer gives the creditor a dated written statement that describes the emergency,
specifically modifies or waives the waiting period, and bears the signature of all consumers
who are primarily liable on the legal obligation.
4. The creditor is prohibited from providing the consumer with a pre-printed waiver form.
Example: the imminent sale of the consumer’s home at foreclosure, where the foreclosure sale will
proceed unless loan proceeds are made available to the consumer during the waiting period, may be
considered a bona fide personal financial emergency.
Other changes that occur prior to consummation must still be disclosed on a corrected form, but
those changes are less likely to delay the transaction. For changes that do not require a new waiting
period, the corrected form must be given to the borrower no later than at or before consummation.
• If a change occurs within 30 calendar days after consummation, the creditor will have 30
calendar days to deliver or mail a revised Closing Disclosure. An example of this kind of change
would be an underestimated recording fee. However, a change in taxes or in other costs that
aren’t related to settlement does not require a new disclosure after consummation.
• Some instances require a corrected Closing Disclosure within 60 calendar days after
consummation. This requirement will apply in cases where a clerical error has occurred. For
example, a borrower would be entitled to a new Closing Disclosure within 60 calendar days
after consummation if the original form were to contain the incorrect name of a third-party
service provider.
• A Tolerance Violation occurs if certain costs on the Loan Estimate form are lower than the
borrower’s actual costs. If a creditor reimburses a borrower for this reason, the
reimbursement will be noted on a new Closing Statement. This too must be given within 60
calendar days after consummation.

융자지식 252- Loan Estimate

by usezloan | Nov 23, 2021 | Financial study

융자지식 252- Loan Estimate

2.36 Loan Estimate
The new Loan Estimate form replaces the Good Faith Estimate required by RESPA and the initial TIL
disclosure form required by TILA. The purpose of the new form is to help applicants obtain an early
understanding of various features, costs and risks that are associated with a potential mortgage loan.
Records of Loan Estimates must be kept by creditors for at least three (3) years after the loan has
been consummated.
Intent to Proceed – In addition to providing essential information to potential borrowers, the Loan
Estimate is an important disclosure form because creditors are prohibited from performing certain
acts until the form is received and the borrowers have indicated their intent to proceed with the
transaction presented.
● The borrower can indicate an intent to proceed with the transaction in any way that he or she
chooses, unless the creditor requires a specific kind of communication. The intent to proceed
might be provided orally in a face-to-face or phone conversation or in some written format.
However, a creditor cannot interpret a borrower’s silence as an intent to proceed with the
transaction.
● Until the borrower has received the Loan Estimate and indicated an intent to proceed, a
creditor is generally forbidden from charging any fees. Prohibited fees in this early stage of
the transaction include (but are not limited to) application fees, appraisal fees and
underwriting fees.
● The only fee that can be charged prior to delivery of the Loan Estimate and receipt of the
borrower’s intent to proceed is a fee for obtaining the borrower’s credit report.
● In cases where the creditor is not charging an advance fee for the credit report, the regulation
specifically prohibits taking any credit card information or collecting a check before receiving
the applicant’s intent to proceed, even if the card is not charged or the check is not cashed.
2.37 Delivering the Loan Estimate
The creditor is required to either give or mail the Loan Estimate to a borrower no later than three (3)
business days after taking the borrower’s application.
The form does not need to be given or mailed to the borrower if the borrower withdraws the
application during that three-day period or if the application is denied by the creditor during that
period.
The three-day clock for providing the Loan Estimate begins when a creditor receives an “application.”
For purposes of complying with the TILA-RESPA Integrated Disclosure Rule, an application is
considered to have been received when the creditor has obtained the following six pieces (and ONLY
these six pieces) of information from the applicant:
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1. Name
2. Income
3. Social Security number
4. Property address
5. Estimated value of property
6. Loan amount
The application is considered to be taken when the creditor has the sixth and final piece of
information, even if that information is taken verbally from the applicant.
Be aware that although mortgage brokers may provide the Loan Estimate to borrowers, the creditor is
ultimately responsible for its delivery.
1. Requires delivery or mailing 3 business days of receipt of “application”. If the Loan Estimate is
not provided to the consumer in person, the consumer is considered to have received the
Loan Estimate three business days after it is delivered or placed in the mail.
