Posted by vanot99 on 2/12/13 8:08pm
Msg #455578

Prelim HUD

I find this to be the most PITA doc to explain at closing. I usually just fly by it but sometimes the borrower wants to know why they have to sign it if they signed the "official" final HUD at the beginning of the package. Anyone else have this problem or a helpful response for me to give?

Reply by ToniK on 2/12/13 8:23pm
Msg #455580

From my experience this doesnt need to be signed at least not the packages I have had. And if one did I would just say its one of the HUD they were sent before and probably didnt approve of which happens alot when I get to signings and the BO asks if I got the new current HUD and not the ones they were sent before.

Reply by NJDiva on 2/12/13 9:07pm
Msg #455584

To keep it simple, I just say,

"It's my understanding that this is the first draft. They have to keep copies and records of anything that transpired with the loan. They just want you to acknowledge that you've seen it and have received a copy. The final HUD is the one that is pertinent to your loan, this one is just for the file."

That keeps it simple and the bo's satisfied.

Reply by Linda Juenger on 2/12/13 9:22pm
Msg #455585

Re: To keep it simple, I just say,

Some of the ones I see, the borrowers are getting back "thousands". They laugh and smile till I tell them that they have to pay off the current mortgage and can have what's left. I never have a problem with them signing this one. They are not stupid, they know exactly what it is. I hate when they act like they don't know.

Reply by Bear900/CA on 2/13/13 1:48am
Msg #455606

http://www.mortgagesfinancingandcredit.org/mortgages/respa/disclosures2.htm

Please see the three points in the loan process when various disclosures are given.

2. Disclosures before Settlement/Closing Occurs
• HUD-1 Settlement Statement
• The settlement agent must then provide the borrowers with a completed HUD-1 Settlement Statement “based on information known to the agent at that time”.

3. Disclosures at Settlement
• HUD-1 Settlement Statement
• At closing, the HUD-1 “shows the actual settlement costs of the loan transaction”.

You can just print this and take it with you.

Reply by Bear900/CA on 2/13/13 2:56am
Msg #455607

Re: Prelim HUD (cont.)

The physical process that takes place behind the scenes goes something like this:

1. In step one of the above link (after application), the LO will ask escrow to provide a preliminary HUD so fees can be worked up to complete a GFE and TIL. The 3rd party fees from the HUD will show in the GFE.

That HUD will stay in both their files but is not a disclosure to the customer. It just contains fees to work up the loan. They both have an obligation however to stay within 10% of the original preliminary HUD fees that are now on the GFE.

This is a hasty, close-as-you-can-get process. (and must stay within 10% of the final HUD)

During the loan approval process, before step two, the lender will request the full HUD-1 to review.

2. In step two, the borrower can request a ‘final’ HUD one day before closing.
I always ask if they did that. It will save you a lot of time at the table.

3. In step three the lender demands another final HUD from the settlement company immediately before doc prep to make sure nothing has changed. This short time frame is critical as last minute figures are hashed out and the lender’s underwriter and doc team are scrutinizing every little detail. They will usually find some problem. It's their job.

I always picture this very short window with the escrow agent’s hair and pants on fire, the lender swirling in the sky like an eagle, and the LO playing referee. (I have to keep myself amused).

You would be surprised at how many emails will fly back and forth in that very short period, some from names you never seen before and will never see again, until the next closing.

So when all three parties finish having heart attacks and seizures, docs are finally sent to escrow (with the Final HUD) and the notary gingerly slips in and says….”What is this Stuff??” Get in line!

Reply by A S Johnson on 2/13/13 9:04am
Msg #455611

Re: Prelim HUD (cont.)

" The first Hud used to start the loan process. It is a list of numbers and fees used to start the loan process. It will differ from the final HUD/Settlement Statement." Why say anything else?

Reply by Pro Mobile Notary on 2/13/13 10:40am
Msg #455613

I am surprised none of the former loan originators did not chime in on this subject.

There is a very important reason why the original HUD-1 might be in the package and it is not because the lender neglected to do their job and comply with the 3 day disclosure requirement.

The RESPA regulations state that if the closing costs change more than the prescribed allowable limit from the original estimated statements and GFE were sent to the final configuration of the loan's fees the GFE has to be re-disclosed to the borrower. Docs cannot be drawn for 7 days if the transaction has to be re-disclosed with a new GFE to give the borrower the opportunity to accept or reject the proposed changes.

By including the original HUD-1 in the package it clearly shows that the changes (if there were any) were within the prescribed legal limitations. It is just another form of lenders trying to CYA.

Reply by ReneeK_MI on 2/13/13 2:56pm
Msg #455664

IMO/E there's another reason

The lender's pkg is a 'whole' pkg sent by pushing one button (simplified into easy words here). Whatever is in that pkg is going to stay in that pkg when it's sent to close - and there's a HUD in the lender's pkg.

The Settlement Agent is responsible for compiling the HUD and disbursing it (with lender's approval of the final figures). The Final HUD is provided by the Settlement Agent.

Depending on when that loan pkg was uploaded - it may or may not be complete, match the Final, etc. Final HUD is the last document that gets done - often trailing the rest of the docs, sometimes even changed DURING the closing.

Reply by Pro Mobile Notary on 2/13/13 3:12pm
Msg #455669

Re: IMO/E there's another reason

While it is true that the "lender's document package" is sent to escrow with a single file, many times there are other documents that the loan originator sends to escrow separately that gets added to the signing package. This is true for both mortgage brokers and bank loan officer origination.

There are multiple functions that go on within lenders. Most often the docs are drawn in a doc department that has no physical connection to the office where the loan originator works and often the LO will send the additional paperwork to the EO, including the original GFE, HUD-1, copies of tax returns for a live wet signature, letters of explanation and the like that the doc department does not even know exists.

I spent 20 years as a mortgage broker and my partner spent 20 years in escrow. I think we know the process and paper flow.

Reply by ReneeK_MI on 2/13/13 4:10pm
Msg #455686

?

I offered another reason which you agree is true. I don't see why you to play 'my resume is bigger than yours'.