Posted by Dollface/NY on 6/30/10 12:32pm
Msg #343152

Negative interest on line 901 on HUD

Just wanted to double check that this is correct. Closing date is June 30th, RTC ends July 3rd, interest is calculated (here is what it actually says) From July 6, 2010 TO July 1, 2010 [e-mail address] a day. The amount is -$547.95. It just looked screwy. I don't ever recall seeing negatives.

Reply by Jim/AL on 6/30/10 12:35pm
Msg #343154

I assume that would be because they have until July 06, 2010 before the loan can actually fund because of the holiday.

Reply by Jim/AL on 6/30/10 12:37pm
Msg #343155

Regardless of right or wrong, there is no reason for you to study or be concerned about the HUD....you are a Notary I assume...do not over think your job.

If the BO questions it, call the LO.

Reply by meganPA on 6/30/10 12:38pm
Msg #343156

Looks like they are backing out the prepaid interest. In other words, instead of the borrower paying almost a whole month of interest on the HUD and having their first payment due in Sept., they are getting a credit for the prepaid interest and their first payment should be due August 1st instead. Double check the first due date on the note. Hope this helps.

Reply by Dollface/NY on 6/30/10 12:57pm
Msg #343163

Aha! Thank you Megan, that's what it is. It was driving me nuts. I knew someone was going to say something about it not being my business/concern/job etc, but outside of being a notary, I am also a regular person who likes to know how things work and thought I could tap the wealth of knowledge here.

Reply by JanetK_CA on 6/30/10 3:09pm
Msg #343197

I agree with Megan. It's not too common, but it is something I've seen from time to time for the reasons Megan explained.

BTW, depending on how we handle it, I don't think this is something that is completely out of bounds for an NSA - unless you want to be a point-and-sign notary. Understanding something like this and being able to point it out to a borrower can make the difference between a package closing smoothly or not.

If you're dealing directly with a title company, this is something that they will expect you to be able to handle, in my experience.

Reply by Dollface/NY on 7/1/10 6:46pm
Msg #343455

You know what Janet - that was the FIRST THING they asked! I agree that it is a little silly to not be able to guide a person to the facts instead of sitting there for 20 minutes plus while they try to get their elusive LO on the phone. I was able to just pull the note, show them their first payment date and he was a finance guy, who immediately got what was going on. Rather than say "duh...I don't know. call someone who does...."

Reply by Pete/MD on 6/30/10 12:40pm
Msg #343157

This is common practice.

Reply by Grammyzoom on 6/30/10 1:41pm
Msg #343178

What a lot of people do not realize is that lenders are not allowed to charge interest in advance on mortgage loans. Mortgage payments always reflect interest in arrears.

So, say for example a signing takes place on the 5th of the month and the funding will take place on say the 10th of the month. Use July 10th funding date for example. If the first payment om the loan is due on September 1st, the lender would charge interest on the loan from the day of funding to August 1st through the escrow and the Sept 1 payment would pay the August interest.

However, if the first payment on the loan is due on August 1st, the borrower should not be charged the full month of July interest since funding takes place on the 10th. In order to keep the borrower from over paying on the interest there is a credit through escrow of interest from July 1 to July 10th. That way when they pay the August 1 payment, which will include the entire month of interest for July, they received a credit in advance, through escrow, for the interest they were not responsible for.

Hard to explain but read it twice and it will make sense.

Reply by LCS_CA on 6/30/10 3:14pm
Msg #343199

I think that was a great explanation. In our area we refer to this as "funding into the month," and there will be less than 30 days before the first payment. It is not permitted by all lenders.

Reply by Dorothy_MI on 7/1/10 7:42pm
Msg #343468

Yup, just did one today with

the negative interest. I've only had it happen if they sign on the first or second day of the month. After that it shows a positive figure for reasons stated elsewhere in this thread.