2. Most charges on the Loan Estimate must be good for at least 10 business days from date
provided unless a new Loan Estimate is provided prior to settlement. However, this 10-
business day provision does not apply to interest rate.
3. A revised Loan Estimate must be provided within 3 business days of receiving information
establishing changed circumstances affecting settlement costs, loan terms, or the borrower
requested changes (but not less than 4 days PRIOR to closing)
4. Requires corrected disclosures to be delivered at least 4 business daysbefore loan
consummation.
5. Originator is not bound by the Loan Estimate if a borrower does not express intent to
continue with application within 10 business days after providing the Loan Estimate.
6. 3-year record retention for documenting reasons for providing new Loan Estimate.
7. If charges at settlement exceed the LE charges by more than the permitted tolerances, the
originator may cure the violations by reimbursing theborrower by the amount the tolerance
was exceeded within 60 calendar days of settlement.
8. A lender/MLO must now wait at least 7 business days after delivery of the disclosures to the
borrower before closing the mortgage loan.
9. Require corrected disclosures to be delivered at least 3 business days before closing the
mortgage if the APR on FIXED rate loans increases by more than 1/8% and on an ARM
mortgage increases by more than 1/4%.
2.38 Good Faith and The Loan Estimate
The Loan Estimate is designed to provide an accurate estimate of all settlement provider charges the
borrower can expect to incur during the course of the loan and at loan consummation. Whether the
Loan Estimate is made in good faith is determined by the difference of the initial cost estimate and
the final costs charged at loan closing.
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If the closing costs on the Closing Disclosure are:
• Greater than what was disclosed initially on the Loan Estimate, the Loan Estimate is
considered to not be made in good faith.
• Less than the Loan Estimate, the originator is considered to have acted in good faith when
making the initial Loan Estimate.
2.39 Loan Estimates and “Business Days”
Because the Loan Estimate must be provided within three (3) business days of a creditor receiving an
application, it is important to understand the definition of a “business day.”
• Within the context of the deadline for providing the Loan Estimate, a business day is any day
on which a creditor is open to the public for the purpose of conducting its regular business
activities.
• The definition of “business day” can be tricky because it isn’t identical in all federal mortgage
laws and rules. According to TILA (and other Federal Regulations, including the Closing
Disclosure “business day” is defined as all calendar days except Sundays and legal federal
public holidays.
2.40 Valid Changed Circumstances
Completing the Loan Estimate – Because the Loan Estimate is, in part, meant to replace the Good
Faith Estimate, it’s not surprising that the figures contained on the Loan Estimate must be based on an
honest assessment of settlement costs that the applicant is likely to pay.
• The amounts listed on the form must result from all the information that is reasonably
available to the creditor or mortgage broker at that time. A creditor or mortgage broker who
does not exercise due diligence when completing the form is not acting in good faith and is in
violation of the rule.
• A creditor will have acted in bad faith if amounts charged to the borrower end up exceeding
the amounts on the Loan Estimate. This presumption of bad faith will occur even if the
differences are the result of mere miscalculations or unintentional poor estimates.
Creditors may only use revised or corrected Loan Estimates when specific requirements are met.
• MAY NOT ISSUE REVISIONS to Loan Estimates because they later discover technical errors,
miscalculations, or underestimations of charges.
• MAY ISSUE REVISED Loan Estimates only in certain situations such as when CHANGED
CIRCUMSTANCES result in increased charges.
Changed Circumstances: Revisions are permitted only in certain specific circumstances. Although a
Loan Estimate may provide to the borrower in good faith, settlement charges can change
unexpectedly between the time of Loan Estimate and the closing.
These variations are permitted by the TILA-RESPA Integrated Disclosure Rule and are subject to legal
tolerance limits.
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These situations that may justify a revised Loan Estimate for the purpose of resetting the fees.
They include:
• Changed circumstances that cause an increase to settlement charges: For example, a Loan
Estimate discloses an estimated appraisal fee of $300, based upon an information given to the
lender that the subject property was a single-family dwelling.
o When the appraiser arrives, it is discovered that the property is located on a 20-acre
farm. The appraiser revised the fee to $450, based upon a different schedule of fees for
farm property.
o The lender must issue a revised Loan Estimate with the new appraisal fee or be guilty of
a tolerance violation.
