Friday, February 19, 2010

lien letters and transfer taxes....what the heck to do on the new GFE and HUD-1

Here's my take....

First things first, determine whether the charge is TYPICALLY a buyer/borrower fee.  If yes, then you MUST show it on the GFE and HUD as a buyer/borrower fee, even if the seller has agreed to pay for it.

In my neck of the woods, typical is determined by state and county custom.

Transfer taxes are TYPICALLY split between buyer and seller in Pennsylvania, SO one half of the transfer tax would TYPICALLY be a buyer/borrower fee even if the seller had agreed to pay for both transfer taxes.

Be careful and make certain there isn't an agreement for the buyer to pay both.  In that case, you would need to put both transfer taxes in as buyer/borrower fees.

Lien letters customs vary by county.  In Allegheny County, the seller typically pays for the lien letters.  In Cambria County, the buyer typically pays for lien letters.  If you are disclosing for a refinance, the borrower pays for lien letters in all counties.

Where on the GFE and HUD-1 do you disclose lien letter charges?  You include these out of pocket costs in with the title services.

Does this make sense to you?  If you have received any other guidance from a reliable source, I'd sure like to hear about it.  Thanks!!!

1 comment:

Bridget said...

I had a specific conversation with Vicki Berry at HUD as CT by statute calls for Sellers to pay for transfer taxes. She said that if seller paid transfer tax was governed by statute you do not have to put it on the GFE but if only by custom you do need to disclose it on the GFE, no matter who ultimately pays for it. We have also warned folks to watch carefully for contractual agreements between buyers and sellers and then promptly saw two instances in the same day.