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Cash To Close

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  • #6896

    mdunker
    Participant

    i am re-creating the a sample Loan estimate from the CFPB, the fixed rate loan purchase sample, where the loan amount is $162,000.00, and the total fees are 8054.00. what i am having problems with is the closing costs financed section. The sample shows zero, however my Los providers is showing a negative 8054.00 in that amount. i have looked at the regualtion and the CFPB guide and i guess i don’t really understand how this part is supposed to work. can someone show me the math on this. thanks.

    #6901

    rcooper
    Keymaster

    To calculating the amount to be disclosed under “Calculating Cash to Close/Closing Costs Financed” you would subtract the estimated total amount of payments to third parties that are not otherwise disclosed in the “Total Loan Costs” and “Other Loan Costs” sections (e.g. other mortgage(s) that will be paid off), from the total loan amount disclosed under § 1026.37(b)(1).

    *If the result of the calculation is a positive number, that amount is disclosed as a negative number, but only to the extent that it does not exceed the “Total Closing Costs”.

    *If the result of the calculation is zero or negative, the amount of $0 is disclosed.

    Here’s an example from the premable:
    Assume that a mortgage loan amount is $250,000, the estimated amount of all outstanding mortgage loans secured by the real property total $200,000, and the total estimated closing costs disclosed under § 1026.37(g)(6) are $10,000; the amount disclosed under § 1026.37(h)(1)(ii) is -$10,000, since the result of the difference between the mortgage loan amount and the estimated amount of all outstanding mortgage loans secured by the real property is positive $50,000, but since there are only $10,000 in closing costs, the amount disclosed is limited to -$10,000.

    Per the above information, determine what the “Closing Costs Financed” amount should be for the loan. If the “Closing Costs Financed” calculation results in a positive number (which would be disclosed as a negative) that exceeds the “Total Closing Costs” (and since the “Closing Costs Financed” can’t exceed the “Total Closing Costs”) that could be one reason it is showing a negative number that matches the “Total Closing Costs”. Or there could be a problem with your software in that it may be automatically inserting that “Total Closing Cost” number under “Closing Costs Financed”.

    I recommend testing various loan examples to determine if it is disclosing the information properly.

    We also have forums set up for discussions on various LOS. If you don’t see a thread for your LOS vedor feel free to start a new thread – you might get some feedback from other financial institutions that use your LOS and have already dealt with this.

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