Once you’ve completed the Initial Setup Guide, you can begin here to set up the CD for sending instructions to the title agent, and the initial CD to the borrower.
- 700 Section: This is where the Seller’s commission fees will go. These should always be paid by the seller and be seller obligated. 704 should be grayed out, and should not be used for You can skip this during initial setup, as it is not going to be relevant to the borrower, so it can just be done when balancing with title.
- 801 Section: Processing and Underwriting fees. These are the fees that we as Goldstar charge to the borrower. They are set by the branch/corp/lockdesk and we should not need to edit them for any reason (the ONLY exception to this is if you need to itemize a seller credit for APR or QM pts/fees If you do not know what that means, you don’t need to mess with them).
- 802 Section: Discount Points and Origination Credits: If the borrower is purchasing points or getting a rate credit, it will be in this section. Same as 801, you do not need to touch this unless itemizing a seller credit
- The rest of 800: This is where any additional fees required to close the loan are located, such as appraisals, credit report fees, condo questionnaires, etc. This is the first section you will begin to Most of the time, you will only have appraisal fees, and a credit fee here (we do not ever charge for flood certs).
Double check the appraisal fee that is there with the appraisal invoice uploaded to the file and make sure that the amounts match. Also check to see who paid for the appraisal (on almost all files that are not VA, the appraisal will be paid for already). If the borrower paid for it, you can open the fee and put the total paid in the POC (paid outside closing) column. If the appraisal was paid for by Dan Milstein (Gold Star’s CEO), then the borrower will pay for the appraisal at close. Since Gold Star paid for the appraisal in that situation, your Payee for the appraisal will be “Gold Star FBO *appraisal company*”.
For the credit report, check the fee that was disclosed against the credit report invoice (should be in the CL-Invoices folder). If we underdisclosed, leave the fee alone, accounting will handle the overage on the back end with the branch. If we over disclosed, you may reduce the fee so that it matches the credit report invoice. If you don’t have an invoice uploaded yet, make a note that you will need to check again later. You can also email the branch for the invoice at this time.
- 900 Section. This is where all of your prepaid items go (prepaid interest, HOI premium, taxes, etc). This part is one of the most difficult for most closers to get correct (the other being the next section, Escrows). This will NOT be a comprehensive guide on how to do this correctly, but in general, you want to do the following:
- 901: make sure that your prepaid interest is correct. It should be calculating interest from the day of funding until the 1st of the next month. You should not need to edit this, it should work automatically as long as your dates were set up correctly in the closing command center. If you are doing an interest credit, you should have a negative prepaid
- 902: MI Premium: if you have an FHA loan or a Conventional loan with Single Premium MI, you will have an amount in this section. Conventional loans with monthly MI will still have a payee here, but no amount (just like the screen shot below). You should NOT need to edit this
- 903: HOI. Make sure that you enter the correct HOI payee, the correct monthly amount for HOI calculated based on the total premium of the policy, and that you are collecting the premium for the HOI policy, if necessary (you will ALWAYS have a premium amount here on purchases).
- 904: Property Taxes. This is the part that is the most confusing. Again, make sure that you have the correct monthly amount based on the tax cert or title work, and make sure that you are collecting the correct amount if taxes are due OR collecting the correct hold if taxes will be due soon and we require a tax If you are in a state like Michigan that has two separate property taxes, you can add the second tax amount on a new line (907 is the first free line that can be used for anything, and is typically used for Michigan summer taxes).
- 905: VA Funding fee. If you have a VA loan that requires a funding fee, it will be here. You do NOT need to touch this ever.
- 906: Flood insurance. Exact same as regular HOI except only on files that are in a flood Make sure everything is correct and being collected if necessary.
- 1000 Section: Escrows. This is the other hardest part that the VAST majority of closers have the most trouble with. This section is not difficult, if you take your time and double check your work, you will get it right every Now here is what you’re looking at:
- 1001: The total initial escrow deposit. This amount is calculated automatically based on everything you put into this section. You do not actual edit this
- 1002, 1004 etc: HOI and Taxes. Make sure that the amount you are collecting monthly is correct based off of your HOI policy premium and Tax Cert/Title work. Make sure that you are collecting EVERYTHING necessary, so if the property is in a flood zone, make sure there is a monthly Flood amount. In Michigan, make sure BOTH taxes are filled out, and that you have summer/winter in the correct spots (the below example is for Michigan, so property tax and city tax are both filled in).
