Skip to content
BOL Conferences
Thread Options
#2261667 - 10/27/21 01:37 PM Closing Disclosure Cure / Violation
Tazzieb Offline
New Poster
Joined: May 2021
Posts: 2
Hi, I am new to the Compliance side of the business and have run into an issue that we are trying to get others opinions on.

Short Story - we had a loan that we had to extend the rate lock numerous times due to issues with the property (property was in probate), we passed the fees to the borrower as our Normal SOP. The parties added to the sales contract that the seller would pay these extension fees. The sales contract was amended multiple times, changing the seller paid credits. Only the initial addendum states that the credit is for extension fees (500), by the last addendum, the seller credit had increased to 2,000. During a compliance review, it was found that the loan did not close with the initial investor and the extension fees were no longer payable. (We do not have extension fees on our end and it is a pass through fee). The CD showed that the borrower paid a portion of the extension fees and the seller paid a portion. We all agree that these fees must be refunded. The issue that we have is Who gets the refund? Compliance is saying the Borrower because the last 3 addendums does not specify what fees that seller is paying and the borrower gets the amount. Mortgage department is saying that the fee should be split to how it was paid on the CD, the portion the borrower paid goes back to the borrower and the seller gets the amount back to them.

What is the collective opinion on this?

Return to Top
TRID - TILA/RESPA Integrated Disclosures Rule
#2261670 - 10/27/21 01:51 PM Re: Closing Disclosure Cure / Violation Tazzieb
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
So your Compliance department (even though they know the credits were originally intended for the extension fees) is OK for charging an unearned fee to the seller?

BTW, welcome to BOL.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2261671 - 10/27/21 01:56 PM Re: Closing Disclosure Cure / Violation Tazzieb
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,225
Galveston, TX
I am with Dan - how can you refund a fee to the buyer that they did not pay?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2261672 - 10/27/21 02:02 PM Re: Closing Disclosure Cure / Violation Tazzieb
Tazzieb Offline
New Poster
Joined: May 2021
Posts: 2
Wow, I will say to our defense that the document that showed that the seller paid the extension fees was not placed in the file and not provided to compliance until after the checks were written and sent to the borrower. It was a week later that the document was provided that showed the fee seller was paying the extension fees.
Definitely gives me food for thought.

Return to Top
#2261674 - 10/27/21 03:09 PM Re: Closing Disclosure Cure / Violation Tazzieb
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,225
Galveston, TX
Well, you indicated that:

"The CD showed that the borrower paid a portion of the extension fees and the seller paid a portion."

If you did not have the document showing that the seller was giving the borrower a specific credit for the extension fees, then that would mean you even may have had larger problems.

That CD disclosure was the only thing I was keying on.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top