How should we disclose construction loan inspection and handling fees?
We are doing a TRID mortgage loan and the LE was sent a while ago. We now need to add his wife to loan. Do we need to have her receive all those initial documents we sent him? She did do an application.
We will be doing an initial construction loan and I wanted to confirm that the construction draws are to be a prepaid charge? If the title company bundles their construction draws and priority photos into one charge do we just leave them all disclosed under a prepaid charge?
We are having a debate as to what is the baseline for 10% tolerance fees when there are a number of LEs and CDs where fees have decreased. Is the baseline the first LE that may have a total of $2500 or the latest disclosed LE or CD that may have a total of $2000? The regulation seems to only address resetting baseline when fees increase rather than when fees decrease.
If the seller is paying all the closing costs, does the aggregate adjust for the escrow show as a credit to the seller or buyer on the closing disclosure?
Question on tolerance cures regarding LE and CD fees.
Based on the regulation, all fees on the LE must be rounded as stated below:
1. Rounding of dollar amounts.
Section 1026.37(o)(4)(i)(A) requires that certain dollar amounts be rounded
to the nearest whole dollar. For example, pursuant to § 1026.37(o)(4)(i)(A),
periodic mortgage insurance payments of $164.50 are required to be disclosed
under § 1026.37(c)(2)(ii) as $165. However, if the periodic mortgage
insurance payment equaled $164.49, the creditor would disclose $164.
We need to know how to handle this when we know and enter an exact fee, it is
rounded down on the LE and then it appears we under disclosed on the LE and
need to issue a tolerance due to the rounding.
For example, the credit report is $53.15. We know it, enter it in system,
but LE regulation forces system to round to $53. When we issue the CD at
$53.15 it appears we under disclosed by $.15 cents; hence appearing to have
to issue a tolerance cure of $.15.
Why would we need to issue a $.15 credit, when we in good faith entered the
exact cost? Are we interpreting the regulation correctly?
On construction/permanent loans with one closing-upon completion, a modification is done and the 30 year rate is set at that time. There are times we have to extend the construction period of 12 months . Usually the rate remains the same but at present the rates are changing. The construction period we base the rate on is the WSJ prime +1% fixed for 12 months. I have to extend one now and the rate will increase from 5% to 5.75%. What if any disclosures are required at time of extension?
I have been told on refi transactions to disclose the property taxes on the LE in the prepaid section, if we anticipate the taxes being due within the next 60 days. If we get to closing and tax bills are still not out, do we still show them POC on the closing disclosure like we are currently doing with hazard insurance, or do we leave them off?
Borrower completes an application stating that the collateral for a purchase
Lot Loan is – Lot 4 Lake Anna Drive, Louisa VA 23093.
Loan Estimate is delivered with the Collateral listed as – Lot 4 Lake Anna
Drive, Louisa VA 23093 (No property card is pulled or reviewed at this time)
No Due Diligence is done, because you assume the Borrower knows what they
Closing Disclosure is delivered with the Collateral listed as – Lot 4, Both
Waters Estates, Bumpass VA 23024 (Title Work and Appraisal is reviewed and
at this time the collateral address is updated)
Question – How closely should we be paying attention to the real property
address that is listed on the Preliminary Loan Estimate? Does it matter if
the information is incorrect?
In this example the City and Zip Code were incorrect. So when I am asked is
the Real Property Information Correct on the Loan Estimate - at this point I
am unsure? Yes - if we go by what the Borrower stated on the application,
but No, if you were to pull the Property Card and review the Legal
Description or compare it to the CD.
May a home improvement loan be treated as a single transaction construction-to-perm loan?
If so, is the draw period/construction period exempt from RESPA servicing rules or do they apply because it is not initial construction of the property?
Here is the scenario: the borrower already owns a house and is taking it down to the studs and will have all new finishes at the completion of construction. He is also paying off two existing loans. Following the construction phase, the borrower will obtain permanent financing through our bank.