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#1405980 - 06/21/10 01:41 PM Buyer pays Seller Expense GFE Disclosable???
deh Offline
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We have a situation where we disclosed the initial GFE as usual. Later when we receive the Purchase Contract it states that our buyer is going to pay $3,000 of the seller's closing cost. Is this something we have to worry about disclosing on the GFE because it is spelled out in the purchase contract???

If we do need to disclose it I would assume this would be a changed circumstance.

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RESPA
#1406014 - 06/21/10 02:26 PM Re: Buyer pays Seller Expense GFE Disclosable??? deh
Truffle Royale Offline

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Seller paying anything is never reflected on the GFE nor is it a changed circumstance. RESPA spells out that you must give the GFE prior to obtaining any verification docs, including the OTP.


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#1406026 - 06/21/10 02:39 PM Re: Buyer pays Seller Expense GFE Disclosable??? Truffle Royale
deh Offline
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Thanks. I wasn't sure since this is a little different in that the purchase contract stated our buyer was responsible for the seller costs. Appreciate your quick response!

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#1406114 - 06/21/10 04:17 PM Re: Buyer pays Seller Expense GFE Disclosable??? deh
David Dickinson Offline
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I'm with Truffle. Issue the GFE following the "normal and customarily" concept. THEN look at the purchase agreement and issue a revised GFE, if necessary.
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#1406125 - 06/21/10 04:32 PM Re: Buyer pays Seller Expense GFE Disclosable??? David Dickinson
Truffle Royale Offline

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Ooops, sorry, you said buyer paying. Doesn't change my answer tho.
Keep in mind, only the things that are a part of getting the loan go on the GFE. If the buyer is paying the seller to leave the washing machine, that doesn't go on the GFE, right? So the buyer paying the sellers costs wouldn't either. It will be on the HUD but not on p 3.

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#1406202 - 06/21/10 06:17 PM Re: Buyer pays Seller Expense GFE Disclosable??? Truffle Royale
David Dickinson Offline
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I agree. Only "Settlement Services" (see the definition in RESPA) required by the lender go on the GFE. Everything in connection with the loan goes on the Settlement Statement.
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#1406518 - 06/22/10 02:15 PM Re: Buyer pays Seller Expense GFE Disclosable??? David Dickinson
deh Offline
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I just printed out the definition of "Settlement Services" per the reg. I agree with with every other description provided under "Settlement Services", but thought the very last one could be a little gray in its interpretation. What is your take?

HUD's Reg X

Sec. 3500.2 Definitions

(15) Provision of any other services for which a settlement service provider requires a borrower or seller to pay.

Our Underwriter is making this an exception and wants the item put on the HUD as a lender paid credit because it was not disclosed on the GFE.
Last edited by deh; 06/22/10 02:18 PM.
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#1406543 - 06/22/10 02:51 PM Re: Buyer pays Seller Expense GFE Disclosable??? deh
Truffle Royale Offline

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What item is the Underwriter talking about? The buyer paid credit required per the OTP? That absolutely does not belong on the GFE.

The section you quote says 'other services for which A SETTLEMENT SERVICES PROVIDER requires a buyer or seller to pay.' What settlement service provider is requiring the buyer to pay the credit? None. The credit is required as a condition of the Offer to Purchase.

Why is an underwriter deciding how to prepare a HUD anyway? Seems way outside their purview.

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#1406559 - 06/22/10 03:12 PM Re: Buyer pays Seller Expense GFE Disclosable??? Truffle Royale
deh Offline
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This is the deposition from the loan officer and it is our Underwriter. I thought it might be a secondary market Underwriter.
SITUATION: I prepared a GFE/TIL prior to having contract in hand. Borrower made no mention of paying up to $3000 of the sellers closing costs and subsequently I have discovered that they agreed to do just that and it is spelled out in the contract. This $3000 was not disclosed in the initial GFE/TIL because I wasn’t aware of it at the time.

UNDERWRITING: Our underwriting findings require that we use a lender credit to cover the $3000 as it was not disclosed up front.

Thanks for clarifying.

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#1406589 - 06/22/10 03:39 PM Re: Buyer pays Seller Expense GFE Disclosable??? deh
Truffle Royale Offline

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deh, from the FAQs, The GFE is defined as '...an estimate of settment charges a borrower is likely to incur in connection with the settlement.' (p.13)

The items your buyer is paying for the seller are 1) Seller charges and 2)incurred in connectin with the purchase not the settlement. These charges CANNOT be shown on the GFE.

Your underwriter is incorrect to require a lender credit. I urge you to contest this because the bank is in no way liable for the $3000 charge.

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#1406714 - 06/22/10 05:40 PM Re: Buyer pays Seller Expense GFE Disclosable??? Truffle Royale
RR Joker Offline
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Well wait a minute. What items were not included on the GFE that the lender is requiring for settlement? If those items were all disclosed on the GFE properly, then no harm no foul, however...if the lender omitted charges that either 1) are typically paid by the buyer, or in some categories (like Transfer Tax ) CAN be paid by the buyer, even if usually paid by the seller were left off, then I agree you have a problem.
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#1406742 - 06/22/10 06:17 PM Re: Buyer pays Seller Expense GFE Disclosable??? RR Joker
Truffle Royale Offline

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Per deh's first post, nothing the lender is requiring for settlement was left off the GFE. The buyer is paying some of the seller's closing costs per the OTP. David and I concur that the GFE issued in the standard and customary manner was correct. Specific conditions of the OTP do not go on the GFE and are not cureable items on the HUD.

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#1406777 - 06/22/10 06:39 PM Re: Buyer pays Seller Expense GFE Disclosable??? Truffle Royale
deh Offline
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Thanks for your help! We are contesting.

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#1406853 - 06/22/10 08:26 PM Re: Buyer pays Seller Expense GFE Disclosable??? deh
RR Joker Offline
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The Swamp
I see that now, TR..."issued as usual".
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#1407787 - 06/24/10 06:21 PM Re: Buyer pays Seller Expense GFE Disclosable??? RR Joker
West Coast Comp Offline
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Lost in the rain.
Tell the UW to back off. The buyer can credit the seller without it being on the GFE (it actually shouldn't be).
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