Survey Shows Impact of New RESPA Requirements on Lenders
February 22, 2011
ClosingCorp, an independent real estate information and data services company, and Broker Banker Magazine released results of a survey of loan originators to determine what effects the recent RESPA requirements for Good Faith Estimates (GFEs) have had on their business. More than half of the survey respondents were mortgage brokers.
Fifty-two percent said they call service providers to get pricing, 40 percent said they look up pricing information on internal tables and templates, 33 percent said they research vendors and prices online, and 33 percent said they use personal referrals or a bank list of preferred vendors. (Respondents were able to select more than one category.)
Sixty-four percent of the respondents said it takes up to an hour to gather the necessary information to prepare a GFE, and 22 percent said it takes between one and three hours. Fifty-two percent reported that up to 50 percent of their closed loans have resulted in tolerance violations, with fines ranging from $50 to $250 per loan. Ninety-five percent said they inflate their GFEs to avoid tolerance violations.
“Since RESPA requirements for Good Faith Estimates went into effect, loan originators have spent millions of dollars when you factor in the increased time it takes to process each GFE, the loss of business to competitors due to overestimating, and the cost of tolerance violations,” said Paul Mass, president of ClosingCorp. “Given these factors, partnering with a technology vendor is a sound business decision because the potential cost savings are enormous. When evaluating vendors, originators should expect real-time pricing data for Blocks 3-8 of the GFE, seamless integration with popular LOS platforms, and risk assumption with a compliance guarantee.”
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