*Using a Credit/Charge Calculation Prior to Completing Block 2 of the GFE*

Example 3(a): Charge in Block 2.

Assume a loan with a principal balance of $250,000. The lender charges $ 1,000 for

processing and administrative fees. The mortgage broker’s compensation will be $2,000

which will be fully paid by the lender. Thus, the total origination charge disclosed in

Block 1 is $3,000.

The interest rate chosen for the loan has a $2,000 credit. Loan level pricing adjustments

related to the loan result in a $2,500 charge. The resulting $500 charge would be placed

in Block 2 and box three would be checked.

The sum of Block 1 and Block 2 results in an adjusted origination charge in Line A of

$3,500.

See Example 3(a) in the March 2011 RESPA Roundup found here: http://www.hud.gov/offices/hsg/rmra/res/mlocomplrodup31811v2.pdf

Example 3(b): Credit in Block 2.

Assume a loan with a principal balance of $250,000. The lender charges $ 1,000 for an

origination fee. The mortgage broker will receive $2,000 in indirect compensation from

the lender. Thus, the total origination charge disclosed in Block 1 is $3,000.

The interest rate chosen for the loan has a $2,000 credit. Loan level pricing adjustments

related to the loan result in a $ 1,500 charge. The resulting $500 credit would be placed

in Block two and box two would be checked.

The sum of Block 1 and Block 2 results in an adjusted origination charge in Line A of

$2,500.

See Example 3(b) in the March 2011 RESPA Roundup found here: http://www.hud.gov/offices/hsg/rmra/res/mlocomplrodup31811v2.pdf