Stupid question- Are we required to collect and remit a GRMA fee on a business loan secured with 1-4 family property?

I was thinking No, but a coworker has me questioning myself!

Yes, it does. Commercial loans secured by a personal dwelling owned by the commercial borrower applies.

The specific loan in question was made to a business and guaranteed by the owner of the business and the owner's father. The father's guaranty was secured with his personal residence.

What if the collateral is 1-4 family rental property? Is the key that it be a primary dwelling?

Yes..primary dwellings.

I hate to be a pest but I just want to make sure that I have my ducks in a row before I change procedures. I'm still a little confused based on the following information. The definition says that the loan must be made to a "natural person".


This is from the Georgia Mortgage Division Rules:

80-5-1-.04 Levy, Collection, Remittance and Refunds of Georgia Residential Mortgage Act Per Loan Fee.

(a) Each borrower who obtains a mortgage loan as defined in O.C.G.A. § 7-1-1000(21) shall pay to the department a per loan fee of $10.00. The $10.00 fee will be due if the loan is a residential mortgage loan as defined in the Georgia Residential Mortgage Act, and if a security deed, a modification of a security deed, or other form or modification of a security interest is recorded.



GRMA code definition:

(21) 'Mortgage loan' means a loan or agreement to extend credit made to a natural person, which loan is secured by a deed to secure debt, security deed, mortgage, security instrument, deed of trust, or other document representing a security interest or lien upon any interest in one-to-four family residential property located in Georgia, regardless of where made, including the renewal or refinancing of any such loan.

Yes, it does say that. WAY back when this was all new, I was getting rebuttal from some attorneys on a few points...that being one of them AND they wanted to collect it when it wasn't required. Here is a piece of a memo I sent out after speaking directly with the State:

DEFINITION: 'residential property' means improved real property used or occupied, or intended to be occupied, as the pricipal residence of a natural person.

The confusion lies in the meaning of 'a natural person'. This could be looked at as anybody...the borrower, a renter, etc. If they had simply said the 'borrower' it would have helped, however there could be instances where the intended occupant and the initial borrower could be two different 'natural persons'.
Confusing? yes, but...

Only collect the fee if you take a DSD on a 1-4 family residential property occupied or to be occupied as the PRINCIPAL residence of the BORROWER. This includes regular mortgage loans, commercial loans where we take a DSD on the/a borrower's residence, construction loans ONLY if we will NOT be filing a new DSD when WE convert to a permanent loan at OUR bank.

Do NOT collect the fee on builder's constructions loans (unless they intend to occupy the property), rental only type property, or construction loans to be occupied by the borrower, but are to be taken out by another company. The final lender will be responsible in that case.


the GRMA Q&A addresses this as well:

Q: Does the loan cover mortgage on commercial property?
A: No; however, if a commercial loan is secured by a personal dwelling owned by the commercial borrowers, the $[then]6.50 must be collected.

Thanks! I completely missed the GRMA Q&As.

We are a TN chartered bank, and we have no locations in GA. We have an application for a mortgage loan on a residence located in GA. Are we required to collect the GRMA fee on this mortgage or are we exempt since we have no presence nor a charter under the laws of Georgia. Please advise. Thanks.

GRMA code definition:

(21) 'Mortgage loan' means a loan or agreement to extend credit made to a natural person, which loan is secured by a deed to secure debt, security deed, mortgage, security instrument, deed of trust, or other document representing a security interest or lien upon any interest in one-to-four family residential property located in Georgia, regardless of where made, including the renewal or refinancing of any such loan.

Thanks Randy!

OK, I give up. Where did you find GRMA Q&As?

It was a publication from the Community Banker's Association from so long ago it may pre-date electronic delivery!

:sigh: Why am I not surprised?

Not to worry..I have it...I should be able to scan it and send to you from my other laptop..this one doesn't like my printer..I don't know why.

This is ancient - but something got me looking into GRMA fees. RR, would you mind sending me the Q&As as well?

Would this fee be an finance charge that counts toward the APR?

General commentary to 1026.4(a)
For example, a stamp tax, property tax, intangible tax, or any other state or local tax imposed on the consumer, or on the credit transaction, is not a finance charge even if the tax is collected by the creditor.

No

We recently opened in LPO in GA. I looked over a couple loans and questioned where the GRMA fee was as I was unable to locate it on the LE. My Home Mortgage Team said it is disclosed under the recording fee section. Going back years ago (prior to TRID) when I worked for a residential lender I remember this fee being disclosed as a pass through fee and disclosed with the credit report, flood determination, etc.

I know the fee is required by the state, but I do not see it being a recording fee or a mortgage tax. Can someone point out where this fee should be disclosed. Thank you,

37(g)(1) Taxes and other government fees.

2. Other government charges. Any charges or fees imposed by a State or local government that are not transfer taxes are aggregated with recording fees and disclosed under § 1026.37(g)(1)(i).

Thanks Randy, my concern though was that this fee is not paid at closing (to the state). The Bank holds it and then semi-annually pays it out. Do you think that makes any type of difference? The more I am thinking about it since, looking at the definition provided, it might not.

It is a fee required by and paid to the State regardless of when you have to actually remit it.

For years, I have included GRMA in with my mortgage recording as that is what drives the imposition of the fee and it's paid to a government body.

Well it would be included in the total recording fees and not be added to the mortgage recording fee that is separately disclosed.

I actually do include it, Randy, as the fee is driven by the recording of the DSD. It has confused people way too much for it to show up nowhere but in a total that doesn't match the deed/mortgage numbers to the left. I decided the 'risk' was worth it and it has never been questioned at all.