Omitting Seller Fee from CD, Reissue CD Post Close

Posted By: Vive Accommodare

Omitting Seller Fee from CD, Reissue CD Post Close - 03/20/18 09:45 PM

In instances where the Seller has fees listed on Title's statement of fees, must we always list all their fees on there onto the Borrower's Closing Disclosure? We have a transaction where a fee was listed, but omitted from the Borrower's Closing Disclosure. During an audit, this was caught and the auditors are now stating the Borrower was due a revised Closing Disclosure because of the omitted Seller Fee. This doesn't affect anything numerical on the Borrower's side as it was truly a Seller fee (meaning not paid on behalf of the Borrower). Would this fall under a clerical error since again it doesn't affect any fees paid nor is it for a good faith violation?
Posted By: rlcarey

Re: Omitting Seller Fee from CD, Reissue CD Post Close - 03/21/18 11:21 AM

It is not a clerical error, it is just an uncorrectable violation. There is no cure possible as it does not directly impact the borrower. If the auditor is saying you owe the borrower a revised CD, have them point to 1026.19(f) and show you where it says that.
Posted By: Vive Accommodare

Re: Omitting Seller Fee from CD, Reissue CD Post Close - 03/21/18 04:20 PM

Thank you for your insight, Rl! I'll do just that!
Posted By: John Burnett

Re: Omitting Seller Fee from CD, Reissue CD Post Close - 03/22/18 03:39 PM

Originally Posted By rlcarey
It is not a clerical error, it is just an uncorrectable violation. There is no cure possible as it does not directly impact the borrower. If the auditor is saying you owe the borrower a revised CD, have them point to 1026.19(f) and show you where it says that.
The auditor would be wrong to accept a post-consummation revised closing disclosure as curative of the violation.
Posted By: Compliance NABW

Re: Omitting Seller Fee from CD, Reissue CD Post Close - 03/23/18 03:44 PM

Are they saying an accurate "Final" CD was due at consummation? I can see that being the point they are trying to make. Although, there is no "cure" for this per se, I do consider it a best practice to send the borrower an accurate "Final" CD. This is assuming the item is something that should not only show up in Section M or N.
Posted By: John Burnett

Re: Omitting Seller Fee from CD, Reissue CD Post Close - 03/23/18 04:23 PM

To clarify my earlier post -- If the seller cost in question was missing from the closing disclosure received by the borrower three days before closing, but was identified at or before consummation, it should have appeared on a final closing disclosure given to the borrower at or before closing. If that is the auditor's comment, I agree. But if was omitted from the latest closing disclosure provided to the borrower, the omission would be a technical violation if the creditor knew or ought to have known of the cost (good faith efforts), but incurable. From the original description of the scenario, I believe the fact was known at closing, which would have afforded the creditor the opportunity to issue a revised disclosure on the spot.