Completing a GFE with "P.O.C"
by John Burnett and Dan Persfull, BOL Gurus Guru BIOS
Question: When disclosing hazard insurance as "p.o.c." on the Good Faith Estimate, does it matter where the dollar amount of the premium is listed? We currently disclose 0.00 in the amount column and include the premium amount immediately to the right of "p.o.c." We are in the midst of implementing an on line application that includes on line disclosures. The vendor of this product includes the dollar amount of the premium in the amount column on the Good Faith Estimate. Since this is different from what we've been doing, we are trying to determine if this is acceptable under RESPA. There doesn't seem to be anything that specific in RESPA regarding completion of the GFE, just disclose as "p.o.c."
Answer by John Burnett: The instructions for the GFE generally require you to adhere to the specifics of the instructions for completing the HUD-1/1A. Those instructions make it pretty clear that the dollar amounts for POC items are not to be placed in the buyer or seller columns, but instead on the appropriate line next to the columns.
Answer by Dan Persfull: The GFE is to show all charges that will be payable at or before the loan's settlement. 3500.7(c).
In my opinion the total on the GFE would be the total of all charges that will be required to be paid at or before settlement. This gives the applicant an estimate of how much money they will need to pay all settlement charges.
They are not included in the "settlement" charges on the HUD 1 or 1A because they have already been paid and do not need to be deducted from the settlement proceeds or collected at settlement. But, because they are settlement charges, they do have to be disclosed on the HUD as POCs.
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