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#2255428 - 06/16/21 07:00 PM Contractual fees
VBHome Offline
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I want to make sure I'm understanding the section below correctly. If we (the lender) don't require an Abstract, but the purchase contract states the consumer will pay for an Abstract would we place that in Section K: Due from Borrower at Closing under Adjustments?

Thank you,

Paragraph 38(j)(1)(v).
1. Contractual adjustments. Section 1026.38(j)(1)(v) requires disclosure of amounts not otherwise disclosed under § 1026.38(j) that are owed to the seller but payable to the consumer after the real estate closing. For example, the following items must be disclosed and listed under the heading “Adjustments” under § 1026.38(j), to the extent applicable:

i. The balance in the seller's reserve account held in connection with an existing loan, if assigned to the consumer in a loan assumption transaction;

ii. Any rent that the consumer will collect after the real estate closing for a period of time prior to the real estate closing; and

iii. The treatment of any tenant security deposit.

2. Other consumer charges. The amounts disclosed under § 1026.38(j)(1)(v) which are for charges owed by the consumer at the real estate closing not otherwise disclosed under § 1026.38(f), (g), and (j) will not have a corresponding credit in the summary of the seller's transaction under § 1026.38(k)(1)(iv). For example, the amounts paid to any holders of existing liens on the property in a refinance transaction, construction costs in connection with the transaction that the consumer will be obligated to pay, payoff of other secured or unsecured debt, any outstanding real estate property taxes, and principal reductions are disclosed under § 1026.38(j)(1)(v) without a corresponding credit in the summary of the seller's transaction under § 1026.38(k)(1)(iv). See comment 38-4 for an explanation of how to disclose a principal reduction under § 1026.38(j)(1)(v).

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#2255443 - 06/17/21 11:08 AM Re: Contractual fees VBHome
rlcarey Offline
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rlcarey
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Galveston, TX
A fee for a service belongs on Page 2 and not page 3. If it is not a requirement by the lender, then it would go in Section H. Not too many lenders will make a mortgage loan without an abstract or a lender's title policy.
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#2255446 - 06/17/21 12:45 PM Re: Contractual fees VBHome
VBHome Offline
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Thank you for clarifying. That simplifies things.

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#2255495 - 06/17/21 06:03 PM Re: Contractual fees VBHome
VBHome Offline
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Additional questions involving fees not required by the lender. The lender doesn't require title insurance for the loan. The borrower decides they want to get Owner's Title Insurance. The title company won't do Owner's Title Insurance alone. They require Lender's Title to be included.

1. Would the fees for both Owner's and Lender's go in Section H?
2. Would any additional fees added as a result of Owner's Title belong in Section H?
3. Are we required to complete a changed circumstance and/or document we verified with the borrower they are aware of the additional fees being added as a result of the Owner's Title they requested prior to sending them the new Closing Disclosure?

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#2255497 - 06/17/21 06:10 PM Re: Contractual fees VBHome
rlcarey Offline
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You must live in a very strange State. How does an owner get an owner's title policy if they pay cash for the property then?
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#2255500 - 06/17/21 06:24 PM Re: Contractual fees rlcarey
VBHome Offline
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Originally Posted by rlcarey
You must live in a very strange State. How does an owner get an owner's title policy if they pay cash for the property then?

I live more in a confused state and I'm confused by your question.

The consumer comes in and applies for a loan. The bank does not require title insurance for the type of loan they applied for. The borrower decides they want Owner's Title Insurance. I don't know why, they just do. The Title Company says they won't order Owner's Title Insurance without Lender's Title Insurance.

There's no documentation in the file indicating the consumer was made aware the Lender's Title fee was added in addition to the Owner's Title fee except where they signed the Closing Disclosure. Should there at least be proof a discussion took place notifying them of the additional fees?

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#2255513 - 06/17/21 07:45 PM Re: Contractual fees VBHome
rlcarey Offline
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Galveston, TX
Not knowing your State, it is hard to say, but every State I have ever been in or researched, an owner can buy an owner's title policy whether there is a lender involved or not. I highly suspect that someone has been smoking a little too much.
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#2255583 - 06/18/21 03:10 PM Re: Contractual fees VBHome
VBHome Offline
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It's not every title company demanding a lender's title policy to go with a requested owner's title policy. Only some of them are, so it's not a state requirement. It's some kind of internal title company policy.

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#2255587 - 06/18/21 03:40 PM Re: Contractual fees VBHome
rlcarey Offline
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rlcarey
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Galveston, TX
Like I said - then find a new title company and report them to your State Department of Insurance as in every State that I can think of, this would be an illegal practice.
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