Instructions for Est. HUD-1 Checklist

Transcription

1 Instructions for Est. HUD-1 Checklist In the General Information and 800 Items section reflecting the term Non-Critical means just that; while we would like the information to appear upfront, we should not hold up docs for this information. The information becomes more critical at time of closing rather than prior to releasing loan documents. As a result, you will not be held accountable for this information missing on the estimated HUD-1. For clarity, we are discussing the Non-Critical sections of the checklist as indicated on the form. Ensure the correct checkbox has been marked indicating that a closing condition has been added reflecting the missing information on the loan approval. Verifying the proper amount for the hazard insurance and property taxes upfront is critical to the loan for several reasons one being qualifying the borrower correctly, as well as ensuring the impound account is set up correctly for the new loan. With regards to non-allowable fees appearing on the HUD-1 when the loan type is an FHA, VA or USDA, the non-allowable fees should not be reflecting on the buyer s side of the HUD-1. However, with that said, there are a couple of methods which have been deemed acceptable by our investors and the governing agencies with regards to the most common non-allowable fees i.e., escrow fee (VA loan types). They are: 1. If the fee is reflecting on the buyer s side of the HUD-1 with a Seller credit to off-set the fee 2. If the fee is being paid with the premium pricing (AKA: Rebate pricing) and NOT coming out of buyer s pocket. If after comparing the purchase contract to the initial GFE and estimated HUD-1, a change of circumstance has been triggered, ensure proper notification to the responsible party in your office in charge of processing the proper re-disclosure of the additional fees. Please follow your specific branch office policy with regards to a change of circumstance. Best practice suggests a condition be added to the loan approval, notes be made in Fastrac and an be sent to the correct individual tasked with this function within your specific branch as per office policy. Once the checklist has been completed, virtually sign, date and upload the form into ImageFlow and use the label name [HUD-1 Checklist]. There should only be 1 estimated HUD-1 and 1 HUD-1 checklist in Imageflow. Page 1

2 Estimated HUD-1 Checklist: Page 2

3 Calculating Box : The use of the Lock Confirmation form will be required to assist in the calculation of boxes 801 and 802 on the estimated HUD-1. The following screen shots are a sample only of a Lock Confirmation form. You can see it reflects an interest rate of % with a base price of premium price/rebate. After all pricing adjustments have been accounted for, the premium price/rebate is now at a cost to the borrower of 1.289%. Page 3

4 Discount Points Sample The HUD-1 would look like this! Box 801= Lender Fee $ Doc Prep Fee $ DU Fee $25.00= $ Box 802= Loan amount $181,650 x Discount Points 1.289%= $ Box 803= Sum of Box 1 + Box 2= $ Page 4

5 Reconciling the Estimated HUD-1: The following is a sample of an estimated HUD-1 for training purposes only. In box 700, ensure the real estate fees have not exceeded a total of 8.000%. Use the above screen shots on page 4 as an example of how to correctly calculate boxes 801, 802 and 803. If the loan is NOT locked, it is recommended that the estimated HUD-1 is not worked up as the fees in these boxes can and most likely will change. Max % Typically Box 901 will change up and until the loan is closed. Using the days according to how the HUD-1 is presented to you is satisfactory so long as it is reasonable. Box 902 should reflect the upfront mortgage insurance required for that specific program i.e., FHA, VA, USDA. The payee should reflect the entity associated to the fee. Box 903 should reflect a full year insurance premium for purchases and if a refinance, use box 1002 accordingly, the number of months remaining until the renewal date based on the deck page provided plus 3mo s. Box 1001 is an accumulation of boxes Typically 2mo s of hazard insurance is collected for purchase transactions. If subject is a refinance, use the number of months remaining until the renewal date based on the deck page provided plus 2mo s. Use the tax chart for your specific state located in the Resource Center in order to use the correct number of months being collected based on the month the loan is closing in. For purchases, review a copy of the tax rate which can generally be located on the website for that specific county tax collector. As your starting point, use the tax rate plus any additional assessments to calculate the actual property taxes. It is PRMG s policy as first choice to use the tax roll as stated on the County website or, if for whatever reason you are unable to use the actual tax rate, then using the industry standard of 1.250% to recalculate the tax amount being collected is acceptable. Page 5

