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#2255357 - 06/15/21 09:24 PM Seller attorney fees on CD
dutchbltz Offline
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Is there any specific guidance about the seller attorney fees on the CD and what section these should be in? (I am talking about the sellers attorney and their own side of the closing costs - things the borrower has no control over and cannot shop for; as it's not their service).

I believe it should be in H. Other, but some of the attorneys we work with think it should be C. Services Borrower Did Shop For.

To me it really doesn't meet the definition of the services a borrower can shop for, so it shouldn't be in C.

Anywhere this is specifically addressed?

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#2255359 - 06/15/21 09:40 PM Re: Seller attorney fees on CD dutchbltz
John Burnett Offline
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If they are not a service that the bank requires, they go in section H. See 1026.38(g)

The only time you would see a seller's cost in any other part of page 2 is when it is for a service the bank requires -- let's pick the appraisal as an obvious one -- that the seller has agreed to pay for specifically, rather than a general seller credit (which will appear on page 3). Another example is a radon test if the lender requires it because radon has been determined to be a problem in homes in its lending area. If the seller has agreed to pay for the test, it will be shown in section B or C depending on whether its a shopped service. See 1026.38(f)(2) - (3) where you will see the phrase "settlement services required by the creditor." Those paragraphs describe what is to appear in B and C, respectively.

Even if the buyer agreed to pay the seller's attorney's fee (not seen very often), that cost would appear in section H, in the borrower's column because it's not a service the bank requires.

Perhaps those attorneys you mentioned should try reading the regulation before offering opinions on what goes where.
Last edited by John Burnett; 06/15/21 09:48 PM.
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#2255379 - 06/16/21 01:54 PM Re: Seller attorney fees on CD dutchbltz
dutchbltz Offline
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Thank you John! I appreciate the detailed response. I'm not in the habit of taking compliance advice from closing attorneys, however, they do have a way of making me doubt myself! smile

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#2257403 - 07/29/21 07:44 PM Re: Seller attorney fees on CD dutchbltz
Krit Offline
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Can I ask a somewhat similar but different question as a follow-up? What is the guidance for Seller Paid fees that are Lender charges. Although they are paid by the seller, should they be included in the APR?

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#2257405 - 07/29/21 07:53 PM Re: Seller attorney fees on CD dutchbltz
rlcarey Online
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What sort of fees would a lender charge the seller? What sort of relationship would a lender have with the seller?
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#2257406 - 07/29/21 07:57 PM Re: Seller attorney fees on CD dutchbltz
Krit Offline
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Sorry for the confusion. In this case, its normal borrower charges from the lender but they are being paid by the seller. For example, the seller is paying $1500 and the FI chooses specific fees to be paid by the seller. Do those fees still impact the APR?

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#2257413 - 07/29/21 08:58 PM Re: Seller attorney fees on CD dutchbltz
rlcarey Online
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The seller is paying $1,500 - you mean they are giving the borrower a general seller credit? If that is the case, then that goes in the summaries of transaction table as a seller credit and has no impact on the closing costs or APR fees. If you are arbitrarily allocating that general seller credit to specific borrower fees and they happen to be finance charges, then those loans are going to be under disclosed.
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#2257546 - 08/02/21 08:43 PM Re: Seller attorney fees on CD dutchbltz
John_Burnett Offline
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It's just a bad idea to "assign" a general seller credit to any specific closing costs for the reason Randy explained. If the seller agrees to pay the buyer's title insurance policy premium, that's another matter. The Bureau laid out good examples of how to handle that in a Factsheet.
Last edited by John_Burnett; 08/02/21 08:44 PM.
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