Changed Circumstance?

Home purchase with additional funds loaned for home improvements. Pest inspection done and damage found - $2400 to repair, $1900 to treat. Buyer & seller agree to split cost of repair, seller will pay all of treatment. Seller lowers purchase price of home by $1200 (1/2 of repairs) and buyer will pay whole bill. Buyer does not have cash, we are not increasing loan amount, they will have to use additional funds earmarked for improvements to pay bill. Changed circumstance and redisclose? I say yes because of additional cost of repairs, bank president says no because it will come out of the additional funds we already disclosed to them for improvements. Ugh!

Are you requiring that the treatment and repairs be made to make the loan? If so, the treatment and repairs are now disclosable items on the GFE and is going to cause you tolerence violations if you don't redislcose with three days of gaining knwoledge.

I spoke to the closing agent yesterday who gave me the figures and explained the situation. We are requiring the treatment & repairs to be done, but if we were not, I would not have to redisclose? We require termite inspections, but I don't see anything in the policy that says we require treatment/repair, but I was informed that we are requiring it. So, I would also put the treatment on the GFE and include a letter stating that even though we know the seller is paying 100% of the fee, we still have to put it on there, is that correct?

Sounds like you have it. The seller will credit the borrower for it on Page 1 of the HUD-1.

Thank you very much

Same loan, settlement agent does not think we should be putting anything on page 1 of the HUD-1 to show seller crediting buyer for charge since it's "not a buyer charge". The charge for the treatment is being shown on page 2 in 1300 block. Am I missing something? (I asked an opinion of another settlement agent from a different title company and got the same answer)

You are requiring the "service" therefore it becomes a cost of the loan to the buyer. How the buyer negotiates its payment is of no consequence. The charge should be shown in the buyer's column in the 1300 series with a seller's credit in the 200 series and the off setting cost to the seller in the 500 series.

That was my understanding. I have explained it to the settlement agent and I can only hope she will make the necessary changes. Thank you.

The settlement agent is not the voice of authority here, nor the one liable, you are. Require them to do it as you instruct.

GREAT point!^^^ Settlement agents work for banks, not vice versa. Too often we forget that fine point and get bullied by the agent. Funny...they never have to explain anything they do to an examiner.

We have had a few bullies over the past year. If it gets too bad, I usually end up with them. I've been in some all out wars, but they know not who they tangle with if they have to go all the way to ME!