Disclosing Property Taxes Under RESPA

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Question:

I just read the 10/14/02 answer from Mary Beth Guard regarding Hazard Insurance Disclosure and RESPA. This confirmed our thoughts about the hazard insurance disclosure question, but opened a new can of worms when it was stated that property taxes must be disclosed in a similar matter. Title companies in this area never include the annual amount of taxes on the HUD. Would you point us to the actual reg where this is spelled out? </strong>

Answer:

First, we have discussed this numerous times on BOL, so if you'll do a search you should find many responses.

Second, check with your regulator as many have different opinions on this.

To address your specific question, refer to Appendix A of RESPA. I'll quote a few lines. The General Instructions state:
The settlement agent shall complete the HUD-1 to itemize all charges imposed upon the Borrower and the Seller by the Lender and all sales commissions, whether to be paid at settlement or outside of settlement, and any other charges which either the Borrower or the Seller will pay for at settlement. Charges to be paid outside of settlement, including cases where a non-settlement agent (i.e., attorneys, title companies, escrow agents, real estate agents or brokers) holds the Borrower's deposit against the sales price (earnest money) and applies the entire deposit towards the charge for the settlement service it is rendering, shall be included on the HUD-1 but marked "P.O.C." for "Paid Outside of Closing" (settlement) and shall not be included in the computing totals. P.O.C. items should not be placed in the Borrower or Seller columns, but rather on the appropriate line next to the columns.

Also, this is from the instructions on Section L:
Lines 808 through 811 are used to list additional items payable in connection with the loan, including a CLO Access fee, a mortgage broker fee, fees for real estate property taxes or other real property charges.

First published on BankersOnline.com 5/17/04