Look to your loan documents. I will bet there is a clause in the mortgage that requires them to maintain insurance to protect the property, therefore you require the insurance to be purchased by contract. If they already have it then they have "purchased" it outside of closing.

Hmmmmmm....is that a reference to my age??????

Thanks for all the help! Everything's clear as mud

Anyone?
Ok, if after you have provided a GFE the consumer says to the loan officer; Bank xyz is not going to charge an origination fee, so the lo decides to waive the fee. Can you simply show the origination fee on the HUD as -0- on line 801?

We don't have this situation here, but this particular Q & A on page 51 made me scratch my head:


So, if you don't have a cap on periodic changes, but have a floor of 4% and an overall cap say of 12%, then you disclose 8% in there? What? I can't understand that or what good that is to the customer.

No. Because the GFE has to be compared to the settlement statement (SS), you list the fee on the SS just as you did on the GFE. Then, you list a credit in the 200 series.

Here's a section of the webinar materials we provided for BOL on this topic:

b. Lender Paid Determined After GFE Is Issued:
If a loan originator (other than for no-cost loans), real estate agent, other settlement service provider, or other person pays for a charge that was included on the GFE, the charge should be listed in the borrower’s column on page 2 of the HUD-1. That charge should also be offset by listing a credit in that amount to the borrower on lines 204-209 on page 1 of the HUD-1 identifying the party paying the charge. [Appendix A to Part 3500 – page 7024]

You can find more about the webinar at the BOL Store:
http://www.bankersonline.com/bankerstore/index.php?main_page=product_info&products_id=1963

I agree with Dan. You won't make someone a loan without having hazard insurance. Therefore, it is a settlement service and it must be listed on the GFE - no matter if they already have it or not. Items are not designated as POC on the GFE.

Thank you David for your response. I remember this from your webinar, and this is what I told everyone in our training. This is very confusing, I can't get it straight in my head. If it is not harming the consumer and there is not tolerance violation due to the reduced charge, why would this not be ok?

We are estimating certain appraisal fees as higher than they likely end up being charged due to the variance in fees being charged by appraisers.

My question is how to handle the overpayment of POC appraisal fees. If we disclose $500 and we collect $500 POC, and then the actual fee is $425, do we show the $425 POC on line 814 of the HUD-1? We obviously still owe the client $75 so then is the $75 credit on lines 204-209?

Thanks

OSB-
On the final HUD 1 you can show POCs on fees the borrower has prepaid. In your example, you are correct in showing the $425 as poc for the appraisal and the balance as a credit.

Can anyone provide some insight on this situation?

If we use an in-house notary (one of our tellers is a notary) and the fees we collect from borrowers are paid directly to her, do we list the notary fees in Block 4 on the GFE, rather than Block 1? Also, if we don't require the borrower to use our notary, would we have to list a notary on the list of settlement service providers that the borrower can shop for?

I wish I wasn't getting hung up on a an issue as simple as notary fees.

If you require it, it must be listed on the GFE. I believe it would go in Block 1. If you don't require the borrower to use a specific provider, you don't have to give a list of providers. If you allow them to shop, you'll need to give them a list.

Thanks David!

So we would list the notary fee in Block 1 - even though the fees charged go to one of the bank's employees, not the bank itself?

Also, isn't "not requiring the borrower to use a specific provider" and "allowing them to shop" the same thing?

David, aren't the lists only for blocks 4,5,&6?

Are the notary fees for documents required in the origination process? Or is it something to do with the settlement.

If it's the first, I'd put them in Block 1, however if it's the second, and you don't allow shopping, I feel like it would go in #3.

RR Joker:

The notarization is necessary on the mortgage document in order for recording, so I guess it's part of settlement rather than origination.

For loans closed in-house (refi's with no attorney involved), we just use our employee who is a notary - out of practice more than anything. If the borrower told us that they wanted to use a particular notary (other than our employee) we would allow so.

I'm so confused...any help would be much appreciated!

You're absolutely right. My bad.

This changes things. I assumed you were requiring it for loan documents. If so, FAQs #2, 5 & 6 in the "GFE-Block 1" section make it clear this goes in Block 1.

Sounds to me like this would be a Block 4 and 1101 fee.


Yes.

David, would you not opine the notary fee as block 3 if it's not part of an agent's fee? AuditorK says that the employee is used when they DON'T use a closer.

I agree,if using an agent, it would go in 4, but not on a refi as described.

Except that we don't select our notary (require the use of our notary), we just use our notary if the borrower doesn't request another.

However, you really do require it since you have to have it.

We require a notary for the mortgage document, but we don't require that a specific person is used. Our notary is used almost 100% just because she is the most convenient and the borrowers don't wish to secure the services from anyone else.

I'm so overwhelmed with unanswered questions about RESPA that I want to dig a hole and stick my head in until 2011!

What are we notarizing? If the lender is the closing agent or if it's loan documents, then I believe this goes in Block 1. If it's required by the title agent, then it's block 4.

If the employee is used when they don't use a closer, then it sounds like it's a block 1 fee.

Also, look at FAQ #8 in the "HUD-1 - General" section:

8) Q: Where should fees for processing and administrative services be listed on the HUD-1 Settlement Statement?
A: Processing and administrative services are services to perform origination and title services functions. For the loan origination function, charges for such services are included in the total on Line 801. For the title services function, charges for such services must be included in the title underwriter's or title agent's charge and are shown in the total on Line 1101. Examples of processing and administrative services include, but are not limited to, the following: document delivery, document preparation, copying, wiring, preparing endorsements, document handling, and notarization.

We are notarizing the mortgage - which is required in order to be recorded in the state of PA.