Lender Notes & Info
Beginning some eight years ago when HUD first started talking about a “new rule”, Beltway Title and Abstract, Inc. has been a driving force for disseminating information of changes to the title industry. We have attended all industry seminars, near and far to gather the correct information necessary to assist lenders and REALTORS. We were one of the first title companies to hold meetings to advise both lenders and REALTORS of rule changes and how they affect business as we have known it in the past.
This effort culminated with the advent of our proprietary, copyrighted “Lender Primer”, which I assume you are familiar with by virtue of your being on this page.
We now take the next step in that continuing effort by attempting to give you the best information available of the interpretation of the 2008 New Rule and in particular, the changes and requirements brought about by the January 1, 2010 mandate of the use of the new HUD-GFE and the new HUD-1.
To minimize your risk of a RESPA violation, please take note of the following:
TOLERANCES
CASE SCENARIO:
National Lender tells settlement agent that because the
Borrower didn't pick the settlement company from their list
of providers, that there was no tolerances required as to
transfer Taxes.
FACT:
As you are aware, there are areas of the HUD-GFE that have 0% tolerances, others that have 10% tolerances and still others that have no tolerances at all. And you are also aware that some tolerances do not apply in situations where the title company chosen is not one of or the only title company on your required list of providers. What you may not know is that, no matter what title company is chosen, one on the your list of providers or one not on your list of providers,
Transfer
Taxes are still subject to the 0% tolerance. They must still be
exact or the lender must pay the
over-tolerance charges.
Do you really want to be liable
for some of the highest charges shown on the HUD-GFE. I
think not. The Lender Primer guarantees that you never
will.
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CLEARING TOLERANCE VIOLATIONS AT CLOSING
CASE
SCENARIO: Lender tells settlement
agent that because there is a tolerance violation, a revised
GFE must be prepared and settlement agent must prepare a
revised HUD-1.
FACT:
There are basically two easy ways of clearing tolerance violations at the closing table
as stated by HUD.
a) The lender gives the borrower a credit for the over-tolerance amount in the 200 series or
b) The lender shows a negative value credit as a P.O.C. in the 1200 series. Either should be labeled “Lender credit to cure tolerance.” Neither
requires a revised HUD-GFE or HUD-1.
None of this is necessary if you use
the Lender Primer.
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ITEMIZATION OF LINE 1101 CHARGES
CASE
SCENARIO:
National Lender tells title agent that their rules require
that all items included in Line 1101 on the HUD-1 must be
itemized on page 2.
FACT: According
to HUD,
Requiring that line 1101 charges be
itemized is a
RESPA violation and flies in
the face of the one line requirement.
An additional page which is not
part of the HUD-1 may be attached to the HUD-1 showing the
breakdown of the charges on line 1101. The Lender
Primer can’t help you here, you are on your own in this one.
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TOTAL FEES SHOWN ON
LINE 1101
CASE
SCENARIO:
National Lender tells title agent that all title fees,
lender's and owner's title insurance and settlement fee must
be shown on Line 1101 only.
FACT: HUD's
Instructions for Completing HUD-1 states as follows:
Line 1101 is used to record the total for the category of
''Title services and lender's title insurance.'' This amount
must be listed in the columns.
Line 1102 is used to record the settlement or closing fee.
Line 1103 is used to record the charges for the owner's
title insurance and related endorsements. This amount
must be listed in the columns.
Requiring
that all title fees, title insurance and settlement or
closing fee be shown on Line
1101 only is a RESPA violation.
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