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#2288831 - 09/19/23 05:55 PM Short Sale - Judgment Fee to be paid by Buyer
Tarhe Offline
Diamond Poster
Joined: Nov 2006
Posts: 1,393
California
We are at the point of issuing our Closing Disclosure today on a purchase transaction that involves a "short sale". In order to get clear title, our buyer has agreed to pay a "Judgment" fee that the seller will not be paying. Of course, we want clear title so this would appear to be a fee related to our loan transaction. This cost was not disclosed on our Loan Estimate. Can we now show it on our CD? I'm thinking in the "Other" section? (The fee is payable to the other bank.) And as such, this would not be a tolerance issue?

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#2288835 - 09/19/23 06:05 PM Re: Short Sale - Judgment Fee to be paid by Buyer Tarhe
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,010
Galveston, TX
If you are requiring it, then it cannot go in Section H. It would be a Section B charge as the borrower cannot shop. You had three business days from finding out about this fee to issue a changed circumstance disclosure to reset your tolerance baselines, even if that means it only shows on the final CD. If the fee, which would be a prepaid finance charge, results in your APR going out of tolerance, then it would require a new three business day wait for closing.
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#2288838 - 09/19/23 06:11 PM Re: Short Sale - Judgment Fee to be paid by Buyer Tarhe
Tarhe Offline
Diamond Poster
Joined: Nov 2006
Posts: 1,393
California
So, not even in Section K as an Adjustment - similar to paying off a loan with another bank? Looks like Bank B filed a judgment against the seller a few years ago that is on title - and our buyer has agreed to pay it.
I will find out when we learned of our buyer committing to paying it to ensure we meet the 3-days. If not, then our Bank must absorb it?

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#2288839 - 09/19/23 06:27 PM Re: Short Sale - Judgment Fee to be paid by Buyer Tarhe
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,010
Galveston, TX
Well, it is either a judgement or a fee. If it is a judgment that the borrower and seller agreed that the buyer would pay, that is one thing and then I would agree that it would be an adjustment in K. But you originally called it a fee that you were requiring the borrower to pay to obtain clear title.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2288841 - 09/19/23 06:28 PM Re: Short Sale - Judgment Fee to be paid by Buyer Tarhe
Tarhe Offline
Diamond Poster
Joined: Nov 2006
Posts: 1,393
California
Oh, I totally see the difference in what you are saying. It is a judgment lien that we are paying off, not a fee. So, thank you for the explanation. So helpful.

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#2288862 - 09/19/23 09:24 PM Re: Short Sale - Judgment Fee to be paid by Buyer Tarhe
John_Burnett Offline
Gold Star
John_Burnett
Joined: Feb 2013
Posts: 258
Cape Cod
And, if it's a payoff of the judgment and not a fee, you don't have a situation requiring a revised LE to avoid having the bank pay the judgment. If you have time for a revised LE, I'd send it as an informational thing to clarify the amount the borrow should expect to pay or receive at closing. Definitely include it as an adjustment in K on the CD.
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#2288865 - 09/19/23 10:39 PM Re: Short Sale - Judgment Fee to be paid by Buyer Tarhe
Tarhe Offline
Diamond Poster
Joined: Nov 2006
Posts: 1,393
California
Thank you!

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