Loan Originators No Longer Able To Waive Fees As Of April 1 2011

Pic credit to Renjith Krishnan

As of April 1, 2011, the lender/loan originator compensation law kicks in.

This is not good for consumers.

We’ve all had those transactions where at the close of escrow the buyer is short closing costs or wants lender fees to be waived in order for the deal to close and usually the lender/originator obliges in some way shape or form, and the deal closes.

However, part of the new lender compensation rule, is that once the GFE has been given, the lender must stick to it.  If the buyer is short to close escrow, the lender/originator can no longer waive fees.  If an originator waives fees after April 1, 2011, there will be ramifications imposed by the NMLS and the originator can lose their license.  This is not just valid for a California mortgage, it’s nationwide and it affects purchase loans as well as refinance loans, first time homebuyers, and repeat homebuyers.

This means some deals may die at the closing table.  So it’s important for the originators and Realtors to know that things are changing after April 1st, and that if the borrower refuses to pay a previously disclosed lender fee at closing, the deal will not fund since the lender can no longer waive fees that were previously disclosed.

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Kevin Walton

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