Posted by Gilda Murray on 1/24/12 9:40pm
Msg #409787

Closing Fees Listed on the HUD

Hello Fellow Notaries. I don't post much but I read all comments daily and really enjoy them. I obtain a great source of knowledge and excellent ideas. I am posting today because my last three signings the borrower was required to pay x amount of dollars and was not informed by the lender. Of course when I tell them I need to pick up the check to send back with the package, I am getting verbally bashed asking questions as to why weren't they told before hand which I totally agree. I've been a notary agent for 7 years and it rarely happened but lately it is getting consistent. Are any of you encountering this problem? Appreciate your comments and suggestions.

Reply by Doris_CO on 1/24/12 10:04pm
Msg #409792

If I see on the HUD that the borrower has to bring money to the table, I call the borrower to make sure they're aware of that. I don't tell them the amount, but let them tell me, if they know. If they didn't know they had to bring money to the table I recommend they call their loan officer. Loan signings have been cancelled because the LO didn't keep the borrower informed and I'd rather it happen before I walk out my door.

Reply by Gilda Murray on 1/24/12 10:31pm
Msg #409799

This is soooooooo true Doris. One of the signings I had last week actually cancelled at the signing table. Not to mention I had downloaded both set of docs 220 pages totaled. Traveled 30 miles, plus docs were late as usual which caused a slight delay but the guy was understanding at that point until I told him about the check requested. He went ooofffffff.
Called his loan officer and told him what he could do with the loan. Good Advice which I knew from all that responded so far I would get. Thanks

Reply by NJDiva on 1/24/12 10:40pm
Msg #409802

Dito Gilda, Dito Doris, Dito GG!!

It's pretty crazy how these poor bo's are treated sometimes. It's especially frustrating to me when I get attacked for the "FREE" closing costs, that AREN'T free. Why should I have to point out to them the title fees on the HUD to de-escalate their dissatisfaction, aggravation and irritation? As was said, it should have been addressed with them already. So many times I've had bo's say "all they had to do was tell me that before you brought the papers. Why didn't they tell me?" UUUUgh! How do you answer THAT one? But this is all part of being an efficient NSA as far as I'm concerned. I really try and have patience and compassion for the bo's. After all, when I've been in their position, I just wanted to know that I was heard, acknowledged and that I was supported.

I definitely agree that usually it's the Escrow/taxes due that is the culprit and when it's brought to their attention, GG said it, they're still not happy, but they understand.

Reply by GOLDGIRL/CA on 1/24/12 10:14pm
Msg #409793

This has been a consistent situation for the 8 years I've been doing this. I think it's due to two things:
1. LOs who couldn't care less what happens once they've got the borrower in the bag. They don't return calls, they don't follow through. They're gigantic PIAs, unethical slobs, blah blah blah.
2. LOs who don't have a clue how things really work once the loan goes to the underwriter, who, as we all know, calls the shots. I notice there's often a huge disconnect between what the LO truly thought was the case and what the closing instructions actually say.

More often than not, the funds due are the result of pay-ahead taxes and insurance, which the LO neglected to stay on top of. Being in CA, you may be noticing this more lately because second half taxes in many counties are coming due in April - within 60 days of the first payment date, which is March 1 (as of Jan.). No borrower, of course, has paid April taxes at this point, so it comes as a big surprise that taxes are included in the settlement statement debits. When you explain that to them and show them, they settle down, but they're still pretty unhappy.

Also, there's the case where the LO has told them this is "no cost" loan, which may be true from the lender's point of view, but they neglected to tell borrowers that title ain't free! And we aren't either, no matter how hard TCs and SSs try to make it so!

BTW: I seldom have docs before I make the confirmation call, so I usually get bashed at the signing table. I work for one TC that's pretty good about alerting borrowers, but for some of the "tumbleweed" SSs I work for, I'm proactive and will call borrowers again and let them know that they have funds due and their options (wiring, personal check, cashier's check). If they start screaming at me I say call your LO.

Reply by MW/VA on 1/25/12 8:47am
Msg #409820

I don't see how they're still getting away with their old tricks. Page 3 of the HUD not has to tie final figures to the GFE. Frankly, I'm not seeing a lot of borrowers who are suprised by the final figures.
I did have one last week that required cash to close on a VA refi. It didn't close. The young man was nervous about changes & cutbacks in the military. I don't know what the LO was thinking, because those VA streamline refi's are supposed to be no out of pocket costs. They had also done an appraisal, which isn't usually done w/a streamline (supposed to be non-qualifying).
Again, for the most part I am seeing a lot less problems at the signing table. :-)

Reply by Luckydog on 1/25/12 11:18am
Msg #409830

What I usually do is when I call to confirm is just inform them they may need a cashiers check at the closing if funds are due, and to please check with their LO for details, as I am not sure of details yet. When docs come in, I call and let them know again once I see the HUD, if money is due, and if they got their check or if need wire instructions. This way, better to be upfront, and let them not be surprised right before the closing. If no money is due, they usually tell me upfront, or getting money back.

