CD estimated taxes not due for 2 full years

Posted By: ADN

CD estimated taxes not due for 2 full years - 04/21/22 09:45 PM

We are working on a loan closing that the preliminary title work shows taxes not due until 2024. We are wondering how to fill out the Closing Disclosure Estimated Taxes, Ins & Assessments section. Would be use $0 for the tax amount or should we utilize the amount that won't be due until 2024?
Posted By: Dan Persfull

Re: CD estimated taxes not due for 2 full years - 04/22/22 12:29 PM

That section is to disclose the estimated taxes, insurance, flood insurance etc. that will be required in relation to the property. Those payments should also be included in your ATR calculation.

The bank is to disclose those estimates and then indicate if they will be included in an Escrow account.

Regulation Z 1026.37(c)
(c) Projected payments. In a separate table under the heading “Projected Payments,” an itemization of each separate periodic payment or range of payments, together with an estimate of taxes, insurance, and assessments and the payments to be made with escrow account funds.
(4) Taxes, insurance, and assessments. Under the information required by paragraphs (c)(1) through (3) of this section:
(i) The label “Taxes, Insurance & Assessments”;(ii) The sum of the charges identified in § 1026.43(b)(8), other than amounts identified in § 1026.4(b)(5), expressed as a monthly amount, even if no escrow account for the payment of some or any of such charges will be established;

Regulation Z 1026.38(c)
(c) Projected payments. A separate table, under the heading “Projected Payments,” that includes and satisfies the following information and requirements:
(2) Estimated taxes, insurance, and assessments. A reference to the disclosure required by paragraph (l)(7) of this section.
Official Interpretation
38(c) Projected payments.
1. In general. For guidance on the disclosure of the projected payments table, see § 1026.37(c) and its commentary.
Posted By: rlcarey

Re: CD estimated taxes not due for 2 full years - 04/22/22 01:25 PM

Dan is correct, it would not impact the ETI&A on page on, but it would impact the escrow chart on Page 4 of the CD. Your doc prep system is probably not set up for that.
Posted By: ADN

Re: CD estimated taxes not due for 2 full years - 04/22/22 02:49 PM

Thank you for the responses. You are correct, our system is not set up to accomodate that and I'm unsure how to proceed. We actually several loans like this in the pipeline with this scenario right now due to the fast growth of our area and new construction.