Help! I've got a mess of a situation and I need advise!

Here's the story....

We did a cash-out refi loan for Mrs. Jones, knowing that it would be sold on the secondary market to XWZ Home Loans. All documents were properly executed, and the HUD 1 indicated various fees "payable to" XWY Home Loans. The recission time passed and the loan was dispursed and delivered to WXY.

XWY Home Loans then refused to buy the loan. We were subsequently able to secure a different secondary market buyer, and did a new note to indicate an endorsement correction. However, our HUD 1 is still wrong, since the fees are no longer going to XYZ. To complicate matters further, Mrs. Jones wants a refund of those fees, since XYZ isn't getting them. (no matter that the subsequent buyer has fees!)

So, here are my questions:

1) Can we do a modified HUD1 to correct the name of the "payable to" recipient? Would it technically be subject to a new recission period? (Bear in mind that the loan has actually already dispursed.) Would it be a violation to issue a corrected HUD 1 without a recission period?

2) Any ideas how to handle Mrs. Jones' request for a refund? Her fees are actually greater now, but we are eating the difference, of course. Is she entitled to a refund of the initial fees?

3) To avoid something like this in the future, can we be more generic in our description on the HUD 1, perhaps indicating our bank as the payee of the fees instead? (I don't think this will work, but I'd like your feedback.)

Thanks for any comments you can provide.

If you made the loan, it is yours. Even if you intend to sale, it doesn't mean you have to (or will, as you found out). Just because it wasn't sold to XWZ Home Loans, doesn't make your original closing (or it's documents) invalid.

1. There is no new loan. No new HUD-1/1A or RofR is necessary.
2. Why should Mrs. Jones get a refund? The intent was to sale to XWZ Home Loans, but it didn't happen. You are paying more now. Would it be right to ask her for more money?
3. You must be specific on the HUD-1, listing "to whom all fees are ultimately paid". You should not list your bank.

If you want to give her a modified HUD-1, you can, but I don't think you even need to do that.