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#2196119 - 10/22/18 07:34 PM LE-Borrower paying Seller Closing Costs
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,060
In the mountains
We have just received a change to the sales contract and the borrower/buyer will be paying all the seller's closing costs except commissions.

From what I know so far, the seller's portion of the closing/settlement fee is $200, $100 for doc prep fee and a $140 courier fee assessed by the title company.

We allow the borrower to shop and so the borrower's title costs are in C. on the LE. When providing a revised LE due to the change in circumstance, do we increase the closing, doc prep and courier fees already disclosed for the borrower by the amount of the seller's portion the borrower will pay for? Do we disclose these fees separately but still disclose in C? or do we disclose them in H.

If it is disclosed in C, is it now subject to the tolerance test? Are the seller's costs paid by the borrower considered finance charge and affect the APR?
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#2196166 - 10/23/18 02:02 PM Re: LE-Borrower paying Seller Closing Costs Likes to Comply
WABComply Offline
100 Club
Joined: Jul 2017
Posts: 223
Wow, this one seems so tricky because it seems that it can go both places. I am leaning on putting then in C as the fees are required to complete the transaction even though the borrower contracted with the seller to pay these fees. I would also add them to the APR as an over disclosure is better than an under disclosure. At least that is what I would tell my Home Mortgage Team.

I do see however arguments the other way on a post in BOL dated back 12/7/15 due to the contracted part. My issue with that is that I am assuming the doc prep fee is the deed preparation which is required. The courier fee is to pay off liens on title so that is needed. And of course the closing fee is needed to complete the close. I know you are not requiring these to be paid by the borrower but the way I see they are required to complete the closing.

Anyone else have any thoughts on this?

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#2196367 - 10/24/18 07:32 PM Re: LE-Borrower paying Seller Closing Costs Likes to Comply
Katherine Offline
Member
Joined: Aug 2017
Posts: 62
We've had similar situations and practically speaking, we disclose in Section C. For purchase transactions, we require escrow and the doc prep fee is for the new deed so that is required for the transaction. Certain fees bother me, such as the seller's portion of the courier fee, because although we require escrow for purchase transactions, we do not require the seller to use a courier or if the seller uses a mobile notary. However, absent something that isn't clearly required for the transaction, I would disclose in Section C. Anything clearly not required, I would disclose in Section H.

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