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#1665427 - 02/15/12 02:27 PM Do we need to cure?
RaesPlace Offline
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Original GFE given at application had all zeros (LO forgot to calculate fees.) The loan was denied due to DTI but we did counter for a higher loan amount in order to pay off and close some debts. The borrower accepted, so the loan amount was increased and rate was locked. A new GFE was issued reflecting the increase of the loan amount and rate lock. All fees remained zeros except block 4 which now shows 320.00, and escrows and interim interest were added. The loan closes and I am looking at the HUD, which shows all charges as lender paid except the title insurance which borrower paid (206.25) However, the 1300 series shows a Pest Inspection as a required service they can shop for. It has a 50.00 charge that the borrower paid outside of closing to a company on our list of service providers. But, the initial GFE showed zeros in this block. Do we need to cure this 50.00?

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#1665430 - 02/15/12 02:17 PM Re: Do we need to cure? RaesPlace
Truffle Royale Offline

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You need to cure the $50 and the $320 in block 4 too. You shouldn't have added that because it wasn't a factor of the increased loan amount or the rate lock.

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#1665436 - 02/15/12 02:23 PM Re: Do we need to cure? RaesPlace
Dan Persfull Offline
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Quote:
All fees remained zeros except block 4 which now shows 320.00, and escrows and interim interest were added. The loan closes and I am looking at the HUD, which shows all charges as lender paid

If any fee that was disclosed as $0 on the GFE has a charge on the HUD then you are going to be out of tolerance and regardless if the bank did pay the fee the cure still goes to the borrower.

The loan officer just cost the bank 90% of the settlement fees.
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#1665437 - 02/15/12 02:36 PM Re: Do we need to cure? RaesPlace
RaesPlace Offline
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But, title insurance is tied to loan amount. I am not trying to be difficult, I just want to have a full understanding of this when I take the matter to management. Thanks!

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#1665502 - 02/15/12 03:51 PM Re: Do we need to cure? RaesPlace
RaesPlace Offline
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There were zeros in all blocks of the original GFE, but no services tied to it. For example, block 3 was titled, Required Services that we Select:

There was nothing listed at all. It didn't say Appraisal $0.
It was just a blank list with $0 in the box. The HUD shows all fees, who the fees were paid to and POC-L. So are you saying that we have to cure these as well? Should we have just left them off the HUD completely?
Last edited by lmh0104; 02/15/12 04:36 PM.
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#1665649 - 02/15/12 05:40 PM Re: Do we need to cure? RaesPlace
Truffle Royale Offline

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On the original GFE, you put $0 in the box thereby telling the applicant there would be no fees for title insurance. You countered with the higher loan amount and then, to all intents and purposes, added a fee. $320 was not the difference between the original loan amount and the higher loan amount so you could not add it.

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#1665653 - 02/15/12 05:58 PM Re: Do we need to cure? RaesPlace
RaesPlace Offline
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Gothca. What about what Dan referenced with us listing the settlement charges as POC-L? Do we need to cure for those as well, in addition to the $320, and the $50? How should we have handled those?

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#1665777 - 02/15/12 07:59 PM Re: Do we need to cure? RaesPlace
Dan Persfull Offline
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Originally Posted By: lmh0104
Gothca. What about what Dan referenced with us listing the settlement charges as POC-L? Do we need to cure for those as well, in addition to the $320, and the $50?


Yes. And to answer your previous question, no you should have not left them off the HUD. You paid them and all settlement fees have to be disclosed on the HUD regardless who paid them.

This will be an expensive learning experience for the bank due to the loan loan officer's error. But I would venture to say they (bank and LO) won't allow it to happen in the future.
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#1666327 - 02/16/12 05:59 PM Re: Do we need to cure? RaesPlace
RaesPlace Offline
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Ok, I have been reading RESPA and the FAQs like crazy and still can't find anything that says we have to cure for charges we paid for if it was disclosed as zero on the GFE. Could someone help me narrow down my search? I should also mention we are out of our 30 day window, but I am assuming we still need to issue the check?

I hope that I am correct in saying that there isn't anything we could have done differently (besides disclose a correct GFE in the first place) to prevent this?

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#1666515 - 02/16/12 08:15 PM Re: Do we need to cure? RaesPlace
Dan Persfull Offline
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Q&A 13 page 43 of the 4/2/10 RESPA FAQs

RESPA 1024.7(i)
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#1666521 - 02/16/12 08:35 PM Re: Do we need to cure? RaesPlace
RaesPlace Offline
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Ok, so we paid for the services plus we have to give them an additional 90% of that amount?

Example:

GFE shows Appraisal-$0
HUD shows Appraisal- 275.00 POC-L

So, we have to pay the appraiser the 275.00 plus pay the borrower the cure?

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#1666656 - 02/17/12 03:22 AM Re: Do we need to cure? RaesPlace
rlcarey Online
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Yup- that about sums it up.

