Posted by EileenHI on 9/7/13 12:43pm
Msg #483613

Charge on the HUD1

Thank you for your responses to the other question I had on this signing. However, I have another one.

In the line number of the 200's there was something called a 'tolerance charge' which was not a really large sum, but large enough. I looked it up on-line, but the information was so confusing I was afraid that I would not be able to explain it to the borrower. When I got to the signing, the borrower brought it up and had called his loan officer and the VA to try to have it explained before I got there. No one could explain this charge, but thought it might have something to do with the fact that he was refinancing an ARM to a fixed rate. Have any of you come across this charge and how have you explained it to the borrower.

Reply by HSH/WA on 9/7/13 1:14pm
Msg #483620

Re: Don't have a clue what this means

but explaining charges on the HUD1 is not the notary's responsibility. If the LO and title can not do it then the BO has to decide what to do about closing the loan. You are there to witness signatures not to be the fountain of wisdom on loan doc questions. Don't let them make you feel responsible.

Reply by BrendaTx on 9/7/13 11:55pm
Msg #483678

Re: Don't have a clue what this means

**but explaining charges on the HUD1 is not the notary's responsibility.**

Hmmm. Not going to pick up that ball and run it, but suffice it to say that it would benefit any notary to know what those lines are...

Reply by Notarysigner on 9/7/13 1:28pm
Msg #483622

It has something to do with the difference between the GFE the "cure" as an "going over the allowable tolerance" .

We are not suppose to know this stuff and definitely not discuss with the borrower. too bad you didn't get any help from the hiring party.

Here's what I found..check out page 43 thru 47
http://www.hud.gov/offices/hsg/ramh/res/resparulefaqs422010.pdf

Reply by Bear900/CA on 9/7/13 1:45pm
Msg #483624

"The 10% tolerance cures may be credited in the 200 section on page 1 of the
HUD-1 as a lump sum and the original listed fees do not need to be changed or altered.
This is because the 10% tolerance is the aggregate total, and so it is not required to select
any particular fee that is higher than the provided GFE fee for the cure."

http://www.digitaldocs.com/pdf/hud1.pdf

If that's confusing to you it's probably a good thing.

If it's what is described above it would be best not to touch it with a ten-foot pole. That part of the HUD is a reflection of the GFE. The LO inputs that information in the GFE but may not be familiar with its placement in the HUD where it is copied as an aggregate.

In a nut, the GFE as quoted sets three areas of tolerance. 1) all origination fees have zero tolerance and must remain the same as quoted. 2) 3rd party service providers selected by the LO must stay within 10% tolerance, and 3) third party service provders selected by the borrower have no tolerance requirements.

You most likely were looking at #2. If that's the case, you might say somethng simple like "I don't know". Or, "it's most likely a reflection of the GFE tolerance guidelines and I recommend you ask your LO to explain that portion of the GFE to you". Capish??

That is what I would say.

Reply by Linda_H/FL on 9/7/13 3:19pm
Msg #483631

200 section is credits to the borrower, not charges

and I just tell them it's that - a lender credit. If they need further information they can call their LO.

JMO

Reply by Bear900/CA on 9/7/13 3:57pm
Msg #483634

Great answer!!!

I have to bite my tongue often to stay within notary bounds!

A credit by itself is one thing but when I hear "credit" and "tolerance" together I know it's an excess 3rd party charge that needs to be credited back by the lender.

Otherwise, I'm as dumb as any LO on HUD-1 details.

Lenders are liable for any costs that exceed the acceptable tolerance levels of the GFE. A good LO/EO working relationship should prevent this since they make up the bulk of 3rd party charges.

Reply by Linda_H/FL on 9/7/13 4:36pm
Msg #483638

I have to bite my tongue too...after 25 years

closing loans in CT it's very difficult - I've gone so far to tell borrowers who insist I *must* know the answer is "Okay, yes, I do - but I'm not authorized to answer those questions - you'll need to call your LO". Never do I tell them "I'm just the notary".

