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#2164584 - 02/14/18 05:12 PM Disclosing taxes in escrow on a new home
nulurch12 Offline
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Registered: 08/05/15
Posts: 76
Loc: NYC
We are currently starting to see more and more purchase deals. I have looked through the CFPB TRID manual and referenced reg x. 1024. The closing department is requesting that we use unimproved taxes to disclose the CD and the initial escrow disclosure but then using improved taxes on the 1st payment letter.
Seems to me that this could work since it is not clearly defined anywhere that it cannot be done but I am wrestling the fact that there is one document with a different payment amount on it.
Anyone deal with purchases regularly?

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TRID - TILA/RESPA Integrated Disclosures Rule
#2164589 - 02/14/18 05:30 PM Re: Disclosing taxes in escrow on a new home [Re: nulurch12]
rlcarey Offline
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Posts: 67917
Loc: Galveston, TX
You can't use unimproved taxes on the CD.

1026.37(c)(5) Calculation of taxes and insurance. For purposes of paragraphs (c)(2)(iii) and (4)(ii) of this section, estimated property taxes and homeowner's insurance shall reflect:

(i) The taxable assessed value of the real property securing the transaction after consummation, including the value of any improvements on the property or to be constructed on the property, if known, whether or not such construction will be financed from the proceeds of the transaction, for property taxes;
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#2164593 - 02/14/18 05:35 PM Re: Disclosing taxes in escrow on a new home [Re: nulurch12]
nulurch12 Offline
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Registered: 08/05/15
Posts: 76
Loc: NYC
Thanks rlcarey I agree with you, does it change at all since this is new construction? New construction is not a product I am used to dealing with.

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#2164594 - 02/14/18 05:39 PM Re: Disclosing taxes in escrow on a new home [Re: nulurch12]
rlcarey Offline
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Loc: Galveston, TX
Seems pretty clear to me: including the value of any improvements on the property or to be constructed on the property,
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#2164595 - 02/14/18 05:44 PM Re: Disclosing taxes in escrow on a new home [Re: nulurch12]
nulurch12 Offline
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Registered: 08/05/15
Posts: 76
Loc: NYC
Thanks again.

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#2164633 - 02/15/18 09:25 AM Re: Disclosing taxes in escrow on a new home [Re: rlcarey]
Kara Sejnoha Offline
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Registered: 06/13/14
Posts: 4
I think this would be an accurate statement for the LE and transactions not subject to RESPA; however, the escrow payments on the CD (for RESPA covered transactions) should be disclosed pursuant to the following: 1026.38(c) Projected payments. A separate table, under the heading “Projected Payments,” that includes and satisfies the following information and requirements: (1) Projected payments or range of payments. The information required to be disclosed pursuant to § 1026.37(c)(1) through (4), other than § 1026.37(c)(4)(vi). In disclosing estimated escrow payments as described in § 1026.37(c)(2)(iii) and (4)(ii), the amount disclosed on the Closing Disclosure: (i) For transactions subject to RESPA, is determined under the escrow account analysis described in Regulation X, 12 CFR 1024.17; (ii) For transactions not subject to RESPA, may be determined under the escrow account analysis described in Regulation X, 12 CFR 1024.17 or in the manner set forth in § 1026.37(c)(5).

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#2164646 - 02/15/18 09:47 AM Re: Disclosing taxes in escrow on a new home [Re: nulurch12]
rlcarey Offline
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Registered: 07/16/01
Posts: 67917
Loc: Galveston, TX
The disclosure of the estimated taxes, insurance and other assessment have to disclose using the same information on the CD as required by the LE. If you establishing your escrow for only the unimproved amount, then you would indicate that "Some" of the property taxes will be escrowed rather than indicating "Yes". This would then be properly broken out in the escrow disclosure on Page 4, which will relate back to the projected payments table.

The basis of the estimated taxes, insurance and assessments disclosure is to tell the customer what this property is going to cost them in the long run once it is finished.
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#2164722 - 02/15/18 12:55 PM Re: Disclosing taxes in escrow on a new home [Re: nulurch12]
Tracey, CRCM Offline
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Registered: 07/06/15
Posts: 526
Loc: Gorham, ME
Or don't require escrows unless required by an investor or the borrower requests them. That is what we do.
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#2164930 - 02/16/18 11:40 AM Re: Disclosing taxes in escrow on a new home [Re: Tracey, CRCM]
Truffle Royale Offline


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Registered: 07/09/03
Posts: 16795
I've been mulling over Randy's statement that
Quote:
"The basis of the estimated taxes, insurance and assessments disclosure is to tell the customer what this property is going to cost them in the long run once it is finished.'
and I don't think I agree.
On the CD, the payment schedules says: Estimated total amount over year 1 .
It goes on to state: In the future, Your property costs may change....

Further, you can't reach beyond the next computation year and use a tax amount that won't kick in until more than 12 months from now. So if the tax bill for the 12 months will be based on the pre-construction assessment, you use the current tax amounts. (this is sop in Iowa and other communities/states) If the borrower wants to pay a greater amount to avoid "payment shock" when the new assessment is effective, it was suggested to us that you get a written statement from the borrower that the added amount is voluntary.

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#2164939 - 02/16/18 11:52 AM Re: Disclosing taxes in escrow on a new home [Re: nulurch12]
rlcarey Offline
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Loc: Galveston, TX
TR - You are confusing the TRID disclosure requirements and the RESPA escrow account and analysis requirements - they are not really related to each other.
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#2164949 - 02/16/18 12:03 PM Re: Disclosing taxes in escrow on a new home [Re: nulurch12]
RR Joker Offline
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Posts: 20150
Loc: The Swamp
We have always disclosed full value estimate, per:

When disclosing the estimated taxes, insurance, and assessments for a construction-permanent loan as either one transaction or two separate transactions, the amount of estimated taxes, insurance or assessments are disclosed as a monthly amount, even if no escrow account is established. The amounts must reflect the taxable assessed value of the real property or a cooperative unit securing the transaction after consummation.
The items are calculated as follows
 Estimated property taxes: The amount of the estimated property taxes to be disclosed includes the value of any improvements on the property or to be constructed on the property, if known, regardless of whether the construction will be financed from the proceeds of the loan. (§ 1026.37(c)(5)(i))
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My opinion only. Not legal advice.

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#2164951 - 02/16/18 12:07 PM Re: Disclosing taxes in escrow on a new home [Re: nulurch12]
RR Becca Offline
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Registered: 09/10/04
Posts: 5200
Loc: out of the frying pan...
I explain it to our staff like this: "page 1 is as-built, section F is as-is."
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#2164968 - 02/16/18 12:30 PM Re: Disclosing taxes in escrow on a new home [Re: nulurch12]
nulurch12 Offline
Member

Registered: 08/05/15
Posts: 76
Loc: NYC
Appreciate all the feedback. Based on everything we have read and some guidance form our legal, we are going to require that documents reflect the same unimproved or improved throughout all documents. Makes my initial question moot.

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#2164984 - 02/16/18 01:02 PM Re: Disclosing taxes in escrow on a new home [Re: nulurch12]
rlcarey Offline
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Registered: 07/16/01
Posts: 67917
Loc: Galveston, TX
Good luck with that - it will not comply.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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