In preparing the Itemization of Amount Financed, a consultant is telling me that I need to list all liens that are being paid off, the fee for the payoff and basically every dollar amount separately that is listed on the HUD-1. Where can I find a regulation on this subject? No other lender I ever worked for requires pay off or pay off related fees to be listed. Really need some help (and I know the BOL gurus will come through!)

If you are providing a HUD 1 or 1A you can leave the itemization blank if you want. However, if you provide an itemization, IMO, it should match the HUD 1 or 1A.

You can't give the HUD-1 in lieu of the itemization unless you provide it at or prior to consummation. That's tough to do for many lenders in a purchase transaction.

Yes, many lenders in CA take the following exemption under 3500.10(d) Exempt transactions. When the borrower or the borrower's agent does not attend the settlement, or when the settlement agent does not conduct a meeting of the parties for that purpose, the transaction shall be exempt from the requirements of paragraphs (a) and (b) of this section, except that the HUD-1 or HUD-1A shall be mailed or delivered as soon as practicable after settlement.

Well, I've learned something new. I've never seen (or at least paid attention to) this exemption, but I never have been in a situation where this exemption was needed.

However, I will echo my previous opinion that if an itemization is given it should mirror the HUD settlement statement.

OK, this got me to thinking. According to the commentary to 226.18(c), the itemization need not be given for RESPA transactions even though the timing between RESPA and Reg Z may differ. The exclusion to that is when redisclosure is required under 226.19(a)(2). So if redisclosure is not required (although in most cases a final TIL in given even if not required) then I think the itemization can be excluded.

Am I missing something here? But again, I have never been in a situation where all the parties were not at the closing.

Here's a recent thread that appears to support me, but the situation is a little different than Anon's.

I believe you're right on point. The itemization can be excluded as long as a GFE is provided and the HUD-1 is provided at or before consummation. Sorry California, looks like you can't benefit from this exemption.

Where is the cite that requires the Itemization to mirror the HUD-1 or HUD-1A. "IMO," just doesn't cut it with senior management.

Quote:

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The itemization can be excluded as long as a GFE is provided and the HUD-1 is provided at or before consummation .

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Anon I appreciate the support, but I think you may have a misunderstood. The other Anon is taking the exemption under 3500.10 because all the parties are not at the closing so they are providing the HUD statements after closing, so they are providing the itemization at or before closing in lieu of the HUD.

However, my contention is that an itemization is not required at all, unless they have to redisclose under 226.19(a)(2) and in most, although not all, cases a redisclosure is not required.

I'm in new territory here based on all the parties are at our closings and I have always taken the stance an itemization is not required as long as we give the HUD within the guidelines.

So, what I'm trying to confirm is not whether they can use the 3500.10 exemption, but rather do they even have to invoke it under the situation?

The itemization can be replaced by the HUD-1 (or HUD-1A) if you are giving the HUD statement with the loan docs at consumation (signing.)

If you aren't giving the HUD statement at doc signing, then your Reg Z disclosure must have a full accounting of amount being financed. The only items that WON'T be a mirror from the Reg Z itemization to the HUD statement are POC charges. Note that any POC charges that are also FINANCE charges must be included in your Finance Charge amount, and will therefore reduce the "Amount Financed."

In California, since there is never a "meeting of the parties" at settlement on a SALE transaction, a HUD-1 is not required at doc signing. However, on a home equity loan, if the borrower is coming in to the branch, you DO have a "meeting of the parties", so a HUD-1A is required.

But basically, the Reg Z itemization needs to account for all of the loan proceeds. The consumer needs to be able to "follow the money!"

So - to recap - there WILL be differences between the HUD Settlement Statement and the Reg Z itemization as follows:

The Reg Z does not require an itemization of the Prepaid Finance Charge, although you can if you want to. The HUD statment requires all of the Prepaids, including any POC to be itemized and include the names of anyone who got paid.

Reg Z does not require that you list items that are POC, like when the customer paid for the appraisal up-front. Likewise, if the lender is paying for closing costs (such as a "no-cost" loan), those items are not required on the Reg Z. On the HUD, you must show all of those POC items, and who got paid.

You also don't need to show an annual amount for taxes or insurance on the Reg Z if the customer is going to pay for those items himself.

(NOTE - the itemization of items "paid on behalf of the consumer" are when the lender pays a third party FROM loan proceeds.)

Bonnie, thanks for a great explanation. As I said I have never had the situation where the "parties" involved were not at the closing.

I'll repeat what I said earlier, I learned something new today.

In California, especially Southern California, we use Escrow companies and Title companies to facilitate the transfer of property. It is almost unheard of for a buyer and seller NOT to use an escrow company.

So, unlike an "east coast" closing where buyer and seller go to the attorneys office and the documents are passed around for all to review, in So. Cal. the docs are sent over to the Escrow who holds them and waits for the buyers and sellers to come in when they please. Sometimes, husband and wife come in separately to sign. At any rate, escrow makes sure all of the docs are signed where they should be, and then they send the documents their various ways - loan docs to the lender, recordable documents to the Title company, and everything else waits at escrow.

This is where it gets weird as far as terminology goes - "closing" or esrow "settlement" really happens AFTER the loan is funded into escrow, who then sends funds over to Title to payoff any outstanding liens, taxes, etc, the transfer deed and deed of trust are recorded, and the dust then settles.

Escrow then figures out the final tally of who got what, prepares the settlement docs accordingly, and sends the seller their check, the buyer a refund check (if any), and all respective parties their copies of the settlement documents. This is when "closing" or "settlement" really happens as far as anyone outside of regulated lending is concerned.

BTW - it is the seller and buyer (or their real estate brokers) who choose the Escrow and Title companies in a sale transaction. Rarely, if ever, does the lender get to choose. This is why, in So. Cal., it can be nearly impossible to get Escrow to prepare the Settlement Statement to exactly match what the lender has.

Bonnie, well said!

I have a question regarding the itemization so I thought I would tag on here. The Reg Z Commentary to 226.18(c) indicates that the bank can provide a statement that a written itemization would be provided upon request, furnishing the information only if the customer requests it. But then it goes on to say "Whether given as a matter of course or only on request, the itemization must be provided at the same time as the other disclsoures required by section 266.18, although separate from those disclosures." Is this saying that regardless of whether you provide the notification and the customer didn't request the itemization, you have to provide the itemization anyway??? Our bank does provide the notification about the itemization but we provide a copy any way as part of the documentation, but would we really have to do so?

If you give as a matter of course it must be given with the other disclosures.

If you only give if requested - if requested you must give at the time of the other disclosures - IOW you can't mail the itemization to them at a later date if they request the itmeization. If they do not request the itemeization you do not have to give it.