- 1003: Mortgage Insurance. If your file has mortgage insurance that is paid monthly, you will have a number here. You do NOT need to edit this number, it is generated You should NEVER collect any amount of mortgage insurance in escrow (it is paid out monthly, so there is no need to collect anything in escrow).
- Aggregate Adjustment. Click on the Aggregate Adjustment button at the bottom of the page to access the escrow setup. This is where you will actually set up your escrow This part is incredibly easy to do incorrectly if you are not paying attention, but is not difficult to get right. Make sure you know your due dates and you will be fine.
Line 1, Cushion. Every payment being collected in escrow will have a 2 month cushion, this is company policy. You should have a 2 above every due date, like in the example below (please note in the example below that there is NOT a 2 above the MI due dates. This is because MI is not escrowed, it is paid monthly. If you have MI that is paid monthly, make sure that there are exactly 12 1’s in the MI column next to each of the next 12 months; this tells the system that the borrower will pay this every month and it does not need to be escrowed. If you do NOT have exactly 12 1’s it will throw off your escrow account.
Due Dates. All you are doing here is inputting the next time this tax will be collected so that the system can calculate how much to hold so that we have enough to pay it when we get to that date. For the below example, the hazard insurance renews in August of 2021, so our next due date is 8/1/2021 (you can always just use the 1st of the month when inputting the date, it will pay out on the 1st regardless).
If you have multiple due dates (for example, in Minnesota, property taxes are due twice yearly in May and October, you would put both of those due dates in the Tax line next to Due Date 1 and Due Date 2, in order of which one will come first. The below example is for Michigan, who pays two separate property taxes, one standard property tax due in December and one City property tax due in July, so the dates are separated into two different columns.
When you have properly set up your escrows, hit OK and the system will automatically calculate your initial escrow deposit.
- 1100 Section: Title This is the easiest section. Match the fees that we have with the fees from the Pre CD that the title agent provides us.
- 1200 Section: Recording Fees. DO NOT touch this section until you have final figures to balance from the title agent. All recording fees are subject to either a 10% or 0% tolerance, so changing them can very easily cause good faith fee variances that need to be cured. Make sure that when you change them, the number you are changing them to is 100%
- 1300 Section: Additional settlement charges. This section is for anything left that wasn’t included in the above sections. Typically, you will have realtor fees here, Survey fees, HOA fees, The only thing to note here is that the lines have either one asterisk* or two**.
Lines with one asterisk should be used for fees that are required to close the loan and could have been shopped for by the borrower (for example, in Florida a survey is typically required on all purchases. The borrower should be given the choice to shop for a surveyor, and this fee should be disclosed to them. VA loans with required termite inspections are the same). Lines with two asterisks should be used for any residual fees that are part of the transaction, but not a specific requirement of the loan (HOA fees, realtor fees, etc).
- Bottom of the itemization. This is where you will put all of your adjustments from CD page 3 so that your itemization and CD balance. The Seller Credit line will carry over automatically between this page and the CD, everything else will need to be typed in both places. You can add prorations and other adjustments together since there are only four lines here. Take note of the cash to close here, this will need to match your CD page
- CD Page 3. Your CD Page 3 will need to match exactly how title’s looks, so any prorations in section K should be put in section K, any that are in section L should be in section L, and you’ll need to make sure that seller credit and deposit are correct. Seller Credits will transfer over automatically to here from the bottom of the itemization that we already did, so if you did that correctly, you should already see your seller credit on CD page 3. The EMD will need to be checked to make sure it is input correctly
Next you want to click this paper and pencil icon in the Adjustments and Other Credits line at the top of CD page 3.
Click on the Non-UCD tab of the window that pops up, and look at these boxes. There should not be anything in these in order for you to balance properly. There are a few VERY specific cases where you might need to put something in these, but for the vast majority of files, you need to make sure these are empty. Side note, if you ever change your escrow account (Step 6, d) you will need to check this, as changing the aggregate adjustment can populate a number in this box
Once you have gone through all of these steps, your file should be preliminarily balanced. To make sure that it is balanced, you need to check three different places, the top of CD page 3:
The bottom of CD page 3:
And lastly, the bottom of the itemization (this is exactly the same as the 1003 page 3):
If all three of those are the same number, then you are balanced and ready to send your instructions to title and/or the CD to the borrower. If they are not, you’ll need to review your work and make sure that you input everything correctly into the Itemization and CD page 3. Your bottom of itemization/1003 page 3 being different from the numbers on your CD page 3 are almost always due to entering the prorations/EMD/seller credit incorrectly.