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#2017207 - 05/30/15 10:46 PM
Gift of Equity
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Junior Member
Joined: Aug 2011
Posts: 45
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Working on TRID and the business line asked where to disclose a gift of equity. I cannot find anything anywhere that discusses this type of gift.
If anyone can point me in any direction, it would be greatly appreciated.
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#2017211 - 05/31/15 01:50 PM
Re: Gift of Equity
RegObsessed
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10K Club
Joined: Jul 2001
Posts: 83,164
Galveston, TX
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What is a "gift of equity" and why would it be reflected on a closing disclosure? What does it have to do with the loan?
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#2017239 - 06/01/15 03:06 AM
Re: Gift of Equity
RegObsessed
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10K Club
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Fannie Mae Gift of Equity A “gift of equity†refers to a gift provided by the seller of a property to the buyer. The gift represents a portion of the seller’s equity in the property, and is transferred to the buyer as a credit in the transaction. A gift of equity is permitted for principal residence and second home purchase transactions. The acceptable donor and minimum borrower contribution requirements for gifts also apply to gifts of equity. See B3-4.3-04, Personal Gifts. http://wiki.fool.com/How_to_Give_Equity_as_a_Gift
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#2018164 - 06/03/15 08:06 PM
Re: Gift of Equity
Kathleen O. Blanchard
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Junior Member
Joined: Aug 2011
Posts: 45
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1. Other credits known at the time the Loan Estimate is issued. Amounts expected be paid by third parties not involved in the transaction.
Kathleen, based on the citation a Gift of Equity would not qualify to be shown in Adjustments/Other Credits because it is provided by the seller who IS involved in the transaction. That commentary states the parties are NOT involved in the transactions.
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#2048127 - 11/04/15 09:29 PM
Re: Gift of Equity
RegObsessed
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Diamond Poster
Joined: Mar 2002
Posts: 2,261
Far from Calif
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Has anyone come up with an answer to this. I agree it seems the easiest place to put it to make the numbers work, but then it doesn't work with what the rules state.
It wouldn't be a seller credit because it isn't a cost paid for by the seller.
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#2048141 - 11/04/15 10:20 PM
Re: Gift of Equity
Kathleen O. Blanchard
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Diamond Poster
Joined: Mar 2002
Posts: 2,261
Far from Calif
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I'm being told they put it in "Other Credits" on the HUD. (This is the first that I've come across "gift equity," so I can't answer that from experience. The processor is telling me that the "adjustments and other credits" area is greyed out, so she has to put it somewhere else for it to fill to that box. Perhaps putting it as a seller credit is the only option? That's just not logical to me since seller credits to reflect costs being paid by the seller.
I'm going through the string describing what goes in seller credits, and again, that is reflective of specific costs as disclosed:
1026.37(h)(1)(vi) Seller credits. The total amount that the seller will pay for total loan costs as determined by paragraph (f)(4) of this section and total other costs as determined by paragraph (g)(5) of this section, to the extent known, disclosed as a negative number, labeled “Seller Creditsâ€;
Then 1026.37(f)(4) is the total of (f)(1) through (f)(3) which is origination charges, services you cannot shop for, and services you can shop for.
1026.37(g)(5) is the total of taxes/other gov't charges, prepaids, initial escrow, and other costs.
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#2048144 - 11/04/15 10:37 PM
Re: Gift of Equity
RegObsessed
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Diamond Poster
Joined: Mar 2002
Posts: 2,261
Far from Calif
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The processor did find a way to get it on the adjustments and other credits line - it's showing as a negative $10,000, so I think we are fine. She figured out how to add an L4 line.
Last edited by CalifDreamin; 11/04/15 10:48 PM.
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The opinions expressed are mine and do not necessarily reflect those of my employer _._._._._._. A.S.A.P. Always Say A Prayer <><
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#2087599 - 07/12/16 06:20 PM
Re: Gift of Equity
RegObsessed
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New Poster
Joined: Apr 2016
Posts: 15
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Was the final decision to put Gifts of Equity by the Seller under Seller Credit as a negative number?
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#2100081 - 09/23/16 01:35 PM
Re: Gift of Equity
RegObsessed
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Gold Star
Joined: Mar 2010
Posts: 266
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I have a Loan Estimate that needs to go out today. There is a Gift of Equity by the seller, should this credit go into the Seller Credit field?
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#2100095 - 09/23/16 02:24 PM
Re: Gift of Equity
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Cape Cod
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When will the buyer receive it?
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#2100120 - 09/23/16 03:45 PM
Re: Gift of Equity
RegObsessed
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Cape Cod
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The include it on the LE as a seller credit, if it will be a reduction in the funds that the buyer has to bring to the table (and a reduction in the amount the seller will receive from the table).
Last edited by John Burnett; 09/23/16 03:47 PM.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#2100195 - 09/23/16 07:55 PM
Re: Gift of Equity
RegObsessed
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10K Club
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Galveston, TX
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Define Gift of Equity by the seller please. Sounds like a lower sales price to me.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2100196 - 09/23/16 07:56 PM
Re: Gift of Equity
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The Swamp
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There was another thread about this subject and that was the general concensus, Randy.
Hard equity [think lease to own] is one thing, but I agree that a 'gift' of equity is a concession.
Last edited by RR Joker; 09/23/16 07:56 PM.
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#2100197 - 09/23/16 08:00 PM
Re: Gift of Equity
RegObsessed
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Diamond Poster
Joined: Mar 2002
Posts: 2,261
Far from Calif
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From Fannie: A “gift of equity†refers to a gift provided by the seller of a property to the buyer. The gift represents a portion of the seller’s equity in the property, and is transferred to the buyer as a credit in the transaction. A gift of equity is permitted for principal residence and second home purchase transactions. The acceptable donor and minimum borrower contribution requirements for gifts also apply to gifts of equity.
_________________________
The opinions expressed are mine and do not necessarily reflect those of my employer _._._._._._. A.S.A.P. Always Say A Prayer <><
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#2114552 - 01/18/17 04:07 PM
Re: Gift of Equity
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New Poster
Joined: Jun 2014
Posts: 7
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How does the FDIC qualify this on a SLTV basis? Is it looked at as 100% financing or is the gift taken into consideration toward the LTV? I think this is what Randy is pointing out.
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