In Ohio the transfer tax is paid by seller and we do not put on the GFE unless the contract states the buyer is paying.

Reviewing a HUD-1 for a closing, the transfer tax appears on line 1204 under the Sellers column. Unfortunately, the contract states the Buyer will credit the seller for the tax. The credit shows on page1 of the HUD as a credit to the seller and a adjustment to the Borrower.

Showing the transfer tax in this manner, the tax does not show up on the comparison chart under the Charges that can not change.

Since the buyer is crediting the customer, do I need to show the tax in the comparison chart and do a tolerance cure or, should I leave as is? And if so, how would I prove to a compliance review that the cure was not necessary?

Is the transfer tax a seller paid by law? If so, it should NEVER show on the GFE. Remember, the offer to purchase has no bearing on the GFE ever. In fact, you should never even get it before you give the GFE.

Therefore, it should not be on p3 of the HUD either.

I agree with Truffle that the GFE should be issued "in spite" of the sales contract but I don't agree that the terms of the sales contract could not constitute a valid changed circumstance in some instances. Sorry Mike, we do not have Transfer Tax in my state so don't feel qualified to address your specific question.

Rules, could you please give me an example of when something in the sales contract would constitue a valid changed circumstance that would affect the GFE which only shows the charges associated with getting the loan, not purchasing the property?
I'm asking seriously here.

I tend to agree...if the contract states a charge the borrower will pay that would not ordinarily be paid...I would likely want to modify the GFE for that charge.

What do you do, just continue to show it on the seller side with a borrower credit?

Not to be beligerant, but still waiting for an example of one of these charges.

All of my RESPA training said that only costs of the loan belong on the GFE. So what loan cost would be a negotiable point on the OTP that would be valid CC?

The original poster gave a good example. The settlement fee is another.

Unless you have state law to the contrary, transfer tax MUST show on the buyer's side with any credit being given on p 1 of the HUD. It doesn't matter what the OTP says to the contrary. Check the FAQ for support.

The same goes for the settlement fee. You show it on your GFE before you read the OTP and then credit on the HUD. A change in fee is not a valid changed circumstance and that's really all this is.

Okay, thinking back to my FL lending days. The Doc Stamps (I think) were TYPICALLY 50/50 split. We disclosed them this way and if there was a contract stipulation that said differently, we showed the appropriate credit on the HUD.

Although it ought not to be wrong to redisclose to give a more accurate disclosure...we have to remember, it's a worst case (not in this case) scenario...not a good faith one.

We are familiar with the FAQ and we prepare our GFE accordingly, but thanks for a different point of view!