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#2253256 - 04/29/21 10:54 PM Cure Amount More Than Fannie Cashback Amt
Vive Accommodare Offline
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Vive Accommodare
Joined: Apr 2013
Posts: 581
Compliance
We have a file where the property taxes were paid prior to closing (without the borrower letting us know). We get to closing and collect the tax installment amount, then once we receive the final settlement statement we see the tax installment was previously paid. Now the borrower needs to be reimbursed for the $5k+ for the tax installment. Our issue is Fannie Mae only permits a lender to give cash back of $2k maximum (is actually $2k or 2% whichever is less) for cash-out limited transactions and only permits $2500 maximum in principal curtailment (is actually $2500 or 2%, but loan is a higher amount). We now have an additional $600 where we don't know what to do or if we can provide the cash back to the borrower due to the cure amount. Does anyone know of anything in guidance where the amount overpaid would trump Fannie guidelines?
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TRID - TILA/RESPA Integrated Disclosures Rule
#2253261 - 04/30/21 11:20 AM Re: Cure Amount More Than Fannie Cashback Amt Vive Accommodare
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,223
Galveston, TX
In the event of an actual over payment that requires a refund under TRID, I am not sure that is limited to a specific dollar amount based on the first bullet point. That says "in any amount". You might want to check with your investor.

Fannie Mae permits curtailments for the following reasons:

o The lender may apply a curtailment to refund the overpayment of fees or charges paid by the borrower, in any amount, in accordance with applicable regulatory requirements.

o If the borrower receives more cash back than is permitted for limited cash-out refinances, the lender can apply a curtailment to reduce the amount of cash back to the borrower to bring the loan into compliance with the maximum cash-back requirement. The maximum amount of the curtailment cannot exceed the lesser of $2,500 or 2% of the original loan amount for the subject loan. For example, if the borrower received $3,500 cash back at closing on a loan amount of $200,000, the lender could apply a $1,500 curtailment prior to delivery to Fannie Mae. This would result in “net cash back” to the borrower of $2,000, thus meeting Fannie Mae’s limited cash-out refinance requirement.
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#2253282 - 04/30/21 03:08 PM Re: Cure Amount More Than Fannie Cashback Amt Vive Accommodare
Vive Accommodare Offline
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Vive Accommodare
Joined: Apr 2013
Posts: 581
Compliance
Thank you, Randy! I did see that in the Selling Guide for Fannie Mae B2-1.5-05, we have submitted this to the Investor to argue the fact it was an overpayment and aligns with Fannie's guidance under the "in any amount, in accordance.." section. We're hoping they don't do the "It's our requirements or bust" philosophy.
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