1. If the form does not provide enough space to disclose a description of personal property to be disclosed under 1026.38(l)(6), an additional page may be used and appended to the end of the form provided that the creditor complies with the requirements of 1026.38(t)(3). Guidance. Adjustments and other credits. Even minor misspellings can cause big problems later. Lenders are required to provide your Closing Disclosure three business days before your scheduled closing. Estimated costs paid using escrow account funds. References required by provisions of 1026.38 to information disclosed pursuant to other provisions of the section, as illustrated on form H-25 of appendix H, may be altered to refer to the appropriate page number of the form containing such information. 1. 1026.20 Disclosure requirements regarding post-consummation events. This may or may not happen on the actual closing date. CLOSING DISCLOSURE PAGE 2 OF 5 LOAN ID # 0000000000 Borrower-Paid Seller-Paid Paid by Others At Closing Before Closing At Closing Before Closing . The disclosed total of payments would not be accurate for purposes of 1026.38(o)(1), but the disclosed finance charge would be accurate for purposes of 1026.38(o)(2). Value where there is no appraisal. For example, if an increase in the Total Closing Costs is attributable only to an increase in the appraisal fee (which is an itemized charge on the Closing Disclosure under the subheading Services Borrower Did Not Shop For, itself under the heading Loan Costs), then a statement is given under the subheading Did this change? that the consumer should see the total loan costs subtotal disclosed on the Closing Disclosure under 1026.38(f)(4). 1. The seller is reimbursing you now to cover these expenses. If you are unable to make the full mortgage payment in a given month, your lender may not accept a partial payment. The creditor discloses an amount under 1026.38(l)(7)(i)(B)(1) only if no escrow account will be established. Although 1026.19(e)(3)(iii) provides exceptions to the general rule, such a charge would generally be subject to the limitations under 1026.19(e)(3)(i) if the consumer decided to use a provider affiliated with the creditor. Like the disclosure required by 1026.37(i), the disclosure required by 1026.38(m) is required only if the periodic principal and interest payment may change after consummation based on a loan term other than on an adjustment to the interest rate or if the transaction is a seasonal payment product as described under 1026.37(a)(10)(ii)(E). If the closing date arrives and the repairs aren't complete, the buyer may be able to hold back a portion of the purchase price in an escrow account to ensure that the repairs are complete. It doesn't include any credits or rebates that lower your closing costs. If that calculation results in a positive amount, the amount is due to the seller. Actual amount you will have to pay at closing. Estimate of closing costs paid before closing. The creditor should not include in the disclosure the phrase Paid Outside of Closing or P.O.C. and the name of the party making the payment, or a statement that the principal reduction is being provided to offset charges that exceed the legal limits, because those principal reduction disclosure elements are not applicable to the transaction in this particular example. If the result of the calculation is zero or negative, the amount of $0 is disclosed under 1026.38(i)(3). Stating if amount is due to or from consumer. CLOSING DISCLOSURE PAGE 4 OF 5 LOAN ID # 1234567890 Loan Disclosures Escrow Account For now, your loan will have an escrow account (also called an "impound" or "trust" account) to pay the property costs listed below. ii. Section 1026.38(j)(2)(vi) requires the disclosure of any additional amounts not already disclosed under 1026.38(f), (g), (h), and (j)(2), that are owed to the consumer but payable to the seller before the real estate closing. Required use. . For the permissible form modifications to separate consumer and seller information, see comment 38(t)(5)(v)-1. 