I was about to send off my response to a question but got cold feet; it seems too easy and wanted to check to see I'm not missing something. Disclaimer: I wasn’t at this institution when TRID rolled out, and the bank I worked for previously did not offer construction/permanent loans. A lot of early TRID decisions were made by a compliance officer that is no longer here and I have been in disagreement with most of these decisions, though, I am not very familiar with the CP product.
Our CPs use one set of disclosures and one loan closing.
Question:
We reflect 2mo of HOI and 2m of taxes in section G (initial escrow deposit) of the LE. This is again something we do not collect at closing because we do not escrow during the interest only phase of the loan. Prior reasoning for doing this was to show upfront because if the loan rolls into the permanent phase there’s no new documentation to provide the borrower to indicate what their initial escrow deposit needs to be. It is a feature and cost of the loan, but not initially. We still show that the loan is escrowed on the LE and what that estimated escrow amount is. It also reflects that the escrow payment doesn’t start until year 2. Can we remove the initial escrow deposit costs calculating cash to close from initial disclosures?
My thoughts:
Based on 1026.37(g)(3) and its commentary (below), I feel like these fields should be blank.
1. INITIAL ESCROW PAYMENT AT CLOSING.Under the subheading “Initial Escrow Payment at Closing,†an itemization of the amounts that the consumer will be expected to place into a reserve or escrow account at consummation to be applied to recurring periodic charges, and the subtotal of all such amounts, as follows:
i. (i) On the first line, the amount escrowed per month, the number of months covered by an escrowed amount collected at consummation, and the total amount to be paid into the escrow account by the consumer at consummation for homeowner’s insurance premiums, labeled “Homeowner’s Insurance __ per month for __ mo.â€
ii. (ii) On the second line, the amount escrowed per month, the number of months covered by an escrowed amount collected at consummation, and the total amount to be paid into the escrow account by the consumer at consummation for mortgage insurance premiums, labeled “Mortgage Insurance __ per month for __ mo.â€
iii. (iii) On the third line, the amount escrowed per month, the number of months covered by an escrowed amount collected at consummation, and the total amount to be paid into the escrow account by the consumer at consummation for property taxes, labeled “Property Taxes __ per month for __ mo.â€
Commentary
1. OFFICIAL INTERPRETATION TO 37(G)(3)
HIDE
37(G)(3) INITIAL ESCROW PAYMENT AT CLOSING.
1. LISTED ITEM NOT CHARGED.Pursuant to § 1026.37(g)(3), each periodic charge to be included in the escrow or reserve account must be itemized under the “Initial Escrow Payment at Closing†subheading, with a relevant label, monthly payment amount, and number of months expected to be collected at consummation. If an item described in § 1026.37(g)(3)(i) through (iii) is not charged to the consumer, the monthly payment amount and time period used in the labels are left blank.
Being able to reach out to BOL's gurus and other members has been extremely helpful for me in the past, I really appreciate any guidance or thoughts.