HELOC - Disclosing Closing Costs

Answered by:

Question:

When the bank pays all closing costs on a Home Equity Line of credit should the fees be disclosed on the note as paid in cash or should they not be disclosed at all?

Answer:

They are disclosed as POC (paid outside of closing). Refer to the instructions for the HUD-1 form available here.

"The settlement agent shall complete the HUD - 1A to itemize all charges imposed upon the borrower by the lender, whether to be paid at settlement or outside of settlement, and any other charges that the borrower will pay for at settlement. In the case of "no cost" or "no point" loans, these charges include any payments the lender will make to affiliated or independent settlement service providers relating to this settlement. These charges shall be included on the HUD - 1A, but marked "P.O.C." for "paid outside of closing," and shall not be used in computing totals. Such charges also include indirect payments or back-funded payments to mortgage brokers that arise from the settlement transaction. When used, "P.O.C." should be placed in the appropriate lines next to the identified item, not in the columns themselves."

First published on BankersOnline.com 2/05/07