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I am reviewing a TRID purchase loan to where the Title company conducted the closing. When the loan processor prepared the closing disclosure the KY Municipal Tax $35.05 to the title company, $56.10 KY Municipal tax to the title company, and $40 to the settlement agent (not us the Bank) were all shown as prepaid finance charges which I understand they are not to be. Is this a violation if they are listed as PFC if they are not? If so how do I write this up as a violation?
Yes this is a violation for not being disclosed properly. TRID requires that the amounts and who they are paid to be accurate. Understanding how to properly write this up depends first on were they allowed to shop for the title copy and settlement agent? Depending on the answers would determine if it is zero tolerance, 10% or a permitted violation for curing. You also have a violation for preparing the disclosure wrong. Since you have found it to be inaccurate you must ensure a revised document goes out. But to do that the first question I asked needs to be determined. allowed or not allowed.
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It appears there may be a potential violation in listing KY Municipal Tax amounts ($35.05 and $56.10) and the $40 settlement agent fee as prepaid finance charges (PFC) on the Closing Disclosure. These charges are typically not classified as PFCs but rather as closing costs or fees. According to TRID guidelines, PFCs should represent charges that finance charges for the loan itself. To address this, you should document the discrepancy, providing a clear explanation of why these fees do not qualify as PFCs, and reference TRID regulations to support your claim. Include a corrected version of the Closing Disclosure to ensure accurate and compliant reporting.
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