Purchase loan GFE was created for customer with usual and customary fees for a purchse. Nothing out of the ordinary was mentioned by the customer. Upon further discussions with Seller agent and customer we find out that the property is in foreclosure and the title company is including fees that are knocking us way out of tolerence. Would not knowing before hand that the property was in foreclosure be a valid change of circumstance to redisclose the title fees????

Yes, imho.
That falls under information relied upon at the time of issuing the original GFE.
How the heck didn't they tell you it was a foreclosed property?

Original Anon:

I want to think that it is too, but that is the question. How the heck didn't they tell us and maybe a better question is...should we have asked???

Would it matter that the seller is already paying a lot of these costs? In effect the borrower will be getting a credit for something they weren't responsible for in the first place.

No, not in my opinion. I'm also not sure it would be something just voluntary stated either..probably wouldn't come to mind...Hey..I'm buying a house..period.


ETA: my response was to original anon.

No, not unless it's usual and customary charges that you would not normally put on the borrower's side...anything else still goes there and still counts towards tolerance, regardless of who pays it.

I have seen situations in foreclosure where it is previous work done for the owner(bank, for instance) by an attorney that is being collected at closing and since it had nothing to actually do with the purchase transaction, it was shown on the seller's side of the HUD for that reason.

Original Anon:

Not to beat a dead horse but if the GFE is a representation of fees to be charged the Loan Officer must take into account circumstances that would affect them. A foreclosure would affect those fees so therefore they should ask. Right? The foreclosure was a circumstance that existed the whole time, us not getting that information does not change the circumstance. Oh but I so want it to be a change of circumstance.

Something just is not right here.

The rub of it also is that the borrower is not even paying these fees. The bank didn't require the use of this title company, nor did the borrower. The seller chose to pick a title company that is seemingly nickle and diming this thing to death and now the bank has to pay out that money to the borrower who isn't adversly affected by it in any way.

If the seller is requiring the use of a specific title company they are violating Section 9 of RESPA. Your borrower might be in for some money when this is all over.

Sec. 3500.16 Title companies.

No seller of property that will be purchased with the assistance of a federally related mortgage loan shall violate section 9 of RESPA (12 U.S.C. 2608). Section 3500.2 defines ``required use'' of a provider of a settlement service. Section 3500.19(c) explains the liability of a seller for a violation of this section.

Original anon:

To be specific, the seller isn't "requiring" this title company, it is the title company they picked. The seller is paying for it so I am guessing that is their call.

No, it's not their call.

2608. Title companies; liability of seller
(a) No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company.
(b) Any seller who violates the provisions of subsection (a) of this section shall be liable to the buyer in an amount equal to three times all charges made for such title insurance.

No it's NOT their call. See the post above re: violations. Per the new RESPA, it doesn't matter that they're paying. The seller doesn't get to pick. The borrower does. Often the borrower will acquiess to the seller's choice but they do not have to. Most importantly, the seller CANNOT make it a condition of the sale. If use of this title company is spelled out in the OTP or some other document, you HAVE to throw it out now or get dinged by examiners later.

original anon:

I believe it is the case where the buyer has acquiesced. The OTP does not designate the use of this specific title company that was chosen.

I'll ask again. Are the fees that are being charged for work not related to the actual purchase of this property, but prior fees the seller incurred in gaining title back to the property during the foreclosure? If so, I do not believe that is a true part of the current settlement charges, but jsut a way to recoup those charges now that the property has sold and can possibly be itemized separately and apart from the general settlement costs on the seller's side of the columns.

This is definitely one of those cases where belief is not enough. You need to be able to document what's happening and why. Examiners do not look kindly on costs skyrocketing without good cause.

Orig anon:

RR joker, these are charges that have been incurred through this transaction. I do not have the list but have a call in to the LO to get that list. Some of the charges that were listed off included notary fee, processing fee etc etc.

Orig anon:

RR joker, these are charges that have been incurred through this transaction. I do not have the list but have a call in to the LO to get that list. Some of the charges that were listed off included notary fee, processing fee etc etc.

Next question. Was this attorney on your approved list and chosen (directly or indirectly) by the borrower?

Another question is, if the fees deal directly with the seller's side for dealings with the foreclosure, why are they being put on the borrower's title work at all? While it affects the ability to close, they're not part of the title insurance or closing costs. The title company should be billing those seperately to the seller and not mudding up your borrower's title insurance bill. jmho

orig anon:

I am going to be taking a closer look at these stmts as soon as they are sent to me. The buyer's title is $275. The rest of it is being paid for by the seller. THat is just how it works here in WI. We disclosed $500+ on the GFE and the actualy costs turned out to be $1,800+. I don't want to have to "eat" costs if I don't have to. The way I see it we are on the hook. Just like we were for RE Transfer Taxes. If we didn't disclose them correctly or at all we ate the costs and credited the buyer even though they are paid for by the seller.

If you're in WI you shouldn't be putting transfer taxes on the GFE or curing for them EVER. There's a state law here (Stat 77.22)that says the seller must pay them.

You say you showed $500 on the GFE for buyer's title and the bill is $275. Does that $275 include the closing costs and administration fees the borrower would normally pay?

In this situation, I still contend that title costs incurred by the seller to regain title do not belong rolled into one total title bill. That's like saying the deed prep has to go on the GFE and the buyers side. It doesn't. It's a cost to the seller from beginning to end. Get the title company to break out the billing on this.

Still not answered. I also asked TR's most recent question and it never was really answered either...it would help us help you if you could answer these particularl questions as they weigh heavily on the end result.as follows:

RR joker, these are charges that have been incurred through this transaction. I do not have the list but have a call in to the LO to get that list. Some of the charges that were listed off included notary fee, processing fee etc etc.

orig anon:

I just would like to thank you all for your responses. I am kind of new to this and appreciate your patience as most of the time my answers are not clear. That being said here are the line item costs from this loan.

From the GFE
Line item 1101 Title services and lenders title ins. $225
From the HUD: $810
Itemized fees from HUD: Notary fee $150, Recording Processing $50, Tax Research $35, Settlement Fee $225, Lender's coverage $275, Endorsements $75.

From the GFE
Line item 1103 Owner's Title Insurance $575
From the HUD: $1,770 (no itemization)

The buyer was given a list of Title companies to pick. Did the buyer have an influence on what title co. was picked? Not sure. They probably just acquiesced to the seller on that determination.

My question is, why do we have to disclose a fee on the GFE that will be paid by the seller?

Not understanding- GFE is Blocks. Numbered lines are on the HUD. You don't itemize title fees on the HUD either.

RESPA requires you to put the costs of the lenders in block 4 and the owners in block 5 on the GFE. (See FAQ on these sections) On the HUD, you put the cost of the policies on the buyers side and give a seller's credit back on p.1.

Orig anon:

Oops...The GFE Title services and Lenders ($275) was in box 4 and Owners title was in block 5 ($575)

the itemization was found on a supplemental page from the preliminary HUD 1 settlement statement provided by the Settlement Agent.

On our purchase HUD we did place the Owners title on the buyers side line #207 and on the seller side #507 on page 1.

But..was the closing company ON your list?

[If so, I'll give you my further opinion on the GFE fees listed.]