The HUD RESPA FAQs (Page 33, Q 7) says that Q: "if it's common practice in the locality to charge both the borrower and seller a separate charge for the service of conducting settlement, how should the charges for that service be disclosed on the GFE? A: The charge to the borrower for conducting the settlement must be included in the total for Block 4 for the GFE. Charges that the seller pays as a matter of common practice and experience are not included on the GFE."

The FAQs for preparing the HUD-1 Settlement statement Page 54, Q 16 indicates that "the total in the borrower's column on Line 1101 must include any amount for conducting settlement that was paid by another person on behalf of the borrower." The Answer then goes on to indicate how to make the credit for the borrower and the charge for the seller.

Doesn't following the FAQs answer about the GFE cause a tolerance problem on the HUD-1 for closing costs? For instance if the total cost of settlement is $1,000 and you've only disclosed $500 on the GFE, isn't there a tolerance problem? Any help you can give me is much appreciated.

We only list the borrower portion on the GFE. In your example the GFE would show Borrower $500.00 and the HUD would show the total amount of $1,000.00 with $500.00 in the borrower column and $500.00 in the seller column. I guess our system knows that only items listed in the borrower column are to be put in the comparison chart.

Thanks JLRoberts for the response, but what concerns me is the FAQs for the HUD-1 state that the TOTAL IN THE BORROWER'S COLUMN ON LINE 1101 MUST INCLUDE any amount for conducting the settlement that was paid by another person on behalf of the borrower. Therefore, the entire $1,000 should be in the borrower's column, not split between the borrower and the seller. Any other thoughts?

With our closing the other $500.00 wouldn't be the borrowers cost paid by the seller. Many title companies in our area charge both the buyer and seller a settlement fee. If your borrowers fee is $1000.00 and the seller agreed to pay half then you would put the whole amount on line 1101 and give a seller/borrower credit in 204-209, 506-509. That is how we are interperting the reg. I'd be interesting in how others are interperting that FAQ.

I see what you are saying. Dan or David - Do either of you have any thoughts? We respect your opinions!!

Anyone?

Not sure what else you're looking for, Cloud9. We have no idea why or how your software would get $1000 to put on p3 if the borrower's charge is only $500. If the common and customary charge to the borrower is $500 and that's what the borrower pays, p3 would be fine because the seller's portion is not counted into the tolerance levels.

We have the same situation right now with an attorney preparing the HUD. We have a tolerance issue because the attorney fee on the GFE was only the buyer/borrower's portion. The HUD includes the seller's portion & they attorney has shown a credit on the first page. I'd love to know what's right!! I understand the FAQ's but when that creates a tolerance issue, do we still have to re-disclose?

As I said when you posted this in the Lending forum, you cannot redisclose because a fee goes up.
You can only redisclose due to a valid changed circumstance.

Things like Deed Preparation are always seller's costs and should never be included in the GFE or on the buyer's side on the HUD.

Do you know yet which FAQ or RESPA section the attorney is basing his argument for lump sum disclosure on?

Thank you!!

To add to my confusion, our legal counsel just told me that the tolerance is based on the entire total of the fees, regardless of who pays them. So even if the seller is paying the deed, it's still considered in the tolerance. That's news to us & our software is wrong!

To which I say to your legal counsel respectfully, 'bologna!'
Go back to the first post in this thread.

If they're not included on the GFE, how can they be part of the tolerance comparison? What is your legal counsel basing his opinion on?

As to your software being wrong, more than one attorney probably weighed in on that not to mention how all the software providers held off and really worked to get it right. The only errors I've found on software, especially this late in the game, have been minor.

Sorry but I think you're getting some bad advice. I know how had it is to fight that too. I'm going to go dig a bit more in the FAQs and see if I can find some more supporting documentation for you.

Hold on a minute. The legal people may have a point. See FAQ #13 in the Section 4&5 part. The part is that the borrower gets the tolerance cure no matter who paid for the service. Also, FAQ #3 in the HUD-1 Page 3 section makes it clear that POC items are still included in the tolerance comparison charts.

The general rule for preparing the GFE is "who or when a fee is paid is not a factor". For instance, 100% of Owner's Title Insurance is always listed on the GFE no matter if it is common practice to have the seller pay 50% of it.

David, we're not talking about title insurance here.
Why would deed preparation ever be on the GFE? Further, if it's not on the GFE, why would it be included in the tolerance?

complofcr posted this in the Lending forum too and listed the fees the attorney was including. See if you still think he's right after reading that.

I guess I didn't see where you discussed deed preparation.

Just because something isn't on the GFE doesn't mean it doesn't go on the tolerance chart - you may have forgotten to list a fee on the GFE.

Why wouldn't Deed preparation go on the GFE? The only reason would be if it is common practice for the seller to pay this fee.

As Cloud posted in the very first post to this string:
"if it's common practice in the locality to charge both the borrower and seller a separate charge for the service of conducting settlement, how should the charges for that service be disclosed on the GFE? A: The charge to the borrower for conducting the settlement must be included in the total for Block 4 for the GFE. Charges that the seller pays as a matter of common practice and experience are not included on the GFE."

Here's the other thread discussing this issue, David. fwiw, I totally agree with your post above.

This particular attorney seems to be lumping additional stuff in that the bank didn't disclose on the GFE because they're not normally borrower charges. I'd have a problem with an attorney telling me I was going to have to cure for items I know should not be on the buyers' side especially to the point of telling me my software is wrong. Sorry but at this point, I'd bet on my software being right over one single attorney.

I agree with your statement about the attorney's extra fee.