Closing and Post Closing Updates and Reminders
To: VHDA Originating Lenders
Date: October 15, 2004
Late Charges for Delinquent Delivery of Documents Satisfactory documentation to complete loans closed prior to 7/1/03 must be received at VHDA by 12/31/04 to avoid a late fee of $1,000 per loan. Contact Connie Ogren at 804-343-5927 with questions or for assistance. Please refer to e-mail dated 4/1/04 for further details.
1098 Reporting VHDA will issue one IRS Form 1098 reporting closing interest, origination fee and discount points to all borrowers. VHDA will also report the servicing interest if we are the Servicing Agent. The Originating Agent should report only the servicing interest on loans they service.
Updated Exhibit M(1) and M(2) Closing Instructions to Settlement Agents (Ex. M(1)) to be used by non-delegated lenders, and Specific Closing Instructions (Ex. M(2)) to be used by both delegated and non-delegated lenders have been updated. Updates include the following:
Current survey requirements on all loans
Alta 7 Endorsement to Title Policy required on all Manufactured Housing
Updates for new First Choice loan program
Updated documents can be found under Forms and Documents.
Recurring Problems in Closing and Post Closing § HUD-1 SETTLEMENT STATEMENT
o HOMESTRIDE Second Mortgage
Do not collect closing interest on the second mortgage because payments are not due for the first three years.
(Reminder: Specific HomeStride Note must be executed.)
o FHA PLUS Second Mortgage
Collect closing interest on the second mortgage because interest is not deferred.
(Reminder: Specific FHA PLUS Note must be executed.)
Always provide at least 2 months escrow for taxes and insurance. Never collect –0.
§ LOAN AMOUNT and P&I PAYMENT CHANGES
o Review the VHDA Underwriting Confirmation provided after loan approval to confirm loan amount and payment. If adjustment is needed to loan amount, or the principal and interest payment differs by more than $1.00 contact VHDA for additional instructions prior to closing.
§ REFORMATION AMENDMENT OF NOTE
o When a correction to the Note is required, VHDA will usually provide a Reformation Amendment of Note to be executed instead of returning the original Note for correction. Any Reformation of Note becomes a part of the original Note and should be handled with the same urgency and safeguards.
§ TITLE BINDER/POLICY
o Alta 7 Endorsement is required on all Manufactured Housing.
o Insured Closing Letter:
Delegated Closers should have a satisfactory Insured Closing Letter in hand prior to requesting funds from VHDA.
o ALL PRIOR LIENS MUST BE PAID, RELEASED AND NOT APPEAR IN FINAL TITLE POLICY.
Affirmative coverage for lender does not eliminate this requirement.
o VHDA recommends, but does not require a current survey if the title insurance company does not note exception in policy.
§ TERMITE INSPECTION
o If structural damage is revealed it must be repaired by a licensed contractor. Treatment does not eliminate the need to repair damage.
§ WIRING FUNDS
o VHDA will make every effort to meet urgent closing deadlines by wiring funds to settlement agents whenever necessary. Please call Pat Hunter at 804-343-5975 to request wires prior to sending the Request for Disbursement.
§ LEGAL DESCRIPTION
o To reduce errors and re-recordings, please carefully review the legal description for accuracy on various documents prior to closing.
Thank you for your continued support of VHDA programs. We will make every effort to work with you in resolving closing, post closing and document delivery issues.
If you have any questions please contact Sheila Pollard at 804-343-5976, or firstname.lastname@example.org.