Posted by HisHughness on 7/26/12 5:34pm
Msg #428176

Closing today for a new company

TIL lists as the amount financed as the amount of the loan, and the annual percentage rate as the interest rate on the note. There are several hundred dollars in settlement fees. Are either of those possible in a correctly calculated TIL?

Reply by Jessica Ward on 7/26/12 5:36pm
Msg #428177

Are they paying all closing costs cash?

I've never been responsible for calculating these things, but if they're paying their closing costs cash, would it show this way?

Reply by HisHughness on 7/26/12 5:47pm
Msg #428178

All settlement charges rolled into loan n/m

Reply by Jessica Ward on 7/26/12 5:49pm
Msg #428180

Oy!

Sometimes I think there's no way this is right--and a couple of times I've caught things that were big errors that they fixed right away and were really appreciative that someone saw.

But other times I think, these people that prepare these things are way better at math than me, and ultimately, aside from names, the accuracy of the documents isn't my deal.

I wouldn't know what to do in that situation.

Reply by bagger on 7/26/12 6:28pm
Msg #428187

Figures don't lie, but liars can figure

Sounds shady to me, but is it our responsibility to point that out?

Reply by ME/NJ on 7/26/12 5:47pm
Msg #428179

Only time the that should happen is there are no settlement charges at all. Even if the there were only a couple of hundred in settlement cost the APR would be different from the interest rate on the note.

Reply by Jodith/WA on 7/30/12 8:42pm
Msg #428713

The way I understand it, if the only settlement charges on the HUD are prepaid interest or tax payments, then those are not counted as "charges" for TIL purposes.

Then again, if there is any prepaid interest, that would be subtracted from loan amount for the amount financed. So perhaps the charges were just for escrow account for taxes and insurance or upfront payments for same?

Reply by Lee/AR on 7/26/12 7:27pm
Msg #428195

Had identical situation yesterday. I didn't get it, but they did (or said it had been explained by LO and they 'got' it). Also said it was a HARP loan. Am not up on all these acronymns and basically don't care as I'm also not responsible for the numbers. They signed. That's my job.

Reply by notarydi/CA on 7/27/12 12:37am
Msg #428223

closing today for a new company

unfortunately, I'm older than dirt and can remember when the TIL legislation first came out. As doc drawers/funders we sat with our HP calculators figuring 'amount financed' and 'APR' including all settlement charges in the calculations. So, to the best of my knowledge Hugh is correct. Not sure about HARP loans. Which while we're on the subject of APR's, saw a loan last week that had a note rate of 12.99% and 6 points and a one year balloon payment. That was some APR!

Reply by sigtogo/OR on 7/27/12 1:33am
Msg #428225

I will never claim to be older than dirt but I used to hand

caculate TILS also. ah, life was so much easier then...... well, except for typing DOT and metes and bounds legal description in triplicate with carbon paper. one mistake-start over.

Reply by Linda_H/FL on 7/27/12 9:16am
Msg #428241

YES YES YES!!!

"hand caculate TILS also. ah, life was so much easier then...... well, except for typing DOT and metes and bounds legal description in triplicate with carbon paper. one mistake-start over. "

and hand-calculate the HUD - *WITHOUT* the luxury of a computer - a calculator - and balance both sides, back out the numbers...

Type the Note - start to finish - and NO corrections, white-out, crossouts, strikeovers allowed.

Is this the same as we used to walk to school uphill both ways in the snow?..

Reply by ikando on 7/27/12 11:36am
Msg #428293

Re: YES YES YES!!!

Reminds me of the time I was filling in at an attorney's office who had asked his granddaughter to help him out. She didn't know how to hit the return key to make the electric typewriter go back to the start of the next line. She probably would have curled up in a ball if it had been a manual typewriter.

Computers have spoiled us all.

Reply by snowflake/PA on 7/27/12 9:40am
Msg #428244

Remember those days all too well! n/m

Reply by sigtogo/OR on 7/27/12 1:28am
Msg #428224

Settlement fees and finance charges are not quite the same

you could say finance charges are settlement fees but not all settlement fees are finance charges. the settlement fees that are determined to be finance charges, according to law, be it fed and/or state, would affect the apr. Settlement charges that are not classified as finance charges would not.
I learned during a loan audit that the state of Oregon'd definition of finance charges and Wells Fargo's definition were not one in the same. In fact every lender seems to have their own take on it.
So, ya, for the comsumer, comparing apr's to determine if a loan is a good deal or not is fairly useless. It would be a great tool if the law was clear and everyone followed the disclosure procedure correctly. dream on.....

Reply by ReneeK_MI on 7/27/12 5:10am
Msg #428230

What goes in APR & what doesn't

Regardless of what costs are rolled into the new loan, the APR is calculated based on what is listed on page 2 of the HUD, and what the line item is described as being.

The rule of thumb is that if a fee/charge would be applied even if it were a cash transaction (i.e. not dependent on there being a mtg loan), it is excluded from the APR. Of course, all rules of all thumbs are never very concise ...

These items are NOT in the APR (easier/shorter list than what is IN APR):

Application fees
Appraisal fee
Credit Report
Escrow set-up & up-front Hazard Ins premium
Notary fee
Title Ins premium, Title exam, abstract
Doc prep fee
recording fee (pd to county)

In your example, Hugh - the loan funds on the 31st, so the interest adj (IN APR) is negated and with only "several hundred dollars" shown in settlement fees, the above items could easily cover that - lacking any bona fide finance charges (defined by Feds), the APR would match the Note rate.

The various states regulate what fees can/can not be charged, and can regulate limits to fee amounts, interest rates, etc - but the Feds define which of those fees must be included in the APR (the TIL being under Fed regulation).

See: http://www.fdic.gov/regulations/laws/rules/6500-1400.html#fdic6500226.4

Manipulating the APR can be done by finding creative ways to describe/list a fee. Since "Doc Prep" fees are non-APR fees, this was a line item that was used a lot as a catch-all/padding device - causing some states to simply prohibit lenders from charging any "doc prep" fees. See how the game is played?

Reply by ReneeK_MI on 7/27/12 5:26am
Msg #428231

additional point to this ...

Lender does the TIL, it is calculated off each line item of their HUD. Lender sends their initial HUD to title/settlement - they add in the items they're responsible for, send that back to Lender for approval.

We're all familiar with waiting for these HUDS to be "approved" by lender - the OTHER thing the Lender does after approving it, is to enter the complete & final line items into their system, and spit out a final TIL to correspond with it. This is why Lenders hesitate to let go of the loan pkg prior to final HUD approval - to ensure the TIL that gets signed is compliant.

It could/does easily happen that a TIL in the pkg is NOT compliant - all it takes is someone at title/settlement (or SS) to release a pkg w/out ensuring (or knowing) that the final TIL has been issued.

Reply by ikando on 7/27/12 5:28am
Msg #428232

Re: What goes in APR & what doesn't

Thank you, Renee. Yours is an explanation I can understand. I always cringe when the BO wants me to explain the TIL because it's so confusing to me.