• Changed circumstances that affect the consumer’s eligibility for the loan or affect the value
of the subject property: For example, the borrower applies for a loan program, which provides
for a preferred interest rate based upon a lower LTV ratio. However, when the appraisal is
completed, it is discovered that the LTV is too high to qualify for the program, triggering a
revised Loan Estimate with a higher interest rate.
• Consumer-requested changes: For example, assume that the borrower has decided to give
power of attorney to a family member to consummate the transaction on the borrower’s
behalf.
o Recording fees are not increased to account for the recording of the power of attorney.
o A revised Loan Estimate must be provided.
• Interest rate locks: If the interest rate is not locked at the time the Loan Estimate is provided,
a lender may issue a revised Loan Estimate once the rate is locked, assuming there has been a
change in rate or charges.
• Expiration of original Loan Estimate: Loan Estimates only guarantee rate and fees for 10
business days. Should the borrower fail to indicate an intent to proceed within that time the
lender may issue a new Loan Estimate with different terms and fees.
• Construction loan settlement delays: For construction loans expected to close more than 60
days after a Loan Estimate is provided, lenders may reserve the right to revise disclosures at
least 60 days prior to consummation by clearly and conspicuously stating that in the original
disclosures.
Should there be a valid changed circumstance justifying the need to issue a new Loan Estimate, the
following should be understood:
• The revised Loan Estimate must be sent within three business days of the changed
circumstance and at least four business days prior to dosing.
• A revised Loan Estimate may not be issued once the Closing Disclosure has been delivered.
• Documentation justifying the new Loan Estimate should be kept in the loan file.
Changed Circumstances that affect eligibility: A creditor also may provide and use a revised Loan
Estimate if a changed circumstance affected the consumer’s creditworthiness or the value of the
security for the loan, and resulted in the consumer being ineligible for an estimated loan term
previously disclosed.
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Examples:
• The creditor relied on the consumer’s representation to the creditor of a $95,000 annual
income, but underwriting determines that the consumer’s annual incomeis only $85,000.
• There are two co-applicants applying for a mortgage loan and the creditor relied on a
combined income when providing the Loan Estimate, but one applicant subsequently
becomes unemployed.
2.41 Tolerances
In some cases, the amounts actually charged to borrowers can exceed the amounts listed on the Loan
Estimate. This is particularly true in regard to charges from third-party service providers. However,
even these charges might have a limit to how much they can differ from the amounts on the Loan
Estimate. The amount that a particular charge can exceed the amount listed on the Loan Estimate is
known as the charge’s “tolerance.”
If the closing costs on the Closing Disclosure are greater than what was disclosed initially on the Loan
Estimate, the Loan Estimate is considered to not be made in good faith. If they are less than the Loan
Estimate, then the originator is considered to have acted in good faith when making the initial Loan
Estimate.
Zero tolerance – Some charges and fees on the Loan Estimate have “zero tolerance.” In other words,
the amount listed on the Loan Estimate cannot be less than the final amount actually charged to the
borrower. There is zero tolerance for the following items:
➢ Fees paid to the creditor, mortgage broker, or an affiliate of either
➢ Taking, underwriting, and processing the application
➢ Origination Fees, application fee, tax service fee, junk fees
➢ Discount Fees (after locking the loan)
➢ Credit to the Borrower (Yield Spread Premium) – after locking the loan
➢ Fees paid to an unaffiliated third party if the creditor did not permit the consumer to shop
for a third-party service provider for a settlement service
➢ Transfer taxes
Cumulative tolerance of 10% – Some third-party services that are charged to the borrower have a
cumulative tolerance of 10%. Although any one of these third-party service charges can exceed the
corresponding charge listed on the Loan Estimate by any amount (even above 10%), the final amount
(aggregate) for these third-party charges cannot exceed the amount disclosed on the Loan Estimate
by more than 10%. The 10% tolerance is cumulative (figured upon the sum total of all such costs) and
applies to the following charges and fees:
➢ Settlement services where the lender/MLO selects the provider (appraisal and credit
report fees). The charge is not paid to the creditor or the creditor’s affiliate
➢ Settlement services where the borrower selects the provider from the MLO’s list
➢ Title services and Title insurance if the lender/MLO selects the provider
➢ Government recording fees
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➢ A creditor may charge a consumer fee that would fall under the 10% cumulative tolerance
but was not included on the Loan Estimate, so long as the sum of all charges in this
category paid does not exceed the sum of all estimated charges by more than 10%.
