[Sandy]

We are doing a consumer home loan and we are collecting the property tax bill that is due now only because it is due to be paid. We do not escrow our loans. Where does that bill payment need to be listed on the CD? Also, if we were to have a delinquent property tax where would it be located on the CD?

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[Kimberly Boatwright, CAMS, CRCM]

The property tax bill should show in Section F – Prepaids on the Closing Disclosure. Since the bank does not escrow taxes, it would not go in Section G – Initial Escrow Payment at Closing.

For additional guidance, the CFPB addresses this in the Official Interpretation of Regulation Z §1026.37(g)(2)-1. It identifies both property taxes due within 60 days after consummation and past-due property taxes as examples of prepaid items. You can find this in 12 CFR §1026.38(g)(2) and the Official Interpretation of §1026.37(g)(2)-1.

For delinquent property taxes, I would generally look to Section F if the past-due tax bill is being paid at closing as a prepaid item. There is also a separate provision, §1026.38(j)(1)(v), that addresses outstanding property taxes as other consumer charges when they are not otherwise disclosed in the applicable sections. I would look at the nature of the obligation and make sure it is disclosed appropriately without being counted twice.

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