(2) The Affiliated Business Arrangement (AfBA) exemption requirements, set forth in § 3500.15, remain in effect when a borrower is referred to a packager by a person or entity not otherwise participating in the guaranteed mortgage package who is an affiliate of the packager or any participating settlement service provider. (3) The exemption in this section shall not apply to a settlement agent that collects amounts for packaged services that exceed the Guaranteed Loan Settlement Charge in the guaranteed mortgage package agreement. (f) Guaranteed Loan Settlement Charge Over-Collection This subsection describes the procedures that must be followed if the packager provides the borrower with a guaranteed mortgage package agreement and the borrower believes in good faith that the amount of the guaranteed loan settlement charge disclosed on the HUD-1 or HUD 1-A erroneously exceeds the amount of such charge in the guaranteed mortgage package agreement. (1) Definitions (A) Guaranteed loan settlement charge over-collection. For purposes of this subsection, a guaranteed loan settlement charge over-collection is any excess of the guaranteed loan settlement charge collected or to be collected at settlement over the guaranteed loan settlement charge disclosed in the guaranteed mortgage package agreement, except that a guaranteed loan settlement charge over-collection does not include any increase in costs that is attributable to a request by the borrower for a change in the amount or terms of a loan after the packager has provided a guaranteed mortgage package agreement or to the borrower selecting a settlement service provider other than that generally used by the packager for packaged services. (B) Guaranteed loan settlement charge over-collection notice. A guaranteed loan settlement charge over-collection notice is a written correspondence (other than notice on a payment coupon or other payment medium) that— (i) is received (I) by the settlement agent at or before settlement; or (II) by the packager that made the guaranteed mortgage package agreement, not later than one year after settlement (the packager may designate to the borrower a specific address to which this notice should be sent); (ii) enables the person receiving the notice to identify the borrower's name, account number and address to which a refund may be sent; and (iii) includes a statement of the amount of the alleged guaranteed loan settlement charge over-collection. (2) Action with respect to the guaranteed loan settlement charge over-collection notice. (i) correct the alleged over-collection at or before settlement, and revise the (ii) forward the guaranteed loan settlement charge over-collection notice to such (B) If the guaranteed loan settlement charge over-collection notice is received by the (i) refund the amount of the guaranteed loan settlement charge over-collection to (ii) if the packager concludes that no over-collection occurred or that any over- (A) the over-collection is corrected at or before settlement pursuant to clause (f)(2)(A)(i); (C) the packager concludes, after conducting an investigation that no over-collection (4) Willful and Fraudulent Misconduct. Notwithstanding the guaranteed loan settlement (g) Loss of Safe Harbor. The loss of the safe harbor exemption because of an un-cured over-collection of guaranteed loan settlement charges affects the packager, the settlement agent and, if the packager is not the lender, the lender, but does not affect participating settlement service providers uninvolved in the settlement. (h) Preemption of state law. Pursuant to section 18 of RESPA, the Secretary determines that the guaranteed mortgage package offered pursuant to this section is more beneficial for and gives greater protection to the consumer than any related state law. Therefore, the provisions of this section preempt any state law that conflicts with or frustrates the purpose of the offering of guaranteed mortgage packages under this section, including, but not limited to, state laws (1) imposing disclosures, (2) limiting fees (including loan related and referral fees) and rebates, (3) limiting the use of affiliated or unaffiliated providers, and (4) imposing advertising restrictions. The Secretary hereby finds that all such laws are inconsistent with the provisions of this section. Sec. 3500.19 [Amended] 8. In § 3500.19(c) the cross-references to "§ 3500.16" and to "section 3500.16" are both revised to read "§ 3500.20". Blackline of CMC Recommended Changes To HUD's Proposed Regulation [[49158]] VI. Rule Language List of Subjects in 24 CFR part 3500 Consumer protection, Condominiums, Housing, Mortgagees, Mortgage servicing, Reporting, and recordkeeping requirements. Accordingly, for the reasons set out in the preamble, part 3500 of title 24 of the Code of Federal Regulations is proposed to be amended as follows: 1. The authority citation shall continue to read as follows: Authority: 12 U.S.C. 2601 et. seq.; 42 U.S.C. 3535(d). 2. In § 3500.2, paragraph (b) is amended by revising deleting the definitions definition of Application, revising the definitions of Good faith estimate, and Mortgage broker and adding the following definitions of Final application, Final mortgage insurance costs disclosure, Guaranteed mortgage package, Loan originator, Loan settlement charges, Mortgage broker loan, No tolerance, Packager, Packaged services, Participating settlement service provider, Par value, Tolerance, Shopping application, and Unforeseeable and extraordinary circumstances; and Zero tolerance: Sec. 3500.2 Definitions. (b)** Application Final application means the submission, upon acceptance of a guaranteed mortgage package agreement or a good faith estimate, of credit information (Social Security number, property address, basic inceme information, the borrower's information on the house price or a best estimate on the value of the property, and the mortgage loan needed) by a borrower in anticipation of a credit decision, whether oral, written or electronic, relating to a federally related mortgage loan. If the submission does not state or identify a specifie property, the submission is an application for a prequalification and not an application for a federally related mortgage loan under this part. The subsequent addition of an identified property to the submission converts the submission to an application for a federally related mortgage Lean: *Final mortgage insurance costs disclosure means the disclosure described in § 3500.14(g)(1)(ix)C). Good faith estimate means an estimate of settlement costs on the required format prescribed at Appendix C to this part prepared in accordance with $3500.7. **** *§ 3500.7 ||49159||||49159|| Guaranteed loan settlement charge means an aggregate amount directly charged to the borrower for packaged services. Guaranteed loan settlement charge does not include (i) any charge of a type payable in a comparable cash transaction, (ii) lock-in fees, (iii) any