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#1536702 - 04/18/11 03:33 PM Failed to disclose fee on GFE
complygirl Offline
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Refinance of home loan secured by two different properties and a vehicle. Bank inadvertantly failed to disclose flood fees for the second property and VSI fee for the vehicle on the GFE. What must we do now?

We must include these fees on the HUD statement and since we'll be out of tolerance, we'll have to eat these fees, correct? How is all of this disclosed on the HUD?

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#1536782 - 04/18/11 04:39 PM Re: Failed to disclose fee on GFE complygirl
Dan Persfull Offline
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Bloomington, IN
These fees should fall within the 10% category therefore you will cure only if they throw you out of tolerance.

Page 3 will show $0 in the GFE column and the actual charge in the HUD column.

The cure if applicable will be shown in the 200 series on page 1.
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#1536827 - 04/18/11 04:59 PM Re: Failed to disclose fee on GFE Dan Persfull
complygirl Offline
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Very few fees are being charged on this loan, so failure to disclose the flood fee (for second property) and VSI fees do throw us outside of the 10% allowable tolerance. So we will have to cure.

Is there a specific way this needs to be listed in the 200 series on the HUD? Should they be lumped together or listed separately?

Also, are we required to disclose an updated GFE, even though it won't correct the tolerance violation? Thanks.

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#1536886 - 04/18/11 05:44 PM Re: Failed to disclose fee on GFE complygirl
#Just Jay Offline
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You may lump sum cure for the 10% items.

No need to issue a new GFE since you have no valid reason/changed circumstance for doing do.
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#1537376 - 04/19/11 03:54 PM Re: Failed to disclose fee on GFE #Just Jay
complygirl Offline
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Is there a particular way this must be itemized on the HUD?

Also, since we failed to list these fees on the GFE are we required to cure for the entire amount or just the amount over the 10% tolerance (since these fees fall into the 10% category)?

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#1537384 - 04/19/11 03:58 PM Re: Failed to disclose fee on GFE complygirl
Dan Persfull Offline
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The charges would have to be shown on the appropriate HUD line and the comparison chart on page 3 under the HUD column. The cure will be shown in the 200 series on page 1.

You only have to cure the amount in excess of the 10% tolerance.
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#1537392 - 04/19/11 04:02 PM Re: Failed to disclose fee on GFE Dan Persfull
complygirl Offline
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So we could list the cure on a blank line in the 200 series in the following manner: "Cure for 10% tolerance category" with the dollar amount? or do we have to mention flood fee and VSI somewhere?

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#1537455 - 04/19/11 05:07 PM Re: Failed to disclose fee on GFE complygirl
Dan Persfull Offline
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Cure for 10% tolerance category would be sufficient.
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#1537457 - 04/19/11 05:11 PM Re: Failed to disclose fee on GFE complygirl
Truffle Royale Offline

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You've mentioned flood fee and VSI on pages 2 and 3 of the HUD. The GFE column on page 3 will show $0 for these fees while the HUD column will show the actual costs.

Page 1 can simply read 'tolerance cure' or something similar. The dollar amount will be the amount over 10% that the flood and VSI fees throw you off, not the entire amount of the two fees.
Example: GFE total for 10% = $100
HUD total for 10% = $150
10% tolerance = $110
Cure = $40.

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#1537587 - 04/19/11 06:51 PM Re: Failed to disclose fee on GFE Truffle Royale
complygirl Offline
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This is an in-house refinance with no seller, so the HUD-1A is being utilized. So does the tolerance cure need to be itemized in the 800 series of page one?

Here is our fee summary:
GFE total for 10% = $15.00
HUD total for 10% = $55.00
10% tolerance = $16.50
Cure = $38.50

Does this look right?

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#1537602 - 04/19/11 07:02 PM Re: Failed to disclose fee on GFE complygirl
Dan Persfull Offline
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You will need to use the HUD 1 for the revision.

11) Q: The General Instructions indicate that if a charge has been shown on the GFE as payable by the borrower but at closing it is paid by another person, including by the loan originator in a loan other than a no-cost loan, the fee should be shown in the borrower‘s column on the HUD-1 and be offset by listing a credit to the borrower on lines 204-209 of the HUD-1. If a HUD-1A form is being used, lines 204-209 do not exist. How should the credit be shown on a HUD-1A form?

A: Use of the HUD-1A form is an optional form to be used by the settlement agent in a transaction in which there is not a seller and as otherwise appropriate. If the use of a HUD-1A form is not appropriate, such as if there is a credit given by a loan originator or other party, the settlement agent must use the HUD-1 form.
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#1537625 - 04/19/11 07:27 PM Re: Failed to disclose fee on GFE Dan Persfull
Truffle Royale Offline

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Your math looks correct to me. As Dan said, you must use the HUD1 form any time you have to give a credit (cure).

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#1537630 - 04/19/11 07:29 PM Re: Failed to disclose fee on GFE Dan Persfull
RR Joker Offline
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In a situation where disclosures were not done timely, we've noticed a software issue in doing the 'no cost' loan. The software can't calculate 10% of nothing, so we filled in the amounts, but then gave a 'lender' credit in 802 for the total of the items, and zero for origination for a net credit of the total of the other fees and a net zero from borrower.

Anyone see any problem with this as opposed to a 200's credit?
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#1537773 - 04/20/11 12:06 AM Re: Failed to disclose fee on GFE RR Joker
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Quote:
Anyone see any problem with this as opposed to a 200's credit?


Short-term, no. Permanently, yes.
I'd document the soft-ware issue and make sure a copy of the documentation got in every file that it applied to.
Meanwhile, I'd be all over the software company to get it fixed asap!

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#1537877 - 04/20/11 02:03 PM Re: Failed to disclose fee on GFE Truffle Royale
RR Joker Offline
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The Swamp
I don't think a mathematical issue can be fixed. You can't take 10% of zero, no matter how you attempt it. This is the first loan we've malfunctioned on, so the theory hadn't been tested until now.

Since we are aware of the mistake at time of earlies, we are just fixing as much as possible at onset (no origination fees)...and since we know exactly what the costs to close are, we are giving the credit in block 2, rather than waiting until the HUD 200's. That's all I really see different.
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