If the borrower and seller are splitting the attorney fees (this is listed on the OTP) would we document this amount in the cash to close section on the LE?

If you have the OTP at the time the LE is being prepared then you have the option to disclose the full fee showing a seller credit for their portion or only disclosing the borrower's portion of the fee.

Keep in mind that if you choose to disclose the full fee with the seller credit then when you do your tolerance comparison you can only make the comparison to the portion the borrower is responsible for. This is why I would suggest only disclosing the portion the borrower is responsible for under the OTP.

Listed in the Owner's Title Policy (OTP)? Did you mean the purchase contract?

I assumed the OTP was the Offer to Purchase. Maybe I shouldn't have made that assumption.

It was Offer to Purchase. Thank you!!

If I do not list the seller credit would we just include the borrower portion in section H?

You list the borrower's portion in the appropriate section for the specific fee.

Could I just put this in the cash to close table?

I believe it should be borrower paid fees in column H under other and then list the seller credits in the cash to close table for the seller's portion.

You have to determine what the attorney fee is actually for in order to know what section to disclose it in.

You would only list seller credits if you are going to show 100% of the fee being paid by the buyer. But as I said earlier if the fee is $600 and you show B-$600 and a $300 seller credit then when you do your tolerance comparison you can only show the buyer's portion as $300. You cannot use the full $600 as your benchmark.

Dan - I am not following your last statement. If you disclose the whole $600 with a seller credit, then the entire fee is subject to 0% tolerance. Then on the CD you have to disclose the full amount with a seller credit. You cannot change how you choose to disclose the fee between the LE and CD. So, if the fee goes up to $700, your tolerance cure would be $100 regardless of the fact that the seller credit went up to $350.

Randy, maybe I didn't word that properly.

Attorney Fee is $600. The purchase agreement states the buyer and seller will split the fee 50/50. We will assume the attorney fee belongs in Section B. The LE has to reflect the known terms at the time it is prepared.

On the LE there are 2 options how to disclose the fee:

Sect B - Attorney Fee - $600
Total Closing Costs - Lender Credit $300

Or

Sect B - Attorney Fee - $300
Total Closing Costs - Lender Credit -$0

The CD would properly disclose the buyer paid their $300 and the seller paid their $300 per the purchase agreement.

If they chose to disclose the $600 on the LE with the $300 seller credit they cannot use the $600 as their 10% benchmark. The buyer was never responsible for more than $300 at closing.