amount charged to satisfy underwriting conditions, including conditions regarding the mortgage property's compliance with applicable laws and ordinances. (iv) any amount charged by a borrower-selected settlement service provider if different from the packagerselected provider of that service, and (v) charges due to unforeseeable and extraordinary circumstances, Guaranteed mortgage package means a guaranteed package of mortgage related settlement services and an interest rate guarantee loan settlement charge, estimated other required costs, and a conditional interest price (including both interest rate and discount points) for a federally related mortgage loan that is offered to a consumer under a Guaranteed Mortgage Package Agreement (GMPA) in accordance with § 3500.16. Loan originator means a lender or mortgage broker. Mortgage broker means a person or entity that renders origination services in a table funding or intermediary transaction. Where a mortgage broker is the source of the funds for a transaction, the mortgage broker is a "lender" "lender" for purposes of this part. Mortgage broker loan is a federally related mortgage loan that is originated by a mortgage broker. No tolerance means that the charges-may vary without being subject to any tolerance. Packager means a person or other entity that offers and provides guaranteed mortgage packages to borrowers in accordance with § 3500.16. Packager does not include a person or entity whose organizing charter does not permit engaging in primary mortgage market activities. Packaged services are settlement services that the lender requires for settlement and includes all services except per diem interest, hazard insurance, escrow/reserves, mortgage insurance, flood insurance, and optional settlement services. Participating settlement service provider means a settlement service provider that provides settlement packaged services in a guaranteed mortgage package and whose charges are ineluded in not imposed separately from the guaranteed mortgage package price loan settlement charge. Par value means the principal amount of the loan. Shopping application means the submission, together with any applicable fee, of credit information (Social Security number (including authorization to order a credit report with such number), property address, basic income information, the borrower's information on the house price or a best estimate on the value of the property, the mortgage loan amount and product type, and other reasonably requested information) by a borrower in anticipation of a guaranteed mortgage package offer or a good faith estimate, whether oral, written or electronic, relating to a federally related mortgage loan. If the submission does not state or identify a specific property, the submission is not a shopping application for a federally related mortgage loan under this part. The subsequent addition of an identified property to the submission converts the submission to a shopping application for a federally related mortgage loan. · * *Tolerance means a variation above an estimate of a category of settlement costs. Tolerance is expressed as a percentage of the estimate. Unforeseeable and extraordinary circumstances means acts of God, war, disaster, or any other emergency, making it impossible or impractical to perform. Zero tolerance means the amount listed may not vary at closing, except in unforeseeable and extraordinary circumstances. 3. In § 3500.7, the first sentence of paragraph (a) introductory text and (a)(2) through (e) are revised, paragraph (f) is redesignated as paragraph (g); and a new paragraph (9), paragraph (a)(1) and the first sentence of paragraph (b) are revised, and a new paragraph (g) is added to read as follows: Sec. 3500.7 Good faith estimate (a) Lender to provide. Except as provided in paragraphs (a); or (b) er(f) of this section, or where a guaranteed mortgage package agreement is provided in accordance with § 3500.16 of this part, the lender shall provide all applicants for a federally related mortgage-lean borrowers who submit a shopping application with a good faith estimate of the amount of or range of charges for the specific settlement services the borrower is likely to incur in connection with the settlement. The lender shall provide the good faith estimate required under this section (a suggested format is set forth in appendix C of this part) either by delivering the good faith estimate or by placing it in the mail to the loan applicant, not later than three business days after an the shopping application is received or prepared. If the application is denied before the end of the three-business day period, the lender need not provide the denied borrower with a good faith estimate. A lender shall not collect any fee in connection with the application or for providing the good faith estimate beyond that which is necessary to provide the good faith estimate. ***24(1) If the shopping application is denied or withdrawn before the end of the three business day period, the lender need not provide the borrower with a good faith estimate (2) For all mortgage loans, third party settlement-services, governmental fees and charges, any other loan-related expenses that are not paid to and retained by the originator must be reported in their entirety in the appropriate categories on the good faith estimate. (b) Mortgage broker to provide. In the event an Except where a guaranteed mortgage package agreement is provided in accordance with 8 3500,16 of this part, in the event a shopping application is received by a mortgage broker who is not an exclusive agent of the lender, the mortgage broker must provide a good faith estimate by delivering the good faith estimate or by placing it in the mail to the loan applicant, not later than three business days after an a shopping application is received or prepared. As long as the mortgage broker has provided the good faith estimate, the funding lender is not required to provide an additional good faith estimate, but the funding lender is responsible for ascertaining that the good faith estimate has been delivered. If the shopping application is denied or withdrawn before the end of the three-business-day period, the mortgage broker need not provide the denied borrower with a good faith estimate. A mortgage broker shall not collect any fee in connection with the application OF for providing the good faith estimate beyond that which is necessary to provide the good faith estimate. (e) Mortgage Broker Fee Agreement (1) General. Except where a guaranteed mortgage package agreement is provided in (2) Content of mortgage broker see agreement. The mortgage broker fee agreement shall (i). An explanation of the nature of the relationship between the applicant(s) and the (ii) An explanation of how and to what extent, if any, the applicant's decisions in (iii) The maximum amount of mortgage broker compensation, expressed as a dollar tgage, contains |