1. For an example of such reference, see form H-25 of appendix H to this part. 1. The cost of completing improvements must not represent more than 10% of the "as completed" appraised value of the property. See comment 38(j)-3 for a listing of the specific provisions. Alternatively, if there is insufficient space under 1026.38(j)(1)(v) for a creditor to disclose the name of the party making the payment or a statement that the principal reduction is being provided to offset charges that exceed the legal limits, a creditor may disclose a statement such as $500.00 Principal Reduction P.O.C. under 1026.38(j)(1)(v) and a statement on an additional page such as $500.00 Principal Reduction for exceeding legal limits P.O.C. Applicable date. 1. Learn more about escrow accounts and how they work. 1. For guidance on disclosing the location of a property for which an address is unavailable, see the commentary to 1026.37(a)(6). The lender may also report you to the credit reporting agencies as not making your required payment. When the result of the calculation is positive, that amount is disclosed under 1026.38(i)(4)(ii)(B) as Down Payment/Funds from Borrower, and $0 is disclosed under 1026.38(i)(6)(ii) as Funds for Borrower. When the result of the calculation is negative, that amount is disclosed under 1026.38(i)(6)(ii) as Funds for Borrower, and $0 is disclosed under 1026.38(i)(4)(ii)(B) as Down Payment/Funds from Borrower. When the result is $0, $0 is disclosed as Down Payment/Funds from Borrower and Funds for Borrower under 1026.38(i)(4)(ii)(B) and (6)(ii), respectively. Section 1026.38(i)(4)(ii)(B) requires that, in all transactions not subject to 1026.38(i)(4)(ii)(A), the Final amount disclosed for Down Payment/Funds from Borrower is the amount determined in accordance with 1026.38(i)(6)(iv). 1. If the creditor deviates from the depiction of the question mark as shown on form H-25, the creditor complies with 1026.38(q) if (1) the size and location of the question mark on the Closing Disclosure are substantially similar in size and location to the question mark shown on form H-25, and (2) the creditor otherwise complies with 1026.38(t)(5) regarding permissible changes to the form of the Closing Disclosure. Examples of items that would be disclosed under 1026.38(j)(2)(xi) include: i. Principal reduction not paid with closing funds. If they don't, call your lender immediately and ask why they have changed. Statements of increases or decreases. 1026.9 Subsequent disclosure requirements. See form H-25(F) in appendix H to this part for examples of such statements under 1026.38(h)(3). 2. The disclosure required by 1026.38(m) is required to be provided under a different master heading than the disclosure required by 1026.37(i), but all other requirements applicable to the disclosure required by 1026.37(i) apply to the disclosure required by 1026.38(m). If a simultaneous subordinate financing transaction is disclosed with the alternative tables pursuant to 1026.38(d)(2) and (e), the first-lien Closing Disclosure must include any contributions from the seller toward the simultaneous subordinate financing that are disclosed in the payoffs and payments table under 1026.38(t)(5)(vii)(B) on the simultaneous subordinate financing Closing Disclosure. Extra line items. Section 1026.38(o)(1) and (2) sets forth the accuracy requirements for the total of payments and the finance charge, respectively. See comment 38(r)-1. 1. For a description of origination charges and discount points, see comments 37(f)(1)-1, -2, and -3. Assumption of existing loan obligation of seller by consumer. 3. Alternative tables. If the creditor forecloses on the property and the proceeds of the foreclosure sale are less than the unpaid balance on the loan, whether the consumer has continued or additional responsibility for the loan balance after foreclosure, and the conditions under which liability occurs, will vary by State. 1026.32 Requirements for high-cost mortgages. Ask the lender to correct any inaccurate contact information. 3. The home buyers need to deposit funds with the title company, where the title company . If the consumer is satisfying existing liens which will not be deducted from the sales price, the amount of the outstanding balance of the loan must be disclosed under 1026.38(k)(2)(viii). See 1026.38(t)(5)(v) and (vi). 5. 2. 2. The clear and conspicuous standard requires that the disclosures required by 1026.38 be legible and in a readily understandable form. For example, if there is no mortgage broker involved in the transaction, the column for the mortgage broker is left blank. Alternatively, 1026.38(l)(7)(i)(A)(5) permits the creditor to base the disclosures required by 1026.38(l)(7)(i)(A)(1) and (4) on amounts derived from the escrow account analysis required under Regulation X, 12 CFR 1024.17, even if those disclosures differ from what would otherwise be disclosed under 1026.38(l)(7)(i)(A)(1) and (4) - as, for example, when there are fewer than 12 periodic payments scheduled to be made to the escrow account during the first year after consummation. If the seller has agreed to pay for specific costs rather than contribute