We were going to close two loans – one for purchase of a loan and the second one for construction. They originally were supposed to be closed on the same day, but later changed to happen on different days – first purchase or a lot and then couple of weeks later for the construction. There is a requirement for a lender title insurance transaction with a construction loan. The fee for that title insurance was collected with the purchase of the lot for some reason. When the GFE was issued for the construction loan, the title insurance fee was not disclosed as it has been already paid. That fee should have been disclosed. What do I do to fix it now since we are working on the HUD?

Are you doing the end loan? Why did you do two loans? I would be more concerned that someone is trying to get these out of RESPA coverage by saying they already owned the property and the loan did not transfer title.

You fix them by adjusting the HUD-1 on the construction loan to reflect reality and pay the cure.

Even tho it should be on the GFE for the CL as a requird service, wouldn't it fall off the comparison as a service used from a prior transaction?

ETA: I do agree about the two loan situations, however...it appears they were trying to skirt requirements.

I do agree about the two loan situations, however...it appears they were trying to skirt requirements.

If that is truly the case then I would definitely error on the side of caution. Not only are you looking at RESPA disclosure violations, you are looking at claims of UDAAP.

Thanks, all.

I agree with Joker that IVM got lucky and this would fall off the comparison chart as a fee purchased in a previous transaction. (December 2010 RESPA Roundup)

You think so if they structured the transactions in order to avoid disclosures - I doubt it. I think the UDAAP penalties assessed by the regulators would far outweigh any cure.

Randy, IVM said nothing about structuring. That is an angle you introduced. If it's true, then I would agree with you. If, however, there's a simple explanation for the two transactions rather than one, then I stand by my statement above.

I try to be a class half full, stary eyed optimist this time of year.

There well could be a good explanation. The only one I can think of is a contract expiring on the lot purchase before they got all their stuff together for a construction loan.

If that's the case, they should have disclosed the LTI on the GFE, but that's not correctable. The end result is, it doesn't affect tolerance because it's a 'previously used service'.

Only IVM can sort this one out for what really happened.

There were two transactions only because of the contract expiration; there was no intention to circumvent anything.

I win the mind-reading contest!