CFPB clarifies disclosure of seller-paid fees
Say what you want about them, but the CFPB webinars can be pretty good if you listen carefully. Let's discuss one more issue clarified in last week's webinar.
One of the issues addressed in last week's CFPB webinar was disclosing seller- paid fees.
Some of the guidance was straightforward. Both borrower and seller need to receive a CD. Yes, the settlement agent must provide the lender with a copy of the seller's CD. No breaking news there.
But then things got a bit more interesting. The CFPB went on to settle an issue that has so far caused a lot of confusion in the industry.
Question: Disclose Seller-Paid Fees on Borrower's CD?
Where we have a separate Seller CD, do we still disclose all seller-paid fees on the Borrower's CD? Can we avoid disclosing some fees, leaving this responsibility to the settlement agent?
Answer: Some, But Not All
So the answer is that when a Seller CD is delivered, SOME information can be left blank on the Borrower's CD, but not as much as you might think.
(1)Leave Summaries of Transaction, Seller's Side (page 3) blank.
Avoid disclosing anything on that side. So don't disclose the sale price but nothing else, leaving the cash to close incorrect. Just leave it completely blank.
Here's a visual aid:
(2)Keep everything else.
Specifically, any and all Loan Costs and Other Costs - even if paid by the seller - still need to be disclosed on the borrower's CD. For example, if the seller is paying the real estate broker commissions, those figures will STILL be disclosed in Section H. as paid by seller. So while we can leave that part of page 3 blank, everything else still has to be disclosed.
Another graphic:
Explained
The idea behind this all? We've discussed it before; TRID is a paradigm shift. The new disclosures are intended to paint a picture of the whole real estate transaction (not just the loan transaction). The borrower seeing what the Seller pays is informative to the borrower who is negotiating the sale price and other terms. That's why we disclose these seller-paid costs even when it doesn't affect the borrower's cash to close.
In Other News:
Epic battle between CFPB and PHH in Federal court. Tough questions from judges during oral arguments have lead some to believe they may declare the CFPB's structure itself unconstitutional. I'm not so quick to jump to that conclusion, but read about this for yourself, it could have a big impact on our industry. A good summary available here.
Bracing for good times? According to the MBA, mortgage apps are up 10% from last week and 17% for purchase mortgages this month.
Jim Morrison with an interesting piece in the B&T on whether median home prices will continue to rise. (subscription required)
What is it about asking for help that is so tough? Are you worried that people will discover you can't do everything? Maybe it's the stubborn belief of a lone wolf that everyone else is a doofus and no one can do it as good as you. Might be easy for me to say, given the quality of people I work with, but you have to find the right balance and let go sometimes ... reach out for help when it makes sense. (Emphasis on balance - everybody has to do a healthy amount of work themselves, not try to pass everything off on other people.) As John is fond of reminding me- Billy Joel didn't set up the piano stage, he trusted the crew to do that.
"The best executive is the one who has enough sense to pick good men to do what he wants done, and self-restraint to keep from meddling with them while they do it."
- Theodore Roosevelt
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