a general amount, those amounts may be listed as Seller Paid line items on page 2 instead. Instead, such costs are disclosed pursuant to 1026.38(f)(2). It includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit. 1026.2 Definitions and rules of construction. In this example, the creditor must disclose the following elements under 1026.38(t)(5)(vii)(B): The amount of the principal reduction, the phrase principal reduction or a similar phrase, and the name of the payee. When disclosed as required by 1026.38, however, many of the corresponding disclosures must be actual amounts rather than estimates in accordance with the requirements of 1026.19(f), even though the provision of 1026.38 cross-references a counterpart in 1026.37. ii. For additional discussion, see comment 38(j)(2)(vi)-2. Definition of escrow account. See also 1026.38(t)(5)(vii)(A). Final seller credits. The modifications permitted by 1026.38(t)(5)(vii) do not specifically refer to the label required by 1026.38(a)(3)(vii)(B) for transactions that do not involve a seller, because the label is required by that section and therefore is not a modification. See the commentary to 1026.37(n) for guidance regarding the optional signature requirements and signature lines for multiple consumers. 1. 1. For additional guidance on prepaids, see comments 37(g)(2)-1 and -2. Charges which are loan costs designated seller-paid at or before closing, or paid by others, are not subtotaled pursuant to 1026.38(f)(5). The creditor may itemize the transfer taxes paid on as many lines as necessary pursuant to 1026.38(g)(1) in order to disclose all of the transfer taxes paid as part of the transaction. Covered features. See the commentary to 1026.37(m)(4) for guidance on disclosing late payment fees, as required under 1026.38(l)(3). 1026.55 Limitations on increasing annual percentage rates, fees, and charges. No seller transactions or simultaneous subordinate financing transactions. Omit the table or label, as applicable, for the disclosure concerning the seller or consumer on the form provided to the other party; or. The creditor may use one addendum to disclose the personal property under 1026.38(a)(3)(vi) and (l)(6). 1. 1. 1. When table is not permitted to be disclosed. This is the total amount you will have to pay at closing, in addition to any money you have already paid. For additional guidance on taxes and other government fees, see comments 37(g)(1)-1, -2, -3, and -4. This feature is risky. See commentary to 1026.19(e)(3) for additional guidance on calculating excess amounts above the limitations on increases in closing costs under 1026.19(e)(3). The disclosure requirements of this section apply to any covered person except as otherwise provided in this section. An escrow holdback is the act of collecting additional funds at closing that will be refunded after necessary repairs have been made to the purchased property. A holdback is a portion of the purchase price that is not paid at closing. Equal amount. 1. Examples of disclosures pursuant to 1026.38(k)(2)(viii) include the satisfaction of outstanding liens imposed due to Federal, State, or local income taxes, real estate property tax liens, judgments against the seller reduced to a lien upon the property, or any other obligations the seller wishes the closing agent to pay from their proceeds at the real estate closing. Also, how are others dealing with amounts for inspections that are performed after the closing? See form H-25(B) of appendix H to this part for an example of the statement required by 1026.38(i)(8)(iii)(A). Methodology. The answer is yes, you can. An escrow holdback is simple money set aside that assures the seller will finish the agreed-upon work at a later time. Amounts placed into an escrow, impound, reserve, or similar account Charges paid to third-party service providers selected by the consumer that are not on the Written List for which a provider of that specific service could have been selected from the list 1. Where personal property also secures the credit transaction, a description of that property may be disclosed, at the creditor's option, pursuant to 1026.38(l)(6). Such statement of No satisfies the requirement to state that the estimated and final amounts are equal, and these sections do not provide for any narrative text to be included with such statement. If the form does not provide enough space to disclose a description of personal property under 1026.38(a)(3)(vi), at the creditor's option an additional page may be used and appended to the end of the form provided that the creditor complies with the requirements of 1026.38(t)(3). However, if the title courier fee was assessed, but at only $15, the charge is factored into the calculation because the third-party service was actually provided, albeit at a lower amount than estimated. 