Reply by JanetK_CA on 1/26/12 3:05am
Msg #409890

I handle it similarly. I got tired of running into the situations described above, so whether or not I've received the docs, I address it at the time of confirmation. I just ask them if they've talked to their LO yet about whether they're getting money back or if "they" are expecting funds from them. Not only does this bring up the issue in a neutral way, it separates me from the other parties in the transaction.

If they don't know, I suggest they try to reach the LO before we get together. I'll tell them that the LO may not have the exact numbers yet, either, since those are prepared by the closing agent, but they can probably at least give them an idea. I've found this to be *very* helpful. I believe this needs to be handled carefully - even tone of voice can make a difference - especially if they've been told that it would be a "no cost" loan. As someone (GoldGirl/CA?) above said, often the difference is caused by something they would have had to pay anyway, like property taxes, impounds or prepaid interest, and when they do the calculations, it's still a no-cost loan, even though it doesn't appear to be. In some situations, imo, this is where a knowledgeable NSA can make the difference between a package getting signed or not.

Reply by jnew on 1/25/12 1:37pm
Msg #409843

2008 RESPA requirements list the obligation to provide the borrowers a copy the HUD 1 at least 24 hours before the closing. We really thought that there was going to be a 24 hours requirement which would be enforced. The problem is that it is treated as a guideline by the loan processors, although some of my customers are good about getting a copy emailed to the borrower in advance. You would think that with funding requirements for good funds at closing (cashiers checks and wire transfers) that the settlement agent would be on top of providing the information to the borrower well in advance. But being the only physical contact that they see in relation to the loan, the NSA bears the brunt of their dissatisfaction. I wish I had a dollar for every time a borrower said "It's ridiculous how long I had to take getting a loan from 'you guys'". A lot of the LO's don't have the guts to inform the BO that they have to come up with cash and leave it to the TC or NSA. My .02

Reply by ReneeK_MI on 1/26/12 5:23am
Msg #409892

HUD is NOT "required 24 hours in advance"

Forgive me, Jnew, but this seems to be a common misunderstanding of RESPA regulations, and I think it's important for us to understand. When we carry around the notion that others (lenders, settlement agents, etc) are skirting Federal laws (i.e. doing bad things), that notion can influence us in other ways. We might talk shop with our friends and families, providing 'inside' examples of how shady the industry is - based on things that are not true - and those people tell other people, and so on. Just not good. I'd hate to think this misunderstanding fuels any NSA to tell a borrower "They're supposed to give this to you 24 hours in advance ..."

The 2008 reforms did not include any requirement for the HUD to be provided 24 hours in advance. The RESPA statute relative to the HUD is:

(b) The form prescribed under this section shall be completed and made available for inspection by the borrower at or before settlement by the person conducting the settlement, except that (1) the Secretary may exempt from the requirements of this section settlements occurring in localities where the final settlement statement is not customarily provided at or before the date of settlement, or settlements where such requirements are impractical and (2) the borrower may, in accordance with regulations of the Secretary, waive his right to have the form made available at such time. Upon the request of the borrower to inspect the form prescribed under this section during the business day immediately preceding the day of settlement, the person who will conduct the settlement shall permit the borrower to inspect those items which are known to such person during such preceding day.

Note these KEY words from the excerpt:

"...completed and made available ... AT OR BEFORE SETTLEMENT ..."
"...Upon the request of the borrower ...the day preceding settlement (borrower can inspect) those items WHICH ARE KNOWN during preceding day."

The link to this specific chapter of the RESPA is: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/resp2603

Ultimately, any borrower CAN ask for the HUD prior to settlement, and certainly can REFUSE to close UNTIL the final HUD is completed & provided to him. With that said, they would also need to understand that any HUD item that includes a calculation relative to date of settlement (interest adjustment, pay-off, etc) will change, if borrower closes on any other date.

Reply by C. Rivera Chicago Notary Services on 1/26/12 11:35am
Msg #409926

old link to RESPA Faqs...see below

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/respa_hm

Reply by ReneeK_MI on 1/26/12 2:33pm
Msg #409939

No, not an old link

just a different page than what you're now posting. What I cited is current.