I am curious how other lenders will disclose this on the GFE/TIL? It is a charge that is paid annually by the servicer to USDA but escrowed monthly from the customer. It is a finance charge therefore APR.
Anyone else scratching their heads on this? Any input is greatly appreciated.
-Jim

The annual fee goes in Block 9 with the rest of the escrows and should be treated as such.

The upfront fee goes in Block 3 where the old guarantee fee went.

But is the annual fee a finance charge? The upfront fee is and this annual fee is a fee for having the loan I would think it would be a finance charge, but would love another opinion as finance charges tend to confuse me.

This annual amount, collected on a monthly basis, is the equivalent of a PMI escrow making it a fc.

So, if we agree the annual fee should be a fc, how are you able to make your escrow affect the APR? Am I missing something?

It's October now, anyone have more input on this?!!

We're not collecting a cushion so we just put the escrow in and check it as an FC in our system. It sounds like you have a software issue. We can't help with those. Try contacting your vendor's tech dept.

May I ask which software you are using?

FICS Loan Producer

Are you getting an accurate APR with this? The amount adjusts annually with the Average Annual UPB. I've tried adding this to our escrows and I've tried entering it as a PMI. I don't see either as an appropriate solution. We are using LaserPro. Does anyone have a work-around suggestion for me?

Officially LaserPro says they don't support USDA documentation. They do claim that there are work arounds but they don't give details so we're still trying to figure it out. I'll let you know if we figure something out.

I have a document (not sure where it came from) that says the annual fee should be listed as PMI so that it's disclosed as part of the monthly payment.

If I find out more, I'll post it here.

How are you completing the TIL disclosure statement in regards to this annual USDA fee? Our vendor has taken the position that this is not mortgage insurance so neither of the mortgage insurance boxes are being checked on the TIL (but the amount is included in the escrow amount). We have one investor that requires the mortgage insurance box to be checked.

Technically it is not mortgage insurance since it is a guaranty fee so I understand the position but it certianly is being treated very similar to mortgage insurance. How are other USDA lenders handling?

Since when does a vendor get to decide? You need to decide and tell them what you need your software to do. Your investor is pointing the way.

The guaranty fee is mortgage insurance that prior to this month, was paid in full up front. Now a portion is paid up front and the rest is paid monthly. You treat the up front the same way you did before and you add the monthly to the escrow.

Bump!
Anyone willing to share their workaround for LaserPro yet?

We've given up. We currently have our correspondent bank do the docs for these loans and they use Doc Magic.

Our Harland rep said they were releasing a different package this fall that would rectify all of these issues. It would import credit report info, sync with desktop underwriter, etc.

That info was from January. I haven't looked into it since.

I have a client getting documents through DocMagic that appear to be compliant, I'm just having issues with recalculating the APR. The annual fee total is part of the finance charge, but is unable to be calculated without doing 30 payment streams (one for each year). The amount is added to the escrow account but since it's part of the finance charge has to be used with the principal and interest to run the APR. What a pain...