On Friday evening we had a dry closing. It was a REO closing and though we had an approved seller HUD - stamped and signed "approved" by the seller's attorney, we did not have a seller signed HUD and so we had our Dry Closing Disclosure signed and held documents and money pending receipt of seller signed HUD today.
Much to our surprise, the seller noted something their attorney did not. There was an addendum to the sales agreement in which the buyer agreed to pay BOTH transfer taxes. This is a $90,000 transaction and so in that area, each transfer tax is $900. The GFE and our HUD only had the buyer paying one transfer tax, which is typical in that area and is also what was disclosed on the first page of the sales contract. What we did not know and the mortgage broker did not know was that there was an addendum changing that portion of the sales agreement.
Interestingly, when we contacted the buyer and the agents, THEY knew about the addendum but apparently no one read it because no one seemed to know that the buyer had agreed to pay both transfer taxes.
I will get back to you with comments concerning how this transaction worked out but we are presuming that the lender will deem this a changing circumstance, redisclose, wait, then close.
This raise red flags all around for better procedures. We know Fannie Mae, Freddie Mac, FHA and VA transactions have the buyer paying both transfer taxes. We will now adopt a procedure in EVERY REO of confirming whether or not there is an addendum and who is paying transfer tax. We'll get that in an e-mail from the seller or their attorney. This way we can check with the lender to handle a potential redisclosure prior to getting to the closing table.
I can tell you right now that the mortgage broker has a knot in his stomach right now pending the lender's decision of whether they will consider this a changing circumstance. If not, the mortgage broker stands to lose $900 to cure the intolerance.