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#1721560 - 07/19/12 04:24 PM
HUD-1
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Diamond Poster
Joined: May 2007
Posts: 1,243
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Is it okay to list a loan pay-off (not part of loan proceeds)under the 1300 series?
thanks,
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#1721596 - 07/19/12 05:47 PM
Re: HUD-1
banker-12
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Member
Joined: Mar 2012
Posts: 69
Down South
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It is common to have loan payoffs in the 1300 section. This is done when the loan to be paid off is not a loan against the subject property but is required to be paid for underwriting purposes. (i.e. car loans, student loans, HELOCS against other property, etc.)
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#1721610 - 07/19/12 06:23 PM
Re: HUD-1
banker-12
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Power Poster
Joined: Feb 2005
Posts: 6,559
Foxboro
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I am with KPOC. The 2nd page is for loan related charges. Payoffs, whether or not they are a lien would show on page 1 in the 100's.
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#1721611 - 07/19/12 06:26 PM
Re: HUD-1
banker-12
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10K Club
Joined: Nov 2002
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The Swamp
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I also agree. Page 1.
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#1721614 - 07/19/12 06:29 PM
Re: HUD-1
banker-12
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Cheeseheadland
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Same as the rest... only have seen and used page one for the payoffs, or an addendum, but never on page two.
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#1721624 - 07/19/12 06:56 PM
Re: HUD-1
banker-12
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Member
Joined: Mar 2012
Posts: 69
Down South
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I was not speaking to the best practice, merely pointing out that it is very common to place it in the 1300 section. As a former settlement attorney for 6 years I was asked to do this in EVERY instance where it was applicable. This request was made by national, regional and community banks.
As you all said, the best practice is to place it in the 100 section and I argued that every time. But I had to defer to the lender who always requested they be shown in the 1300 section. They would never accept a payoff addendum. But this is merely my experience.
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#1721629 - 07/19/12 07:09 PM
Re: HUD-1
banker-12
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Power Poster
Joined: Feb 2005
Posts: 6,559
Foxboro
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I wouldn't call that a best practice-I would call it the correct way/place to show it.
The 1300's section is labeled "Other settlement charges".
As JJ points out, I have seen addendums if paying off a bunch of credit cards, loans, etc that didn't fit in the 100's.
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#1721987 - 07/20/12 06:37 PM
Re: HUD-1
banker-12
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Diamond Poster
Joined: May 2007
Posts: 1,243
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In reviewing the file, I noticed that the loan payoff (vehicle loan) listed under the 1300 series was part of the loan proceeds - I had initially stated it was not.
This loan had 3 payoffs and only 2 payoffs were listed in the 100 section and the 3rd one was listed under settlement charges.
Is this considered a violation? Do we need to correct it (loan closed in May 2012)? The loan is a refi/cashout on a 2nd home.
thanks,
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#1721995 - 07/20/12 06:50 PM
Re: HUD-1
banker-12
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10K Club
Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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Is this considered a violation? Do we need to correct it
Yes and yes.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#1722016 - 07/20/12 07:14 PM
HUD-1
banker-12
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New Poster
Joined: Feb 2005
Posts: 14
Texas, USA
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Will someone tell me how to disclose construction loan proceeds on page 1 of the HUD-1? I've been completing line 202. Principal amount of new loan with the total loan amount inside box, not in the amount column because no loan proceeds were advanced at closing. Is this correct?
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#1723601 - 07/26/12 02:26 PM
Re: HUD-1
banker-12
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100 Club
Joined: Dec 2004
Posts: 117
GA Mountains
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I would also like to know how others are disclosing construction loan proceeds on the HUD1.
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#1723603 - 07/26/12 02:29 PM
Re: HUD-1
banker-12
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Joined: Nov 2002
Posts: 20,656
The Swamp
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I don't have one at ready reference to verify, but I believe the full loan would be shown inside the column...Otherwise your bottom line will be showing the line as cash to the customer.
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#1723625 - 07/26/12 02:50 PM
Re: HUD-1
banker-12
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100 Club
Joined: Dec 2004
Posts: 117
GA Mountains
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Thanks Joker. I am trying to use this time before the next round of changes to research these issues that I haven't had time to deal with before. Just want us to be consistent. And of course, we haven't been overwhelmed with construction loans lately. I have four examples in front of me right now (not recent loans). One was disclosed that the borrower would receive all in cash on HUD Line 303; one shows "Held for Construction" in Line 104; one was a HUD1A and showed in Line 103 as "Settlement Charges to Borrower" (definitely not correct!); and one shows in Line 207 as "Construction Draw". So they are just all over the board...Since this isn't addressed in the regulation anywhere, just wanted to get an idea of how others were disclosing.
