My question is in regard to homeowners association (HOA) monthly dues and where they should be placed on the Loan Estimate and the Closing Disclosure. I have 2 scenarios - one where the buyer (our borrower) will pay the October dues with closing (assume the loan closes in early October so the dues are due). The other is where the seller has already paid the October dues and the buyer is reimbursing the seller.
1. If we know that HOA dues will be due (paid by buyer) at the time we prepare our Loan Estimate, it would be disclosed in Section H ("Other"). If we do not have that knowledge at the time we prepare the LE, we can leave the HOA dues off entirely. It is not a cost imposed by the bank for its loan. Correct?
2. On the CD, if the HOA Dues are to be paid by the buyer and will be collected at closing, do we disclose this in Section F for Prepaids and show one month being prepaid? or do we keep it in Section H for Other? Reg Z says, "Under the heading "Prepaids", an itemization of the amounts to be paid by the consumer in advance of the first scheduled payment." Section "F" is for obligations that are related to the ownership or use of the real property.
3. If there is a pro-rata reimbursement to the Seller for HOA dues that the Seller prepaid and that the buyer will now reimburse him for, this would be shown in Section "K" as an Adjustment Due from Borrower at Closing on the CD.
Do I have this right? Thank you!