6 Box 1101 is an accumulation of boxes If there is reference made to an addendum reflecting the breakdown of fees totalled, this should have been included in the estimate provided. Typically these fees do not require any changes or updates unless you are otherwise aware of undisclosed fees. Remember for VA loan types box 1102 will need to be deducted as it s a non-allowable fee when tallying up non-recurring and prepaid closing costs. Refer to page 1 regarding allowable methods. Box 1201 is an accumulation of the fees available in box Ensure for purchase transactions box 1203 reflects a transfer tax fee. Again, these fees typically will not require you to make adjustments. Section 1300 is otherwise used for miscellaneous type of fees. These can include but are not limited to a Broker Coordinator Fee (common with REO s); Home Warranty Fee; Escrow pad; NHD; payoff of debts to qualify, etc. Here is where the written list of providers, the initial GFE, or locked GFE together with the purchase contract, should be reviewed to ensure accuracy with regards to the payees and who s required to pay for the specific fee. Remember that the escrow pad should not be included when tallying up the non-recurring and the prepaid closing costs in determining sufficient funds to close. Page 6

7 While the 3 rd page of the HUD-1 is important for the purposes of comparing the fees to the GFE, when working up the estimated HUD-1 to determine the fees and sufficient funds to close it s not required to review this page in great detail. Page 7

8 Run the tape: When preparing to run the calculator tape, the math is broken into sections so that you are able to complete the details of transaction screen in Fastrac. To begin, ensure you have corrected the estimated HUD-1 to reflect the correct math on pages 1 and 2 as per your specifications. Note the following: 1. Sections are charges to the borrower and should therefore be added into your math for closing costs 2. Sections are credits to the borrower and should therefore be deducted from your math for closing costs Page 8

9 To start, what is the minimum statutory requirement for the loan program? Sales Price (Sub. from loan amt.) Loan Amount Minimum Required OR Sales Price (multiply by % of DP) % of Down Pymt (100% - LTV) Minimum Required $260,000 (-) $234,000 $26,000 OR $260,000 (X) 10% $26,000 Per the estimated HUD-1, what is the amount the borrower has brought into escrow? $2,000 + $22,691.94= $24, NOTE: Right off, you SEE the borrower has not met the minimum statutory requirement of $26,000 Definition of Non-Recurring closing cost: A fee which will be charged to the borrower 1x as a result of obtaining the loan Add the non-recurring closing costs together (don t forget to review page 1 for additional fees) $ $ $25.00 $1, $ $ $ $ $4, Definition of Prepaid closing cost: A fee (or the pro-rated portion of the fee) which must continue to be paid periodically by the borrower for the life of the loan or until it s refinanced and/or paid off in full. Add the prepaid closing costs together (don t forget to review page 1 for additional fees) ($130.72) = See page 1 $ $ $1, $2, Page 9

10 What are the total closing costs? $4, $2, $6, What are the total credits involved in this transaction? $2, Premium Price (1.000%) $ Seller credit towards Transfer Tax $ Seller credit towards Title Policy $5, Seller credit toward other closing costs $8, Total credits being applied towards closing costs Do the credits exceed the actual closing costs? Yes $2, Premium Price $ Seller credit towards Transfer Tax $ Seller credit towards Title Policy $5, Seller credit towards closing costs $8, Total credits being applied towards closing costs ($ ) deduct Non-Recurring closing cost $4, Sub-total: left over from the total credits ($2,195.44) deduct Prepaid closing cost $1, Total: Overage from credits. The credits exceed the closing costs (too much credit) *MLO/Processor must be notified as Sellers credit is dipping into borrower s down payment requirements $26, Total required from the borrower as per our reconciled HUD-1 Note: this amount does not include verified EMD Prior to the reconciliation of the estimated HUD-1, it reflected the borrower as not coming in with the required minimum down payment however, since the HUD-1 has now been reconciled, we can visually see if the borrower has sufficient verified funds to close as per the assets in the loan file. As long as the borrower has sufficient funds verified to close, we can image our reconciled estimated HUD-1 and update the loan approval accordingly clearing the file to close so long as there are no additional PTD conditions remaining. Page 10

11 The following adjustments were made to the estimated HUD in our example. Page 2, the tape was run beginning from the top to the bottom. Carry the updated number from box 1400 on page 2 to box 103 on page 1 of the HUD-1 and complete the calculation down to box 120. Page 11

12 Continue with the rest of the math all the way to the bottom of page 1 of the HUD-1. Note the Seller credit was reduced in our example due to overage with the total credits vs. closing costs. Final reconciliation reflects the borrower must come in with $24,000. Note this amount is including the EMD funds of $2,000. By adding the EMD back into the funds required, the borrower will end up with their required $26,000 which, as we determined earlier, was the minimum amount we needed from the borrower for closing. Page 12

