by Alex Parker, DocuTech Compliance Specialist
Worksheets seem to be an item of interest among mortgage originators since the implementation of the new Good Faith Estimate at the beginning of the year. DocuTech’s compliance department has received many inquires about worksheets and recently HUD has given some guidance for those wishing to use worksheets in their initial disclosure packages. This short article will describe the uses for worksheets and review some of the recent instructions from HUD about how to properly use worksheets during the origination process.
A worksheet is a document used by loan originators that provides information about fees and interest rates associated with a mortgage loan. The document may also be used to give the borrower information that is not contained in the new GFE such as the overall cost of the transaction or the estimated amount the borrower will need to bring to the closing. Many lenders and borrowers have been frustrated by the lack of information included on the new GFE and have decided that worksheets are the best way to provide additional information about the transaction. For these reasons many DocuTech customers have requested to have worksheets added to their loan packages. Due to the increased use of worksheets HUD has issued some recent guidance on the use of worksheets. The April 2, 2010 RESPA Rule FAQs and the March 18, 2010 RESPA implementation briefing are good sources of information about the use of worksheets, these documents can be found at www.hud.gov/respa.
The FAQ addresses two issues on the use of worksheets. The first is whether a loan originator can give the borrower a worksheet for a rate quote if they have not provided all the information necessary to trigger the use of a GFE. HUD answered that such use was permissible as long as the following conditions were met:
- The worksheet should never look like a GFE and should not lead the customer to believe it is a GFE.
- A worksheet should never be used in lieu of a GFE.
- When a loan originator receives enough information to complete an application they must issue a GFE.
The second FAQ addresses whether a worksheet can be used in conjunction with a GFE. HUD responded that a worksheet can be used in conjunction with a GFE to provide additional information about the loan such as the amount of cash needed to close, seller credits and other non-loan transactions fees that would be useful to the consumer. In the March 18th webinar HUD also clarified that a GFE should always be provided if the customer asks for a GFE, and that a consumer should never have to show €œintent to move forward€ to receive a GFE.
The use of worksheets can be an effective tool to help the consumer understand the details of the mortgage transaction, it can also be helpful for originators to keep track of information that is not included on the GFE. As long as originators pay close attention to the HUD guidance on worksheets they should be able to deliver them in a manner that is both compliant and useful for originators and consumers.