Q: Once a GFE is issued are there any circumstances under which the loan terms or charges can change?
A: Yes. The loan terms or charges can change in the event that there are changed circumstances. "Changed circumstances" is now defined in § 3500.2 as: (1) Acts of God, war, disaster, or other emergency; (2) Information particular to the borrower or transaction that was relied on in providing the GFE and that changes or is found to be inaccurate after the GFE has been provided, which information may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property, or any other information that was used in providing the GFE; (3) New information particular to the borrower or transaction that was not relied on in providing the GFE; or (4) Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems. None of the information collected by the loan originator prior to issuing the GFE may later become the basis for a "changed circumstance" upon which a loan originator may offer a revised GFE, unless the loan originator can demonstrate that there was a change in the particular information or that it was inaccurate, or that the loan originator did not rely on that particular information in issuing the GFE. In addition, the loan originator is presumed to have relied on the borrower‘s name, the borrower‘s monthly income, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any information contained in any credit report obtained by the loan originator before providing the GFE. The loan originator cannot base a revision of the GFE on this information, unless it changed or is later found to be inaccurate.
This can be found in GFE-Changed Circumstances – FAQ #1 of HUD’s FAQs. HUD’s FAQs can be found at http://www.hud.gov/offices/hsg/rmra/res/respa_hm.cfm