2. The file number required by 1026.38(a)(3)(v) may contain any alpha-numeric characters and need not be limited to numbers. Taxes Coming due within 30 days of closing- Put on line 907 under Escrow for Upcoming Taxes Due as it will not work under the escrow set up based on first payment date being after the taxes are due Reserves(1000 section)- You need to click on the AGGREGATE SETUP and ensure the following: Additional page. See comment 38(t)(4)-1. Yes, you can, and the solution is affectionately known in real estate circles as an escrow holdback or holdback escrow. 1. The sample Closing Disclosure shows you where you'll find information on your own form. iii. The prominence requirement also requires that, in the event an increase or decrease in costs has occurred, certain words within the narrative text to be included under the subheading Did this change? for a Yes answer are displayed more prominently than other disclosures. Funds to be held by the closing agent for the payment of either repairs, or water, fuel, or other utility bills that cannot be prorated between the parties at closing because the amounts used by the seller prior to closing are not yet known must be disclosed under 1026.38(k)(2)(viii). The finance charge is calculated in accordance with the requirements of 1026.4 and its commentary and is expressed as a dollar amount. 2. Appraised property value. See also comments 37(h)(1)(v)-2 and 37(h)(1)(vii)-6 for an explanation of how to disclose on the Loan Estimate amounts that will be disclosed on the Closing Disclosure under 1026.38(j)(1)(v). The Final amount disclosed for Down Payment/Funds from Borrower reflects any change, following delivery of the Loan Estimate, in the amount of down payment and other funds required of the consumer. The amount financed is calculated in accordance with the requirements of 1026.18(b) and its commentary. Pursuant 1026.38(t)(5)(viii) creditors may modify form H-25 to the extent that translation prevents the headings, labels, designations, and required disclosure items under 1026.38 from fitting in the space provided on form H-25. Closing Disclosure: What It Is And How To Read It For additional examples of items disclosed under 1026.38(t)(5)(vii)(B), see comment 37(h)(2)(iii)-1. Section 1026.38(i)(1)(iii)(A)(3) requires statements that an increase in closing costs exceeds legal limits by the dollar amount of the excess and a statement directing the consumer to the disclosure of lender credits under 1026.38(h)(3), or a principal reduction under 1026.38(j)(1)(v), if either is provided under 1026.19(f)(2)(v). Ask questions so you understand exactly what happens if you cant make a payment in full. The method used to determine the aggregate adjustment for the purposes of establishing the escrow account is described in 12 CFR 1024.17(d)(2). Transferred escrow balances. 1. Provision of separate disclosure to consumer. For guidance regarding the requirements of 1026.38(t)(4), see the commentary to 1026.37(o)(4). 2. An increase in the Final amount of Down Payment/Funds from Borrower relative to the corresponding Loan Estimate amount might result, for example, from a decrease in the loan amount or an increase in the amount of existing debt being satisfied in the transaction. Lender. If the calculation required by 1026.38(i)(9)(ii) yields a negative number, the creditor or closing agent discloses the amount as a negative number. Disclosure. For a discussion of lender credits, see comment 19(e)(3)(i)-5. Section 1026.38(e)(1)(iii)(A) requires a statement of whether the amount increased or decreased from the estimated amount. Generally. 4. 1. Entity name. Guidance in other comments. If 1026.38(k) applies to a simultaneous subordinate financing transaction, 1026.38(k) is completed based only on the terms and conditions of the simultaneous subordinate financing transaction and no contract sales price is disclosed under 1026.38(k)(1)(ii) on the Closing Disclosure for the simultaneous subordinate financing. If your interest rate isn't what you were expecting, ask your lender why. For example, a creditor providing a $500 principal reduction to satisfy the refund requirements of 1026.19(f)(2)(v) discloses the principal reduction under 1026.38(j)(1)(v) by providing in Section K of the summaries of transactions table a statement such as $500.00 Principal Reduction for exceeding legal limits P.O.C.