So on the comparison page on the HUD, since the seller will be selecting paying for the OTI (generally) would that figure move from the 10% tolerance section to the no tolerance section, since it is out of our control?

I don't think so Jay. Regardless of who pays, it still goes in the comparison. But, if they were to choose someone not on your list..then I'd think it would no longer be a tolerance concern.

There will be no list, because in the 6 times in the course of the year the borrower would have to pay for it, we will select the provider for them.

if it is left in the comparison, it will throw the tolerances totally out of whack, granted into our favor, but meaningless.

I don't get your logic, since it has to be quoted regardless of who pays it. That was the one "non-negotiable" piece of GFE madness.

We don't even REQUIRE it, but still have to quote it.

Lemme ask this way, we don't have anything that we allow the customer to shop for, but if we did and it was a 10%er, and they choose a provider not on our provider list, would you still keep that item in the 10% tolerance section, or move it to the no tolerance limit section?

As Joker said . . . Whether it is required or not, it must be quoted.
Here is the direct quote from the GFE Instructions
"
Block 4, “ Title services and lender's title insurance. ”—In this block, the loan originator must state the estimated total charge for third party settlement service providers for all closing services, regardless of whether the providers are selected or paid for by the borrower, seller, or loan originator. The loan originator must also include any lender's title insurance premiums, when required, regardless of whether the provider is selected or paid for by the borrower, seller, or loan originator. All fees for title searches, examinations, and endorsements, for example, would be included in this total. The charge shown in this block is subject to an overall 10 percent tolerance as described above.

Block 5, “ Owner's title insurance. ”—In this block, for all purchase transactions the loan originator must provide an estimate of the charge for the owner's title insurance and related endorsements, regardless of whether the providers are selected or paid for by the borrower, seller, or loan originator. For non-purchase transactions, the loan originator may enter “NA” or “Not Applicable” in this Block. The charge shown in this block is subject to an overall 10 percent tolerance as described above.

I am past the quoting and GFE period... I am trying to undertsand how to best show this on the third page of the HUD at settlement.

According to the third page of the GFE OTI has no tolerance limits if it is purcahsed from a company we do not identify, which is generally how it will happen.

If you don't allow them to shop, how can they choose someone not on a list that you don't provide them. Since if you don't allow someone to shop, you don't have to provide a list.

But my thought would be if you gave them a list and they choose someone not on the list, thus you allowed them to shop, then it would move to a non tolerence item. JMHO

ACK!! this is getting all mangled up.

OTI, we disclose. No issue there. It is in the 10% bunch.

Seller selects and pays for it. This is all done totally outside of the control of bank (us) and the borrower.

Since it is done outside of the bank and borrowers control, would this itme then move into and become a non tolerance item in the HUD comparison chart when it is said and done?

JJ, don't let the seller paid part get to you. IMHO, if the OTI comes from someone on your list, 10% tolerance; if it comes from someone not on your list, no tolerance. Doesn't really matter who pays for it (at least that's what HUD says) .

No arguements... I am strictly talking placement of this item on page three of the DUH form.

Can I move that to the 'Charges that can change' section since no tolerance limit will apply to it.

If I leave it in the 'charges that in total cannot increase more than 10%' section, it will totally skew my figrues for the block since my LOS system will tally for the overage percentage everything in that section, wether a tolerance applies to a certain item or not.

I believe you would have to move it there Jay

In this letter do you give them until the docs. expire (e.g., 120 days) or what date do you normally use? Secondly, is the notice that you are referring to the same as the alternative notice of incompleteness that is permitted under Reg B? I am trying to decide if we need to change our procedures for prequal. apps. when no property is identified or we just do not hear back from the individual.

In our county the seller/realtor chooses the TC. They are not the borrower so would never be given the GFE or provider list. Are you saying that if the seller/realtor chooses someone on a list they never see, the tolerance still applies? I agree with your statement about HUD not caring who pays for it as far as it going on the GFE but they are clear on when the tolerance applies, either lender select or borrower select. We feel that if the seller/realtor selects the TC to do the OTI, then it will never be lender select or borrower select. The only choice is to mark it borrower select, thus won't be counted in the tolerance at closing. It's really not going to matter to us because in our county the seller is required to pay for it so it will always be on the GFE and not listed on the buyers side of the HUD, so the tolerance won't apply anyway. There is only a rare instance, such as a REO sale, where the buyer would ever have to pay for it and in that scenerio the tolerance would apply. As mentioned in another post, we will always be "padding" costs on a purchase by the amount of the OTI. That is one thing we can thank HUD for as I am sure they did not mean to allow us to pad the costs by several hundreds of dollars.

I would review your FAQ's on this one... my understanding is that is still goes in the buyers column of the HUD, and is 'cured' with seller credits in the 200/500 series on the front side.

Holy Moly - how did I miss that. We were going to mark it seller paid on the HUD. Luckily for us it still won't matter though because we are only putting two TC on our list. If they pick one of them, the fees will be accurate, if they pick someone else the tolerances don't apply anyway. Whew!

Why is there even a sellers column on the HUD if we are not allowed to but anything in it. There will definately not be enough lines in the 500 series for all the items the seller will be paying for......

HUD-1 – Seller-paid items
1) Q: What if at closing the seller is paying for a settlement service that was listed on the GFE, such as the Owner‘s title insurance policy? How is this shown on the HUD-1?
A: If the seller is paying for a service that was on the GFE, such as Owner‘s title insurance, the charge remains in the borrower‘s column on the HUD-1. A credit from the seller to the borrower to offset the charge should be listed on the first page of the HUD-1 in Lines 204-209 and Lines 506-509 respectively.

This is so much fun!
When you think you have it ~ something comes up and you find out you did not have it in your head.

Can I ask a question? Are we all thinking the same that the only 2 times Block 1 can be changed is a different loan program or if the interest rate was based on a percentage?

So even if a changed circumstance came into being- you could never increase Block 1 unless the loan program changed or the interest rate was based on a percentage. Is this correct? Thanks so much.

The loan amount, itself, changing, is also a changed circumstance, but only the fees affected, if based on a percentage, can change.

Boy, that's a chopped us sentence if I ever wrote one!

JJ, I'm a little late in your conversation for the OTI and just skimmed over the questions, but if you do not choose the provider then you allow the consumer to shop, doesn't matter if the Realtor, or someone else chose the provider for the consumer.

For items that that you allow them to shop for you must provide a list and if they choose a provider from the list you are subject to the 10% tolerance. If they choose someone not on the list the tolerance does not apply, HOWEVER, if you fail to provide a list for providers that you allow them to shop for you are subject to the 10% tolerance regardless who they choose.

Not sure if this addresses your concerns or not.

very well said, Dan! Not what JJ wants to hear, but very well said.

Thanks RR joker- appreciate it a lot.

Any ideas?

I would think it would have to be zero. Then in the last box..fill in the baloon payment amount due at maturity.

This is probably a dumb question, but here goes . . . .

Applications that were submitted this week and used the old GFE, but do not close until after next week . . . . is there a re-disclosure required on the new forms or do you continue through wiht the forms on which you started?

start with old, end with old. But check with your closers to make sure they can still support the old.