However, POC-L on the HUD-1 is not the right approach. The fee ($275) goes in the borrower's column in line 804 and the bank credit ($275) is shown in the 200 series.
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#1672009 - 03/01/12 08:48 PM Re: Do we need to cure? RaesPlace
RaesPlace Offline
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So, I took this issue to management and was instructed to get the opinion of our attorney. I referenced the FAQ's (#13) and 1024.7(i). She disagrees that we owe the borrower the cure since we paid the fees. Now, I do not know where to go from here.

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#1672047 - 03/01/12 09:30 PM Re: Do we need to cure? RaesPlace
Dan Persfull Offline
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Your regulator because they are the ones that are going cite you for Section 5 violations.

PS. The bank paying the fee is no different then a seller paying the fees. If the fees the seller paid are misquoted and causes a tolerance violation the cure goes to the borrower, not the seller. In this case the fees the bank paid that are out of tolerance the cure for the tolerance violation goes to the borrower.

I am curious on what regulatory citations the attorney rendered her opinion.
Last edited by Dan Persfull; 03/01/12 09:34 PM.
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#1672056 - 03/01/12 09:39 PM Re: Do we need to cure? RaesPlace
RaesPlace Offline
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I sent an email to our regulator immediately after posting here. I hope to get a quick response.

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#1672089 - 03/01/12 10:25 PM Re: Do we need to cure? RaesPlace
#Just Jay Offline
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Originally Posted By: lmh0104
So, I took this issue to management and was instructed to get the opinion of our attorney. I referenced the FAQ's (#13) and 1024.7(i). She disagrees that we owe the borrower the cure since we paid the fees. Now, I do not know where to go from here.


Oh, how I wish attorneys spent as much time reading, questioning, and understanding consumer regs like we do.
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#1672125 - 03/02/12 12:37 AM Re: Do we need to cure? RaesPlace
Truffle Royale Offline

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Like Dan, I'm curious what regulatory citations the attorney based their opinion on. confused

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#1672127 - 03/02/12 12:46 AM Re: Do we need to cure? RaesPlace
Kathleen O. Blanchard Offline

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I suspect none.
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#1679843 - 03/20/12 05:31 PM Re: Do we need to cure? RaesPlace
RaesPlace Offline
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FWIW, my regulator agrees with the attorney. confused

I also attended a webinar though PBS on Mastering the HUD and the speaker also concurred with the attorney and regulator.

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#1679911 - 03/20/12 06:45 PM Re: Do we need to cure? RaesPlace
Truffle Royale Offline

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What is the support they're using for all these concurrences?
Specifically, where in what reg does it say this?
Surely, your regulator can point to chapter and verse so you can share it with the rest of us.
Or maybe PBS had it on their power point?

Not trying to be contrary but I've sat through various HUD webinars and numerous trainings and not once did I hear what you say you've now heard three times.

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#1679928 - 03/20/12 06:57 PM Re: Do we need to cure? RaesPlace
RaesPlace Offline
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They used the same FAQ's and section that I did and stated that their interpretation is that we would not have to pay the settlement fees AND the borrower.

They did state that POC-L was incorrect, that we should have issued a credit to the borrower in the 200 series, but since we paid the settlement fees outside of closing to the appraiser, title company, etc, we do not also owe the borrower.

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#1679935 - 03/20/12 07:06 PM Re: Do we need to cure? RaesPlace
Dan Persfull Offline
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You are treading on thin ice following their advice.

13) Q: If a seller or person other than the borrower pays for a settlement service (through a credit on page 1 of the HUD-1) and the lender corrects a potential tolerance violation for that service, may the seller or other person receive the tolerance correction or must it always go to the borrower?
A: The borrower must receive the tolerance correction in accordance with 24 C.F.R. ยง3500.7(i).

and

(i) Violations of section 5 of RESPA (12 U.S.C. 2604). A loan originator that violates the requirements of this section shall be deemed to have violated section 5 of RESPA. If any charges at settlement exceed the charges listed on the GFE by more than the permitted tolerances, the loan originator may cure the tolerance violation by reimbursing to the borrower the amount by which the tolerance was exceeded, at settlement or within 30 calendar days after settlement. A borrower will be deemed to have received timely reimbursement if the loan originator delivers or places the payment in the mail within 30 calendar days after settlement.

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#1681990 - 03/26/12 12:42 PM Re: Do we need to cure? RaesPlace
RaesPlace Offline
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Dan, perhaps their interpretations were different since there was no credit on page 1? I agree with you but am trying to make sense of the direction I have been instructed to take. All the settlement fees show POC-L where itemized and the comparison chart shows zeros on both the HUD and GFE columns.

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#1681996 - 03/26/12 12:57 PM Re: Do we need to cure? RaesPlace
Kathleen O. Blanchard Offline

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It looks like they are not taking the cites as instructions to cure but as how to handle if they cure; and are willing to see what happens on being made to cure. All you can do is document what you have been told to do.
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#1682216 - 03/26/12 06:14 PM Re: Do we need to cure? RaesPlace
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Even though it seems 'common sense' you have already 'done the right thing'...it does fly in the face of everything I've ever understood~
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