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We have a construction home loan for $540,000.00 with a fixed rate of 3.75% with a term of 1 year (3 quarterly interest only payments and a final payment of principal and interest). Interest payable when advances are made.
The title company made an error and did not get the borrower to sign the closing disclosure the bank prepared. Instead, they used a mixture of their “mock closing disclosure” that they used for balancing purposes and a couple pages from our closing disclosure and got our borrower to sign it. There are several errors and missed items on page 4 and page 5 of the closing disclosure that they had the borrower sign. The most concerning are: total of payments disclosed as no amount listed should be $556,397.88, Finance Charge no amount listed should be $11,231.00, APR disclosed as 0% should be 4.177% and TIP being disclosed as 0% and should be 1.875%
Where and how can I begin to try to fix this?
From your description, it appears the title company has committed Truth in Lending violations. It appears they have significant liability, as does your institution. Get your attorney involved. The title company will likely try to push the liability in your bank’s direction. You may want a consultant to review the transaction to determine all of the errors and to calculate the amount of required reimbursement.
A pre-closing review should have caught these apparently obvious errors. What happened there?
The Closing Disclosure reviewed by compliance prior to closing was good. It was the one we created and was the one we sent to the Title Company to use for closing. They did not use ours, they created their own and used it with our borrower at closing. We caught it on our post closing review of the file. Would you or do you know
of a consultant that would be able to review the transaction for our bank?Yes, I know several consultants that could handle this assignment. Please contact me by email jack@mycomplianceresource.com. Include your name, your institution and contact information.
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