13 Below is a sample of the final reconciliation using the calculator tape and the HUD-1 as per pages 9 & 10. Page 13

14 Entering Data into GFE Screen: Once calculations have been completed on the reconciled estimated HUD-1, the GFE screen in Fastrac must be updated accordingly. You ll find the GFE 2010 tab on the left hand side panel of Fastrac as shown below. Once you click on the tab, the right side of the screen will update showing you the GFE in Fastrac. Should a GFE already exist then you ll see the below screen shot. Click on [Add New GFE Version]. Click on [Copy New]. This will create an exact copy of the existing GFE allowing you to update the information. The following screen shots will reflect how to input the information off of the estimated HUD-1 into Fastrac. Compliance is everyone s responsibility! While the Underwriter is not responsible for redisclosing the loan, if you find any inconsistencies, errors or omissions, follow the policies of your specific branch with regards to change of circumstance notification. The appropriate party should be notified to complete the change of circumstance within 3 business days from notification date. Page 14

15 Ensure the highlighted information below is correct inlcuding the borrowers personal information. Most of the following fields have already been completed, however verifying the information for accuracy is prudent. 1. Re-disclosure Received Date is the same date as the Date of GFE 2. Date the borrower can close; Use the TIL Calculator to complete this field. 3. Type the Redisclosure Reason. Note: The loan amount and interest rate require an update. Ln Amt.: $234,000 Int. Rate: 4.750% Page 15

16 Box 801 should be left blank as the information will populate correctly onto the GFE if the rest of the boxes are completed correctly. A total of PRMG s lender fees will populate in box 1 on the GFE. If on the estimated HUD-1, it reflects any discount points (the net price being a positive (+) number) being paid by the borrower, then Box 802 [Discount fee] is completed. However should the end result equate to a premium price (the net price being a negative (-) number) or a rebate to the borrower, then input that information into the [Retail YSP (to line802) (to block 2)] as shown below. All other fees/charges should be correct. However, again, compliance is everyone s responsibility so if you see any additional required corrections, then please update the necessary fields. Page 16

17 Ensure the following screen reflects the correct amount for UFMIP, VA Funding Fee, or USDA guaranty fee as required by the specific program. In addition, for purchases, typically the full year of the hazard insurance premium is entered here. This premium amount is taken off of the copy of the insurance deck page uploaded into ImageFlow. Ensure you correct the monthly dollar amount which matches the estimated HUD-1 you worked up. Purchase transactions require to collect 3 months of hazard insurance. Use the tax charts located in the Resource Center to determine how many months of property taxes we are currently collecting. Notice for government loans, the monthly insurance (if any) will populate here however will NOT be included in the amount of funds being collected from the borrower. At this stage of the loan file, you will also note that we will not see an aggregate adjustment. This information will be included on our Lenders Instructions to the closing agent once the doc drawers have completed the loan docs. Refinance transactions require to calculate the hazard insurance by using the remaining months on the existing policy from first payment date plus 3 months. For example, a policy expiring in June with a first payment date in March will require 9 months plus 3 months, or 12 months, as there are 9 months remaining before it must be paid and there must be a 3 month pad in the new impound account. Page 17

18 Following the estimated HUD-1 you reconciled, correct the fields to match. Page 18

19 Again, following the estimated HUD-1 you reconciled up, correct the fields to match. Box 1203, take the dollar amount reflecting on the estimated HUD-1 and divide into the Sales Price to determine the percentage. For example, HUD-1 reflects $ / Sales price $260,000 =.0011 or.110% (move the decimal point over to the right 2x s to determine the percentage amount). Page 19

20 How to calculate transfer tax: Line 1203 should be completed correctly in accordance with the specific state property tax rate. Transfer tax rates vary by state and can be verified by visiting the following website for the state of California, 1. Identify the amount of the state's transfer tax. For our example, let's say it is $2.20 for each $ Identify the sale price of the house. For our example the sale price will be $260, Calculate the taxable units. To do that, you will divide the sale price of $260,000 by $1000, making the taxable units = Multiply the taxable units by the transfer tax rate. In our example it would be $2.20 x 260, making the transfer tax $ Page 20

21 Again, following the estimated HUD-1 you reconciled, correct the fields to match. Once all of the data integrity has been completed in Fastrac, click on [save/close] which will permanently save this version of the GFE. Page 21

22 To keep up with compliance, the TIL must be recalculated to ensure there is no increase of more than.125% as an increase would require a re-disclosure of the GFE/TIL to the borrower. Should this be the case, you, as the Underwriter, are required to notify the appropriate Associate by following the procedures in your specific branch. Recalculating the TIL: Most of the information will auto-populate from the GFE screen. Ensure accuracy by reviewing each section and update accordingly. Click on [Calculate]. The TIL has been re-calculated. Click on [Save/Close]. Yes, it s that easy! Page 22

23 Fastrac Data Integrity: Follow these instructions for inputting the data into the details of transaction screen in Fastrac using the reconciled estimated HUD-1 and the calculation tape. Page 23