Posted by LJ on 4/13/07 10:49pm
Msg #185165

Since when is the "Estimated" Settlement Statement

the correct one to go by and not the real Settlement Statement sent ? I almost lost my cool with a LO tonight at a closing. The borrower questioned the payoff figure of old loan, saying it should be lower. We called the LO and "she" said in a rude tone of voice that the "Estimated" settlement statement is what we should be going by. It is correct on there, but not the true HUD one. Now, mind you, the estimated statement was sent with title docs and buried in the bottom of pkg. I didn't even know there was an estimated in pkg because I got the docs late and didn't have a chance to go through them beforehand. She made me look so stupid to the borrower because I had to dig and dig looking for it. She also told me that the borrower would be getting all interest back and a $300 pad they had in there. It is pretty hard to explain to a borrower that the Estimated is correct and the real one is wrong. She was so rude to me on the phone. I almost called her back after the closing, but knew I would say things I would regret.

Reply by Susan Fischer on 4/13/07 11:33pm
Msg #185168

Those pesky borrowers..always asking questions..."$300

pad?"

"She also told me that the borrower would be getting all interest back and a $300 pad they had in there." [She didn't tell the borrower, she told the notary to tell the borrower.]

"Oh, you found it. Ok, we'll take it off..." Just sign, and everything will be ok. Trust me.

"Estimated," "Final," it's not important, trust me, it all works out and we'll make it right.

Fishy, fishy, come bite my hook.

These kinds of assurances should not go through the notary, but should be between the borrower and the lender/title. I hand over the phone, because otherwise *I* said it, not the lender/title, and I have no authority to discuss any changes or assurances about the deal. And I don't want to end up in court saying under oath that I said the words, "they will take it off," when "they" are saying to the court, "look at the four corners of the contract...it's all right there, we never said that."

JMHO.

Reply by Larry/Ca on 4/13/07 11:52pm
Msg #185170

Don't know about Illinois, but in California these are always estimates and borrower will receive a Final Settlement Statement after the close of Escrow. The payoff of the old loan will be what is owed the day it is paid off. Old lender will always return to borrower if any amount received is in excess of what is owed. This is not an issue as nobody ever gets cheated on the payoff of the old loan. As Susan says, LO should explain this to the borrower.

Reply by ReneeK_MI on 4/14/07 4:34am
Msg #185178

I'm not sure what you're referring to as the "real Settlement Statement" and the "true Hud", but my guess is you were looking at the Lender's Hud, and that it was 'preliminary' - not intended as the complete & final Hud.

There are several different processes used to compile the final Hud (i.e. no standard process), and the only way to know is to look at them. More times than not, the settlement agent is providing the final - and very often when the settlement agent is out of CA, it's going to be labeled "Estimated".

Very, very often - the Lender's Hud is only containing the fees that the lender provides to the settlement agent, to be used to PREPARE the final version (or, in CA's case, the 'final' ESTIMATE). If it's the first prelim Hud - it will often be missing title fees, recording fees, the final calculations on lien payoffs, tax payments, and other items the settlement agent inputs or calculates.

It's usually when you're downloading the pkg DIRECT from the lender that you'll find these prelim versions - because the software 'holds' all the closing docs as one download, and they don't have the ability to pick/choose which docs to not include. When docs go from lender to settlement agent, and S/A scans and THEN sends to you - this is one of the primary reasons. This allows them to pull out things such as the prelim/Lender Hud to avoid situations like you experienced.

You still have to bear in mind, there's a lot of variables to this scenario. Lender sends prelim Hud to S/A; S/A inputs the items they're responsible for (such as payoff calculation), sends BACK to Lender for approval. Lender usually inputs the data into their system to match the S/A's Hud, in order to have a final TIL calculate. Sometimes - it's at THAT point that pkg is downloaded - so Lender's hud MIGHT match final hud, it depends on the timing. That doesn't mean the final Hud (or the final "Estimated" hud) can't be changed again at the last minute, AFTER you've printed the pkg. Just to confuse you more - some Lenders require BOTH their Hud AND the Settlement Agent Hud to be signed (which is why you sometimes have two with matching numbers, but different formats).

It's perfectly normal and in fact necessary to pad the payoff to some degree of safety, and every penny will be accounted for when the final check is cut to the previous lender - and any overage that lender gets will be refunded to the borrower. A payoff check that arrives SHORT is a headache about to happen, and that's why they're padded. Just prior to cutting the check, the S/A will usually update - and any pymts the borrower might have made on that prior mtg right before closing will usually be accounted for then.

Reply by aatatusko on 4/14/07 8:02am
Msg #185187

Thank you Renee! n/m

Reply by LJ on 4/14/07 9:06am
Msg #185191

Re: Thank you Renee!

I understand what you are all saying and thank you for responding. When a HUD is received in the pkg, the borrower thinks that this is the final. I understand also that payoff's could be different at funding date. What I don't understand is why the "estimated" HUD found at the bottom of the pkg is correct according to the LO. Why wasn't the "final" HUD corrected to show the correct payoff amounts? They had the correct figures, why not show them on the final HUD? Also, this was explained to the borrower, not me. The borrower was on the phone with her the entire time until she asked to speak to me. She was very rude to me in telling me to find the "estimated". She got very impatient with me while I was looking through 130 pages and it was at the bottom. I was told that she was trying to wrap it up for the night. I kept my cool with her especially in front of the borrower, but I sure would have liked to say what was on my mind. The pad and interest she was talking about was explained to the borrower and I guess he understood. Believe me, I know better than to be the go-between. I always, always have it explained to the borrower, not me. The bottom line here is, the proceeds due to borrower were going to be almost $2,000 more than it said. How can this be so off on the final when they have it correct on the "estimated" statement. Am I wrong in assuming they didn't take the time to revise the final HUD hoping the borrower would not catch it and question it? Your are right saying "fishy, fishy in this case. This LO was something else and wouldn't trust her with a ten foot pole. I said nothing to the borrower or to the LO. All I said to the borrower was "take your time in thinking about this and you tell me if and when you are ready to sign." He sat there a few minutes and said, yes lets get this over with. So, we signed. The closing costs were astronomical, but he also told me he had filed bankruptcy a few years back. So, we as signing agents don't know a borrowers background and we should never judge a loan. We know very, very little about the borrowers. It was an ARM loan also with a very high interest rate. This is probably the best he can do for now and the only way he could get a loan. I just wish the LO and title would have made sure that the final HUD was right since it was right on the estimated. Thanks everyone for letting me get out my frustration.