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Awesome exchange of information! You all rock!
My closer at First American title says this:
This is my thinking. It’s not a “fee” related to the lending of the funds ie: origination, tax service, apprl, credit report. And an LO is required to disclose what “closing cost” are being charged in conjunction with obtaining a mortgage. Any other charges, such as credit card debt/ bad debt and things like that would be charges that are out of the realm of “closing cost” or at least I would think so as they are simply payoffs of debt or in this case an agreement to help assist the seller with their debt and unrelated to a “fee” the bank is charging to loan money.
Thanks Bryant and Jeff for your response. I am also contributing 10k as a cash contribution to the 2nd lender. It is not part of the purchase price. And it looks like my GFE only lists the amount being financed. I woke up in the middle of the night in a panic when I realized that I don't see the closing costs on the GFE to include the contribution. Isn't the contribution part of the settlement due at closing? My broker says we can't be off more than 10% of the GFE at closing but perhaps he means title and other escrow charges. Does the GFE need to match the HUD? How would my lender know how much cash I'll need at closing to verify I have enough funds during underwriting. I just need confirmation because I can't contact my broker until Monday and I'm nervous! Thanks in advance for your expert feedback.
GFE refers to expenses associated with your loan only. The HUD is ALL expenses associated with the purchase. So the GFE expenses will show up on the HUD. The 10k contribution to the 2nd lien holder is not on the GFE. It is in section 100 of the HUD.
So if you are buying this house for 100k and you are putting 20% down and your closing cost from GFE is 3k and you are giving 10k to the 2nd lien holder you will need 33k to close (20k down + loan costs of 3k + 10k for 2nd lien holder).
If you shoot me your GFE, I can tell you how much cash you need to close. My e-mail is satarnag@amirifinancial.com. I uploaded a master HUD (Showing buyer and seller side) where buyer contributed to 2nd lien. The only difference is this was a cash transaction so most GFE fields on the HUD will be blank.
master-hud-blk.pdf
Thank you Satar. So what you are saying is that the contribution does not have to show up on the GFE and only on the HUD which will show everything. Currently my GFE states that my estimate is about 11K, but I know that I'll need an additional 10K at closing to cover the contibution to the second. Then technically, the GFE will not include all the extras that the HUD will cover in terms of costs outside of the loan itself. Is this correct? I'm starting to feel much better! You guys are such a tremendous help.
you are correct. So you need 11k plus the 10k plus your down payment. Please let me know if you have any further questions.
Sorry the GFE should have an "Total estimated funds to close" which should include your down payment and closing cost. So you need 22k total to close.
No it does not go on the GFE. It is part of the purchase price that goes on the GFE but nothing more.
Jeff. The cash contribution from the Buyer would not be part of the purchase. If it were part of the purchase the short sale lender would want it. Now it could be a POC item on the buyer side or it could be in the 100s under the "Gross amount due from buyer" section and then placed in the 330s on the seller side under m" Gross amount due to seller". But it's not a part of the purchase price.
The last one I did the buyer contributed $10,000. The HUD is attached.
But the question is would this have to be on the buyer's GFE? My guess is since this is in the 100s on the HUD the answer is no.
sample hud buyer cash contribution.pdf
It would be interesting to see the entire HUD. I don't understand how the foreclosing lender got more than the contract price.
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