Closing Costs and Banks are Disgraceful

[firegurl]

What I have in my packet is titled "Sellers Estimated Settlement Statement" on what appears to be letterhead from the title company. It isn't even half a page.
Pulling up a HUD-1 it's 3 pages. But again, this was a cash sale, and looking at HUD-1 at the top, there is no provision for a cash sale. What I have looks like a condensed version.

You received a condensed, seller only version. Believe me, there is a HUD associated with your home. Just because you don't have a copy of it doesn't mean it doesn't exist.

 

[tvguy]

You received a condensed, seller only version. Believe me, there is a HUD associated with your home. Just because you don't have a copy of it doesn't mean it doesn't exist.

But you didn't answer my question. There is no option for a cash sale on a HUD-1.

http://www.hud.gov/offices/adm/hudclips/forms/files/1.pdf

 

[DebbieB]

But you didn't answer my question. There is no option for a cash sale on a HUD-1.

http://www.hud.gov/offices/adm/hudclips/forms/files/1.pdf

I found the HUD-1 from the cash sale of my prior home. None of the boxes on the top were checked. The attorney used it for the calculation of the settlement figures even though there was no loan.

 

[Tink888]

I worked for many years for both title companies and real estate attorneys. A HUD-1 Settlement Statement is NOT required for cash purchases, however, most title companies/attorneys will provide them for cash transactions as it's generally good practice. HUD-1 are handy in cash transactions not only for the breakdown of costs to both buyer & seller, but as a record for each party for tax purposes.

So while not required, I've never personally seen a cash transaction where one was not provided.

Edit to add a few words about title insurance......Your title insurance premium is based on the purchase price (for an owner's policy) or mortgage amount (for a lender's policy) and while it may seem like a big waste of money and that the title company doesn't do very much, it's not and they do. They make sure you have clear title and the insurance protects you if an issue arises. With the way people refinance these days and the amount of foreclosures, etc especially in recent years, there is no way I'd purchase real estate without it.

 

[DawnM]

We have purchased 4 homes during our marriage. These are not excessive fees and are quite standard.

We are looking to purchase our 5th home next Spring (after selling this one) and I am not looking forward to the fees and expenses associated with it.

Dawn

I was so excited to purchase a new condo from Lennar. I was so excited to get $7,000 towards closing costs and upgrades on carpet, tile, appliances and cabinets....UNTIL I saw the closing statement and costs. Why give me $7,000 towards closing costs when they knew darn well it would be eaten up in the additional costs. I have only owned one home in my life. I have been a renter for many years. Some of the fees are outrageous! What bank charges a loan origination fee of $1,480 when they are the only bank I could go to? Who charges $200 for a credit report when they are basically free? Lennar charged me a 1.75% builders fee which was around $2,700!!!!! I am supposed to close next Monday on (10/27) and don't even have a HUD statement yet. Has anyone been able to negotiate these stupid fees that they are imposing or am I just stuck??? Thanks all!

 

[firegurl]

But you didn't answer my question. There is no option for a cash sale on a HUD-1.

http://www.hud.gov/offices/adm/hudclips/forms/files/1.pdf

I would imagine you've gotten your answer by now but I will explain anyway. The options listed at the top are the transactions where the HUD is required. As has been pointed out, its not required on a cash transaction but its still used.

 

[firegurl]

Duplicate

 

[NewRVLady]

OP-I hope you searched Lennar homes reputation in your area

In Miami the BBB gives them an F
http://www.bbb.org/south-east-florida/business-reviews/home-builders/lennar-homes-in-miami-fl-6718


We had a "chain" type builder across the road from us....many complaints-they finally just up and left with 4 homes in mid construction. These places and the Model Home became eyesores. Finally, 2 years later they went up for Auction and people are fixing them, finishing the 2 that were shells.

 

[bunkkinsmom]

We have purchased 4 homes during our marriage. These are not excessive fees and are quite standard.

We are looking to purchase our 5th home next Spring (after selling this one) and I am not looking forward to the fees and expenses associated with it.

Dawn

Agreed. I am a real estate agent in NC and these don't seem excessive. I will say this....ALWAYS USE A BUYER'S AGENT!!! And please explore our advice when it comes to lenders. We work with these people on a daily basis and we know who the good ones are. I just lost a sale (I was the listing agent) because the buyers went with their personal bank (who is KNOWN for being horrible in our industry) and at 45 days didn't even send the Employment Verification forms to the buyer's employers. Buyer got fed up with the entire process and walked away. Had they been my buyers I would've advised them up front to explore other lending options, and had my contact numbers ready to provide for them.

 

[vetrik]

A few more notes about title searches and title insurance....

Just because a house or a condo is new, does not mean the land is. The land that the house or condo sits on has been owned by people, sometimes lots of different people, for many years. For a purchase, every property needs to be searched back for 50 years or more. Sometimes going back that far results in researching multiple property transfers, land subdivisions, easements for utilities, rights of way to public land, liens for unpaid taxes or utilities, mortgages and discharges of mortgages, executions for medical bills or credit cards, etc. When someone refinances, a new title search has to done because you can't just take someone at their word that there haven't been any changes to their property (in fact, in my experience, most of the time we find things on title searches it's a complete surprise to the owners).

Every document recorded in public record for a property has to scrutinized to make sure there are no errors...for example, a deed with a wrong name or legal description, or a mortgage release with the wrong information making it invalid. Sometimes a title search is very simple and takes an hour, sometimes it is extremely complicated and takes multiple people several days. How complicated a title search is is unrelated to the cost of the house/condo....some of the least expensive properties we've searched have had the hardest titles. If there are any issues on the title, our office will work (sometimes for hours, days or weeks) to clear the issues so the closing can proceed, again for no additional charge. Unlike other areas of law, we don't bill by the hour. Every title search is a flat fee, no matter how long it takes.

And that's what title insurance protects, any of those old issues that may crop up. People pay car insurance every month they own a vehicle and homeowner's insurance every year they own a house, even though they may never file a claim. Title insurance is just like other types of insurances, it is there in case you need it.

There is owner's title insurance (which protects you as the owner), and mortgage/lender's title insurance (which protects the lender). Where owner's title insurance is different than other types of insurance is that it is a one time cost for the whole time you own the property. Lender's title insurance is required by the bank and has to be reissued whenever you refinance since your mortgage information has changed and the new loan has to be protected. Just like it's more expensive to insure a Lamborghini than a Honda, the amount for title insurance is calculated based on purchase price and loan amount and will cost more for a higher priced home. For me, what in most cases amounts to a fee of under $2000 is pretty reasonable to protect what will likely be the largest investment of my life. I paid for $752 for the owner's policy on our house that cost hundreds of thousands and we've owned for 9 years so far with no plans to move....I pay $1200/year to insure our cars that cost 15% of what our house did, and are a depreciating asset!

 

[pooh6890]

Let me go over these one by one.
1 Loan origination fee. This is negotiable along with points and interest rate. Now that you've selected your loan and close in a week, kind of late in the game to change your terms.

2. Credit reports. they are free on certain websites to people getting their own credit checked. They are not free to lenders and usually a quickie is done at initial approval and a thorough one is done at final approval. $200 is not excessive here.

3. Builder's fee. This is the one you mentioned that is dubious. Ostensibly to offset development costs on common areas, this is a fee paid directly to the builder. I've seen some so nefarious that they put a deed restriction that any time the house is sold for the next 99 years, the builder gets a fee. This isn't your bank's doing. It is your builder. I doubt you could negotiate it away now. You have already signed the contract. Here, said fee would have to be specifically disclosed at contract. Not sure of the law in your state.

1. When I signed the contract for the condo the salesman told me that everyone signs at 5% because it's a portfolio loan. I was told that it was negotiable because my FICO score was in the 800's. When the mortgage company contacted me to start the paperwork, they would not negotiate and I am stuck at 5.125%. Luckily I put down 20% so my payment is low. I can always re-finance in a year or so. Yippee...more closing costs!

2. Everyone is entitled to a free credit report with all 3 agencies once a year. There is no possible reason to charge anywhere near $200. It's not like you will print out your credit report and make changes to it. I stand by the credit report fee as ridiculous.

3. The builder's fee was somewhere in the 59 pages I initialed when buying. Attorney said it was. My complaint to them was this is my second Lennar purchase and I referred 4 people to them over the years. I explained that I would like them to at least lower it to 1%, which is what is normal for this area. No chance man!! If they had lowered it, my salesman would have been correct that my closing costs were run $500 to $1,000 since they gave me $7,000 towards my closing costs. Thing is he knew at the time about the builder's fee and neglected to tell me that. This is basically why sales people get a bad rap I guess.

 

[pooh6890]

A few more notes about title searches and title insurance....

Just because a house or a condo is new, does not mean the land is. The land that the house or condo sits on has been owned by people, sometimes lots of different people, for many years. For a purchase, every property needs to be searched back for 50 years or more. Sometimes going back that far results in researching multiple property transfers, land subdivisions, easements for utilities, rights of way to public land, liens for unpaid taxes or utilities, mortgages and discharges of mortgages, executions for medical bills or credit cards, etc. When someone refinances, a new title search has to done because you can't just take someone at their word that there haven't been any changes to their property (in fact, in my experience, most of the time we find things on title searches it's a complete surprise to the owners).

Every document recorded in public record for a property has to scrutinized to make sure there are no errors...for example, a deed with a wrong name or legal description, or a mortgage release with the wrong information making it invalid. Sometimes a title search is very simple and takes an hour, sometimes it is extremely complicated and takes multiple people several days. How complicated a title search is is unrelated to the cost of the house/condo....some of the least expensive properties we've searched have had the hardest titles. If there are any issues on the title, our office will work (sometimes for hours, days or weeks) to clear the issues so the closing can proceed, again for no additional charge. Unlike other areas of law, we don't bill by the hour. Every title search is a flat fee, no matter how long it takes.

And that's what title insurance protects, any of those old issues that may crop up. People pay car insurance every month they own a vehicle and homeowner's insurance every year they own a house, even though they may never file a claim. Title insurance is just like other types of insurances, it is there in case you need it.

There is owner's title insurance (which protects you as the owner), and mortgage/lender's title insurance (which protects the lender). Where owner's title insurance is different than other types of insurance is that it is a one time cost for the whole time you own the property. Lender's title insurance is required by the bank and has to be reissued whenever you refinance since your mortgage information has changed and the new loan has to be protected. Just like it's more expensive to insure a Lamborghini than a Honda, the amount for title insurance is calculated based on purchase price and loan amount and will cost more for a higher priced home. For me, what in most cases amounts to a fee of under $2000 is pretty reasonable to protect what will likely be the largest investment of my life. I paid for $752 for the owner's policy on our house that cost hundreds of thousands and we've owned for 9 years so far with no plans to move....I pay $1200/year to insure our cars that cost 15% of what our house did, and are a depreciating asset!

Lennar is paying for the Owner's title insurance which was $992 off my charges. I signed on May 31st. On June 1st that charge was given to the buyers....whew...just in time

 

[pooh6890]

Yesterday was a very productive day. I spoke with the Title Company, Lennar, the Closing agent and the CM dealing with my condo. I am much less stressed today after speaking with all of them and getting some actual costs. I have my walk-thru next Monday and closing on Oct. 30th....Now my problem is I have to be out of my apartment by midnight the 31st or I have to pay another $1550 gouging for November as they don't pro-rate on month-to-month which I have been on for October....I need a big glass of WINE!!!

I appreciate all the helpful and great advice from all of you. I will come back and let you all know how it really goes next week!!!!!

 

[Patch'sD]

Agreed. I am a real estate agent in NC and these don't seem excessive. I will say this....ALWAYS USE A BUYER'S AGENT!!! And please explore our advice when it comes to lenders. We work with these people on a daily basis and we know who the good ones are. I just lost a sale (I was the listing agent) because the buyers went with their personal bank (who is KNOWN for being horrible in our industry) and at 45 days didn't even send the Employment Verification forms to the buyer's employers. Buyer got fed up with the entire process and walked away. Had they been my buyers I would've advised them up front to explore other lending options, and had my contact numbers ready to provide for them.

Where in NC, I am looking at the Leland Area just outside Wilmington. Any Comments about the area if you are familiar with it.

 

[smiths02]

Yeah the bolded is my point when all these "lenders" want to talk to me about how beneficial it would be for me to refinance. Maybe to them but not me.

I have paid on my house for 6 years now and by putting an extra amount toward principle each month have effectively knocked my 30 year mortgage down to 22. But no one wants to refinance for 20 years, which would be a benefit to me, only 30 years. That only benefits the bank.

When I get them to actually listen to me and go through the math of the way I make my payments now the get all red faced and tell me "we can't help you after all".

No joke.

In our case, we knocked a significant amount off of our monthly payment by lowering the interest rate. So even if we pay for 31.5 years instead of sticking with the 30 years, we save thousands and thousands of dollars. Of course, we could put extra towards principal and cut our interest payment down even more, but we have a few unexpected things happen (mainly twins instead of a singleton pregnancy) that messed with our finances.

Since we have a VA loan, I can't tell you how many notices we get weekly telling us to refi at a higher interest rate.

So note to OP, if you can refinance, hopefully the interest rate going down will make you feel better about all those closing costs.

Also to OP, I don't buy the GFE is an estimate that ALWAYS goes up. I am pretty sure that a GFE is supposed to be just that a good faith estimate, not a low ball, bait and switch. That would make me mad. But then again,we had a fight with SunTrust and did not get results until we reported them...one person we spoke with actually told us that "thereafter" on a loan document doesn't mean "thereafter" Yes, the banks need to charge fees, but sometimes they take advantage of people not reading or understanding the documents. (We found a mistake that was going to cost us hundreds of dollars a month. We called and spoke to the bank, visited the bank, etc. without any results. We were treated as idiots who just didn't understand how things work. After we filed the complaint, things were resolved in our favor.)

 

[STLDisney_Freak]

Agreed. I am a real estate agent in NC and these don't seem excessive. I will say this....ALWAYS USE A BUYER'S AGENT!!! And please explore our advice when it comes to lenders. We work with these people on a daily basis and we know who the good ones are. I just lost a sale (I was the listing agent) because the buyers went with their personal bank (who is KNOWN for being horrible in our industry) and at 45 days didn't even send the Employment Verification forms to the buyer's employers. Buyer got fed up with the entire process and walked away. Had they been my buyers I would've advised them up front to explore other lending options, and had my contact numbers ready to provide for them.

DH and I built a house a year ago. We used the same agent as the builder so he was a dual agent at that point. Worst mistake of our life! If I ever have it to do over I will always get my own agent.

 

[tvguy]

I found the HUD-1 from the cash sale of my prior home. None of the boxes on the top were checked. The attorney used it for the calculation of the settlement figures even though there was no loan.

Thank you. Looking at the form, it just doesn't seem to apply without a box for "cash sale".
While I do not have that specific form in my packet, the half sheet I do have discloses everything that applies to my sale that would go on a HUD-1

1) Sales Price
2) Real Estate Commissons paid and to whom
3) Property taxes paid.
4) Title insurance cost.
5) County transfer fee
6) Escrow company fees
7) Amount of check given to me
8) My name
9 Sellers Name
10) Property address.

There are 220+ lines on a HUD-1, 210+ of them would have been blank if they had used one.

 

[pooh6890]

In our case, we knocked a significant amount off of our monthly payment by lowering the interest rate. So even if we pay for 31.5 years instead of sticking with the 30 years, we save thousands and thousands of dollars. Of course, we could put extra towards principal and cut our interest payment down even more, but we have a few unexpected things happen (mainly twins instead of a singleton pregnancy) that messed with our finances.

Since we have a VA loan, I can't tell you how many notices we get weekly telling us to refi at a higher interest rate.

So note to OP, if you can refinance, hopefully the interest rate going down will make you feel better about all those closing costs.

Also to OP, I don't buy the GFE is an estimate that ALWAYS goes up. I am pretty sure that a GFE is supposed to be just that a good faith estimate, not a low ball, bait and switch. That would make me mad. But then again,we had a fight with SunTrust and did not get results until we reported them...one person we spoke with actually told us that "thereafter" on a loan document doesn't mean "thereafter" Yes, the banks need to charge fees, but sometimes they take advantage of people not reading or understanding the documents. (We found a mistake that was going to cost us hundreds of dollars a month. We called and spoke to the bank, visited the bank, etc. without any results. We were treated as idiots who just didn't understand how things work. After we filed the complaint, things were resolved in our favor.)

I am a mother of twins too!

I will feel better about the closing costs if I refinance because it's what I chose and not chosen for me. At this point, I am closing next Thursday (10/31) and still have no Hud statement or breakdown of Title Insurance costs. Plus, I have the pleasure of paying for all this paperwork that I don't even have. They require closing cost funds to be wired 48 hours in advance, but I have no paperwork.....wonder why I am so stressed????

 

[bunkkinsmom]

Where in NC, I am looking at the Leland Area just outside Wilmington. Any Comments about the area if you are familiar with it.

PM-ing you!

 

[bunkkinsmom]

DH and I built a house a year ago. We used the same agent as the builder so he was a dual agent at that point. Worst mistake of our life! If I ever have it to do over I will always get my own agent.

If I had a dollar for every time I heard that.........

As a dual agent, they are not supposed to advise either way, just help in negotiations. BUT most builder's agents actually are employees, draw plus commission, sooooooo...... With my company we have dual agency and designated agency. So your contract is with the FIRM, not an individual agent. In other words, if you are my buyer and I show you one of MY listings, I can offer you ANOTHER agent in my firm to help negotiate that doesn't know the particulars of my listing. That way the firm can always act in the best interest of both parties. I can still represent the best interest of my seller while you get exclusive representation. And my company is worldwide, so we get these types of situations quite a bit.