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#1723648 - 07/26/12 03:17 PM
Re: HUD-1
banker-12
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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Considering the wording 'principal amount of new loan' and considering the full loan IS the principal amount...I'll stand by my comment above.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1723704 - 07/26/12 04:07 PM
Re: HUD-1
banker-12
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100 Club
Joined: Dec 2004
Posts: 117
GA Mountains
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Let me make sure that I understand what you are saying. Are you saying to put the entire construction amount on Line 202, inside the column, where nothing will add in the column? If they are getting a draw at closing, would you show that figure in the column on Line 202? I appreciate your help.
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#1723737 - 07/26/12 04:33 PM
Re: HUD-1
banker-12
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10K Club
Joined: Jul 2001
Posts: 83,364
Galveston, TX
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While there is no specific guidance, I would use something similar to the answer to question #1 in the HUD-1 – 200 series section of the FAQs. The principal balance is listed outside the column and any immediate advance involved in the settlement is listed inside the column so that your settlement balances.
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#1723755 - 07/26/12 05:14 PM
Re: HUD-1
banker-12
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The Swamp
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I don't believe I agree with that as the same as a construction loan. Just because it's not drawn at inception does not mean the principal loan amount needs to be tinkered with. YOur settlement is going to be erroneous if you list it outside, rather than inside the column. I suppose you 'could' show the immediate draw and underneath it show the remaining to be drawn, but what difference does it actually make?
If you put the full principal outside the column and only show the first draw (if any, or zero) without compensating offsets, you will still be showing money to the borrower that isn't true.
ETA; to me, what HUD tried to accomplish in that Q&A is NOT show anything IN the column any fees that were likely financed in that second loan...all they are showing in the column is what is being applied as the "downpayment". I totally agree with that example, but not how it would relate to a construction loan disclosure.
Last edited by RR Joker; 07/26/12 05:15 PM.
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#1723777 - 07/26/12 05:38 PM
Re: HUD-1
banker-12
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10K Club
Joined: Jul 2001
Posts: 83,364
Galveston, TX
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"If you put the full principal outside the column and only show the first draw (if any, or zero) without compensating offsets, you will still be showing money to the borrower that isn't true."
Why is that? The money that is being drawn will be shown on the HUD-1 as to where it is going. Why would any money show going to the borrower at settlement if it wasn't?
Basically, this is a black hole. Pick a way to disclose and stick with it. There is nothing out there to prove if you right or wrong.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1723796 - 07/26/12 06:10 PM
Re: HUD-1
banker-12
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Joined: Nov 2002
Posts: 20,656
The Swamp
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As I mentioned above...if you do that...you would have to also do this: I suppose you 'could' show the immediate draw and underneath it show the remaining to be drawn, but what difference does it actually make? However, you couldn't simply follow the Q&A referenced without an additional step. I guess my point is...you are not wrong to show the actual principal in 202, regardless of what transpires at closing, or later. If they are borrowing $150000, that's what they are borrowing, and the entire amount goes in the column. ETA: just one more example of how unfriendly HUD is to non-secondary market-type traditional disclosable loans!
Last edited by RR Joker; 07/26/12 06:13 PM.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1723812 - 07/26/12 06:31 PM
Re: HUD-1
banker-12
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10K Club
Joined: Jul 2001
Posts: 83,364
Galveston, TX
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I haven't looked yet (saving it for a raining day when I can digest it with probably a twelve pack handy), but I wonder how "friendly" the new CFPB regulations will be to non-cookie cutter transactions.
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#1723865 - 07/26/12 07:46 PM
Re: HUD-1
banker-12
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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Not, Randy. As usual, they haven't changed (just their name did! ) Here's a for-instance. It appears the total payments at 5 year mark is hard-coded and there's nothing to say different in the body of the proposal (not that I've found). Okay..what about loans that fall under RESPA but that mature in one or 3 years? I'm not sure but what the late charges are hard-coded too...I may be wrong on that, but the 5 year deal is a booger.
Last edited by RR Joker; 07/26/12 07:46 PM.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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