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Replies (11)
- Justin Sheftell, "Courtesy Mortgage"
- Contributions:3428
Transfer taxes are the fees the seller customarily pays in CA to their county when the sale completes. The lender is required to disclose this fee to you, even though in CA >95% of the time the seller is going to pay it.
If the lender didn't disclose it to you on the initial GFE, then they are required to pay YOU the fee as a tolerance violation.
To fix it, the lender should disclose the fee from the beginning, and if they don't know the amount, they should disclose a high amount to protect against a tolerance violation.
If transfer tax is not disclosed on the GFE the only cure is for the lender to pay it. Since this is generally a Seller paid fee, the borrower would not pay it anyway but the seller would receive a "gift". The loan officer cannot be forced to pay it either. There is no "tolerance" for transfer tax so it must be disclosed and disclosed accurately.
As to what can be done to prevent it; the loan officer needs to coordinate with escrow to get exact figures... or, assuming you are working with someone that is not brain damaged, they should have a fee schedule of the tax for all areas of California and know them.
As to what can be done to prevent it; the loan officer needs to coordinate with escrow to get exact figures... or, assuming you are working with someone that is not brain damaged, they should have a fee schedule of the tax for all areas of California and know them.
- Norm D Plume, "America Needs Nixon!"
- Contributions:1670
the lender is only required to disclose it if you, the buyer, are paying it. California doesn't have a statutory requirement stating which party, seller or buyer, pays it therefor it's negotiated in the purchase agreement.
I disclose it on the GFE on California transactions if I don't have a copy of the ratified purchase agreement, however if I do have the contract and it shows the seller is paying it I don't disclose it on the GFE.
Most of the times the seller pays it in CA.
I disclose it on the GFE on California transactions if I don't have a copy of the ratified purchase agreement, however if I do have the contract and it shows the seller is paying it I don't disclose it on the GFE.
Most of the times the seller pays it in CA.
Transfer tax must be disclosed on the GFE in CA regardless of who pays it or it's a violation.
- Patrick Nolan, "Bucks County Banker"
- Contributions:239
Some really wacky answers here from people that obviously do not understand the GFE and/or tolerance credit requirements. If the transfer tax on the HUD-1 at closing is charged to the seller there is no tolerance violation end of story.
This is only an issue on this particular transaction if the contract specifies the buyer pays the transfer tax and the lender did not disclose it, in which case the lender will be providing the buyer with a credit for 100% of the transfer tax. Transfer taxes are a zero tolerance item.
To suggest to this consumer that the lender is going to provide a credit to him or the seller for a non-disclosed transfer tax that is not being charged to the buyer on the HUD is simply incorrect the same way any interpretation of the new GFE requirements makes lenders think they need to disclose GFE costs to the buyer that are never paid by the buyer.
This is only an issue on this particular transaction if the contract specifies the buyer pays the transfer tax and the lender did not disclose it, in which case the lender will be providing the buyer with a credit for 100% of the transfer tax. Transfer taxes are a zero tolerance item.
To suggest to this consumer that the lender is going to provide a credit to him or the seller for a non-disclosed transfer tax that is not being charged to the buyer on the HUD is simply incorrect the same way any interpretation of the new GFE requirements makes lenders think they need to disclose GFE costs to the buyer that are never paid by the buyer.
" If the transfer tax on the HUD-1 at closing is charged to the seller there is no tolerance violation end of story."
The file would never get to the HUD-1 at closing because 99.9% of the lenders in California would reject the GFE if it does not disclose the transfer tax. Maybe that works in the states where you are, but I have seen lenders reject a GFE that does not disclose it and even have some rejected if it's not disclosed to the figure they believe it should be.
HUD is grey on this unless it's specifically stated as state law and most lenders proceed with caution by requiring it disclosed.
From HUD:
The file would never get to the HUD-1 at closing because 99.9% of the lenders in California would reject the GFE if it does not disclose the transfer tax. Maybe that works in the states where you are, but I have seen lenders reject a GFE that does not disclose it and even have some rejected if it's not disclosed to the figure they believe it should be.
HUD is grey on this unless it's specifically stated as state law and most lenders proceed with caution by requiring it disclosed.
From HUD:
"GFE – Block 8
1) Q: What is the definition of "transfer taxes"?
A: Transfer taxes are taxes charged by state and local governments on mortgages and home sales based upon the loan amount or sales price and on the property address.
2) Q: How is the transfer tax disclosed in Block 8 of the GFE?
A: The amount the borrower is likely to pay for transfer taxes is disclosed in Block 8 of the GFE. In some areas this amount, as a matter of practice, is governed by state or local laws. If state or local law is unclear or does not specifically attribute transfer tax to a seller or borrower, the amount to be disclosed on the GFE is governed by common practice or experience in the locality of the property.
If the seller is paying a portion of the transfer tax that was not disclosed on the GFE, then that portion should be listed in the seller's column in the 1200 series on the HUD-1."
- Norm D Plume, "America Needs Nixon!"
- Contributions:1670
Transfer tax must be disclosed on the GFE in CA regardless of who pays it or it's a violation
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sounds like I have over 100 violations for not disclosing the CA transfer tax just in the last 12 months then; yet nary a cure paid.
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sounds like I have over 100 violations for not disclosing the CA transfer tax just in the last 12 months then; yet nary a cure paid.
- Lance Holtman, "First City Financial"
- Contributions:111
RNorm, Who prepares your HUD and who performs your post closed audits? FIRE them! You are ripe for a HUD audit....
- Norm D Plume, "America Needs Nixon!"
- Contributions:1670
Lance, you do realize it's normal and customary for the seller to pay the transfer tax in CA, right?
For those that put it on the GFE regardless, more power to you; seriously, that's probably a good "best practice", however if it's not on there in a state where it's normal and customary for the seller to pay it; and the seller does in fact pay it per the contract, there is no cure.
For those that put it on the GFE regardless, more power to you; seriously, that's probably a good "best practice", however if it's not on there in a state where it's normal and customary for the seller to pay it; and the seller does in fact pay it per the contract, there is no cure.
What is transfer taxes were not disclosed of GFE in the state of California
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