Sellerpaid Closing Costs and the GFE

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Question:

If a customer brings in a sales contract to by a house when applying for a mortgage loan, and the contract specifies that SELLER is to pay all closing costs, is it required to put any of these charges on the Good Faith Estimate? If yes, do you put "Paid by Seller, POC" If no, please explain why or why not.

Answer:

Answer by David Dickinson

24 CFR 3500.7(c) states the GFE must list all fees which the borrower will normally pay at or before settlement based upon common practice in the locality of the mortgaged property.

If the borrower will not pay these fees, then do not list them on the GFE.

Answer:

Answer by Lucy Griffin

While David reads RESPA and Regulation X correctly, I don't think that HUD does. I am uncomfortable suggesting that these costs don't need to be disclosed when HUD usually looks for any way to increase the amount of information disclosed. And since HUD wrote the regulation they are right even when they are wrong. I would suggest disclosing the fees as poc simply to give the applicant information on the true cost of their purchase contract. The costs that will be paid by the seller go to the benefit of the borrower.

First published on BankersOnline.com 2/3/03