Posted by GMann on September 15, 2004 at 13:58:29:
Nope…Owner occupied refis only.
Read the first sentence. “If you’re REFINANCING your mortgage or applying for a home equity installment loan”. All compliance officers will tell you that this applies to the primary residence only.
Since no major lenders allow Section 32, most people are unfamiliar with the Section 32 laws.
You need to ask someone that has been in the mortgage industry for at least 7-10 years. They were around when it was an issue. Not only for the points >=8%, but when rates were high and you had a C or D customer, you sometimes hit the APR threshold of 8% over the corresponding treasury.
The closing costs on this are 6%…how is that excessive? Standard rates on a loan are 6% of the loan amount. Yes 4% for the broker is a little steep…but on a small loan you have to charge more points to make the money for it. Now on a $200,000 loan I would understand only charging 2 points, and your making more money then on this one. Small loans will always get charged more. Is it the same amount of work for less money? I don’t think so.
Posted by Devon on September 13, 2004 at 16:41:44:
You might be running close into section 32… i will be surprise if teh bank will actually let you get away with this. Sectoin 32 is a high cost loan, and that is all teh broker, title and lender fees may not exceed 5% of your loan amount… if the broker fee is already 4%… once the lender sees the fee sheet it will not fly. Actually… what state are you in, I believe it varies by state.
Posted by GMann on September 14, 2004 at 10:37:10:
Section 32 (federal law) shouldn’t be an issue unless you have a >15% rate on a 30 yr. loan. Section 32 starts at >8% of total fees (not including settlement costs).
Some states have legislated a lower % cap on fees (NC, NY, IL, SC…etc.)
I would look at the Good Faith Estimate and see what the total of Broker Fee, Origination Fee and Yield Spread Premium and if the total is more than 3% ask the broker to lower fees. 3% is on the high side, but if your loan was difficult they would earn it.
I am in Florida the broker told me the total cost of closing wouldnt exceed 5% but what I’m wondering is why is his fee double the cost to close and it was the lender who sent me a copy of the estimate to close.
Posted by GMann on September 14, 2004 at 22:19:54:
Sometimes the lender will overdo the fees. This is a separate Good Faith Estimate than from the broker. They both have to give you a GFE, but the lender wants to make sure and overdisclose to stay in compliance. Over is okay, under means re-disclose.
Get the original GFE from the broker and ask him if about the difference in fees from his and the lenders. You will probably get the same answer I gave you about the lender’s GFE.
Posted by GMann on September 15, 2004 at 09:19:54:
I am not an attorney and this is not legal advice…Seek an attorney for legal advice.
Section 32 covers O/O refis. Does not apply to O/O purchase or Non-owner purchase or refi. All assume 1-4 units.
I don’t have any links to info on Section 32. More than likely your state has more restrictive laws than on the federal level. You can go to your states site and get info on the mortgage laws. If you aren’t into reading 100’s of pages of legal garb, you can call the state dept. that governs mortgages and ask for the compliance division. They will be able to answer specific questions.