Reply by Darlin_AL on 9/7/13 4:17pm
Msg #483636

Charge on the HUD1

Glad to know, when they ask me next time I can sound better informed when I say "it is a credit resulting from amounts on the GFE--but for the detail you need to ask your LO" instead of "I have no idea, but your LO can explain it and how it is calculated". If I got that right?

Reply by Linda_H/FL on 9/7/13 4:43pm
Msg #483639

Yep...very simply put, it's a lender credit..

Now, mind you, it's a lender credit if it's a refi...if it's a purchase, it could be a lender credit OR a Seller credit. Either way - there's someone superior to us who has more authority to go into detail about it with them...be it title, LO, or realtor.

I just point to that section and say "these are credits to you with regard to this transaction ... your loan amount plus other credits". They hear credit, they know it means money to them and they're happy campers...usually.

Reply by Bear900/CA on 9/8/13 1:08am
Msg #483679

Well,.........

Stating "it is a credit resulting from the GFE" may not always be accurate.

My statement was in regards to the 3rd party charge(s) over the tolerance amount that was credited back by the lender. Merely refering to the GFE regarding credits is IMO best left out.

There are other credits not related to the GFE at all, such as a seller credit that Linda mentioned.

Some notaries understand the 2010 GFE and HUD (poor souls). But to be honest, many LOs will tell the customer not to mind the GFE's estimated settlement charges at the bottom of page 1 as they don't match up to anything. How can they explain that? They generally don't. My point is if you can evade the GFE and focus on the HUD it may be best.

During the application process, LO's will often divert attention to the fees work-sheet (that you rarely see) for the application. This is what the LO generally gives to escrow to develop charges on the HUD. They work back and forth with this at times. This is critical as a change in fees due to a mistake is not a permitted reason to re-disclose.

Closing costs (originations fee, title, escrow, etc.) that are charged the customer may be credited back to the customer through 'lender credit' (YSP) if that is used, which is shown as a charge (for the fees) and then as a lender credit. There may be lender credit on the GFE & HUD section 200 for both refi's and purchases if YSP is covering any closing costs.

So there are difefrent scenarios some relating to the GFE and some not. You may find yourself treading on thin ice referencing a credit back to the GFE if you don't fully understand it. I don't expect that to make any sense at all. Thank you Feds!

BTW, this information is provided for general education that may help explain why it's best not to go where others won't tread.

My thought is the more you say the more they may press you for additional information. You provided a scenario where the customer was realy digging. Some notaries may handle that well, some not.

I provide answers to the customer to a limited degree. If I'm pressed on what I do full-time I give a smile and say it's a conflict of interest to reveal that and move on. They get it.

Best!

Reply by Darlin_AL on 9/8/13 11:53am
Msg #483694

Thanks Bear--I'll stick to the generality..."LO for details" n/m

Reply by MW/VA on 9/7/13 6:36pm
Msg #483659

I have seen "tolerance cure" credits on the HUD. I cover it

this way, by saying that under new regulations final nos. are tied to the GFE on page 3 of the HUD. They're only allowed to exceed those within the % tolerance. After that, there are 2 choices--redisclose & wait to close or credit the overage.
I have never felt I'm crossing any lines there--it's a credit, not a charge.
I've seen those credits for as little as .33 for example, but they're there.

Reply by EileenHI on 9/7/13 8:40pm
Msg #483672

Re: I have seen "tolerance cure" credits on the HUD. I cover it

Since he had already called his loan officer and could not get an answer I told him that I was not familiar with the line item either. He signed.... But your responses have helped. I really wanted to know just to be informed.

Reply by Eve/VA on 9/9/13 9:44am
Msg #483717

I've seen that a couple of times

told them it was an adjustment of some sort and suggested they call the LO.

Reply by jnew on 9/9/13 10:23am
Msg #483723

My guess is that one or more of the closing costs exceeded the ten per cent tolerance from the GFE and they are crediting the borrower to cure the excess. My response to the borrower is " This is a lender credit, if you need a full explanation call your loan rep" and then we move on.