Wednesday, January 11, 2012

Who is the lender named on the HUD-1 form?

First I think we need to recognize that the primary purpose of the HUD-1 is consumer disclosure.

Until yesterday, every HUD-1 I have ever produced disclosed the name and address of the mortgage lender named in the NOTE and MORTGAGE.  Simple.

Yesterday, we had a transaction with a retail lender who was working with a wholesaler who called themselves a warehouse lender but really acted like a wholesale lender but wanted to also act like the retail lender.  Does that make sense?

So, this wholesale lender whose name is not on the NOTE or MORTGAGE insisted that their name and address be shown on the HUD-1 and would not approve the HUD-1 unless we made that change.  They wanted their name on the HUD-1 because they were table-funding the loan.

I was very uncomfortable doing this because we were not really doing a proper HUD-1 preparation, however, the lender is responsible for RESPA compliance and so we made the change, however, we informed the lender that we would create a special disclosure for buyer and seller to sign which acknowledged this unusual circumstance and disclosed the name and address of the lender whose name appeared in the NOTE and MORTGAGE.

There were a number of other requests made by this goofy lender leaving me with the impression that our comrades out there in the title insurance business must be doing whatever these folks want without regard to proper procedure.  They thought we were nuts for even questioning their request.  

No comments: