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| | | Forum Newbie
Group: Forum Members
Last Login: 7/31/2007 12:23:23 PM
Posts: 2, Visits: 12 |
| hey everyone,
i am a new processor and i'm trying to figure out the best way to set up my reserves section of my good faith estimate.
i hate either being short at the end or a borrower not getting as much cash-out as expected because i didn't estimate correctly on such things as taking insurance into consideration or what not.
as of right now, i'm doing...
15 days interest
5 months tax reserves
? mortgage insurance
i was just wondering what anyone else here puts for certain sections, so that next time around, i'm not caught being short or with not enough cash-out.
thanks in advance for any help!
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| | | Forum Newbie
Group: Forum Members
Last Login: 7/26/2007 3:47:48 PM
Posts: 4, Visits: 5 |
| | Tax reserves will depend on your state and how their taxes work. The lender is going to want to collect from the date last paid until the day the payment is due. This will of course give them an extra month's cushion which is what they like to see. The Mortgage insurance is generally going to be 2 months. That is what has worked for me. barjas |
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| | | Forum Newbie
Group: Forum Members
Last Login: 7/31/2007 12:23:23 PM
Posts: 2, Visits: 12 |
| so i guess the taxes depends on the borrower, whether the borrower pays, for example every 6 months or if the account is impounded and he/she just paid last month.
the difference between paying his/her taxes last month as opposed to 5 months ago is pretty big.
so should i change that on a file-to-file basis or is there kinda a good estimate to put, say 2 months or 6 months reserves or whatever?
are there any other fields i should worry about to get the best estimate in your opinion?
thanks for your help!
i appreciate it! |
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Supreme Being
Group: Forum Members
Last Login: 9/12/2008 11:24:50 AM
Posts: 289, Visits: 242 |
| | Point has a feature for calculating these reserves that hardly anyone uses. It is called the Aggregate Adjustment. It helps make your GFE more accurate because it accounts for overcollection in the escrow account. If you click on the Aggregate Adjustment button in the GFE screen, you can enter the number of months of taxes, insurance, etc. that will need to be paid in any month. Point will then calculate the adjustment to be made to keep the escrow account from holding too much money. (BTW, to make the aggregate adjustment work properly, you need to enter the first payment due date.) When you're calculating taxes, you withhold the number of months that will NOT be collected in payments before the taxes have to be paid, plus the lender's cushion (usually 2 months). For instance, if 12 months' taxes are due in December and the first payment date is October, you should collect 9 months plus 2 months' cushion for a total of 11 months. If only 3 months' taxes are due in December and the first payment is October 1, you only need to collect 2 months' taxes (cushion). The formula is: Total # months taxes due - number of payments made before taxes due + 2 (or whatever cushion the lender requires). Legally, non-interest-bearing escrow accounts can only have a 2 month cushion at any point in time. The aggregate adjustment on the HUD is used to correct any potential over-collection at the time of closing so it never exceeds this. Insurance is calculated in an identical manner. Except FHA mortgage insurance. Point will calculate this correctly if you enter all of the fields correctly. The actual scheduled MI payments on the TIL will differ slightly from the number in the proposed housing payment section because FHA allows servicers to annualize premium and reduce the premium monthly based on the reducing balance.
- Mike
mike@mtig.biz |
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| | | Forum Newbie
Group: Forum Members
Last Login: 9/25/2008 6:30:29 AM
Posts: 1, Visits: 2 |
| | Mike, When calculating the escrow account I am running into an error. If the current tax bills are out and the taxes are going to be paid at the closing, the escrow account is not calculating correctly. EX: Current tax bills are out but not due until November. Closing scheduled for 9/26/08 with first payment due 11/1/08. Aggregate table set up to show 12 month due in November. Table calculates 13 months, but at closing the entire tax bill is collected at closing an paid. The Escrow acct should be collecting 2 months. This always happens with the current tax bills are out for the year and the closing attorney pays the bill. Any sugestions? Henry |
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| | | Supreme Being
Group: Forum Members
Last Login: Today @ 10:58:28 AM
Posts: 109, Visits: 1,169 |
| | I think I'm one of the only users that uses the Aggregrate Escrow table, but I'd highly recommend everyone look further into it. Let the technology work for you. |
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