I am trying to cure a mistake made with the document prep fees on the Hud 1. Our attorney does the title exam, search, and legal documents including the mortgage and we have since January 1, 2010 placed this fee of $35.00 under # 1100 series. If I understand it correctly after attending the RESPA Seminar in Paducah, KY we needed to place this fee under Block 1, origination charge. How do you suggest we cure this correctly? Refund the $35.00? Do a new revised Hud 1? Not sure where to begin, also we have one that is paid out, do we do the same cure on this loan? please let me asap?
Of the fees listed in your question only the portion of the total fee that is for preparing documents for the bank, such as the mortgage, must be included in Block 1/line 801 of the GFE and the HUD-1. Regulation X provides that a violation may be cured at closing or within 30 days after closing. Beyond the 30 day period refunding fees to the customer does not cure the violation; you still have legal liability. But refunding the excess fees may appease the examiner.
Moving forward, determine what portion of the total fee is for preparing documents for the bank and properly disclose that item. For the loans disclosed in error in the past, consider refunding the document preparation portion. This action should be taken for all loans upon which the error occurred. Provide the consumer with a revised HUD-1, reflecting the refund. The manual provided at the seminar includes examples of the two methods that may be used to reflect the correction.