No tolerance requirement – If a borrower is allowed to choose a third-party service provider and
chooses a provider who is NOT on the creditor’s recommended provider list, the cost of the service
will not be subject to any tolerance and may increase from the amount listed on the Loan Estimate
without limit.
➢ Services the borrower chooses providers (title companies, termite, survey, etc.)
➢ Impounds for Taxes and Insurance (Escrow Account)
➢ Prepaid interest (Per diem interest)
➢ Homeowner’s/Flood Insurance/Property Taxes due at closing
Remember, when a creditor allows a consumer to shop for a third-party service and the consumer
chooses a service provider not identified on the creditor’s list, the charge is not subject to a tolerance
limitation.
Fees that are greater than those listed on the Loan Estimate and exceed their allowed tolerances must
be refunded to the borrower within 60 days after consummation.
2.42 Revised Loan Estimates
In most cases, the amounts listed on the Loan Estimate cannot be changed by the creditor after the
form has been delivered. However, there are some situations in which a Loan Estimate can be
replaced with a revised Loan Estimate.
● When a revised Loan Estimate is used, the amounts on the revised form are the ones that will
be compared to the final settlement costs. The amounts on the original form will no longer
apply.
● If a revised Loan Estimate is used, it will need to be mailed or given to the borrower no later
than three (3) business days after the creditor learns of the reason for the revision.
● Note that, in all cases, a revised Loan Estimate CANNOT be provided to the applicant after the
delivery of the Closing Disclosure.
● A revised Loan Estimate is to be received at least four (4) days prior to loan consummation (as
the Closing Disclosure must be given to the borrower no more than three business days prior
to closing). This is to make sure that that the SOONEST a loan can close is seven (7) days after
the disclosures have been delivered or placed in the mail (3 + 4 = 7).
A revised Loan Estimate can be issued in the following circumstances:
● The borrower requests changes to the credit terms or the settlement.
● A previously floating interest rate is locked after the original Loan Estimate was given or mailed
to the borrower.
● A Loan Estimate has already been given or mailed to the borrower, and the borrower has gone
more than ten (10) business days without indicating an intent to proceed.
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● A “changed circumstance,” which is a special scenario that occurs or is discovered after
delivery of the Loan Estimate, and either results in higher settlement costs or a change in a
borrower’s eligibility for a loan. There are three broad categories of changed circumstances:
1. An extraordinary or unexpected event.
2. A change in the information that was reasonably relied on by the creditor when making
the Loan Estimate.
3. New information that impacts the settlement costs or the borrower’s eligibility for the
loan.
Some examples of a changed circumstance are:
➢ A title insurance company going out of business.
➢ The appraised value of the property is lower than the borrower’s original estimate of
value.
➢ A natural disaster damaging a property.
➢ A change or inaccuracy in the borrower’s stated income.
2.43 Key Terms Appearing on The Loan Estimate
Annual Percentage Rate (APR) – APR is the estimated total cost of credit over the life of the loan,
expressed as an effective annual interest rate. It includes any interest, discount points, origination
fees, mortgage insurance premiums and other costs of borrowing money.
Total Interest Percentage (TIP) – The Total Interest Percentage (TIP) discloses to borrowers the total
amount of interest that they will pay over the life of the loan, expressed as a percentage of the
original loan amount.
Waiting Periods After the Loan Estimate – A transaction cannot be consummated until seven (7)
business days after the provision of the Loan Estimate. This seven-day period starts when the creditor
delivers or mails the form (in other words, not necessarily when the borrower actually receives it).
• The definition of “business day” for the purpose of this waiting period differs from the
definition that lenders use to determine the deadline for providing the Loan Estimate. For
purposes of the seven-day waiting period, a business day is not merely any day on which a
creditor is open to the public (as in the Initial Loan Estimate) to conduct regular business.
Instead, it is any day except Sundays and federal holidays.
• A borrower can waive the seven-day waiting period in the event of a “bona fide personal
emergency.” For instance, a borrower might want to eliminate or shorten the waiting period if
the loan is needed right away in order to prevent a property from being sold at a foreclosure
proceeding.
• A borrower who wants to waive or reduce the waiting period must give the creditor a signed
handwritten statement that explains the issue and specifically requests the elimination or
reduction of the waiting period. No pre-printed waiver forms are allowed. The lender will
make the final decision on whether or not this waiver is approved.