Can Vacation Time Affect RESPA's 10% Tolerance and Cause a Delay?
 You bet it can! Here are some tips to prevent your transaction from going over the 10% tolerance. It doesn't take much to push a loan over this tolerance, but by asking your customer some questions early in the process and sharing the information with your loan officer and escrow officer, will prevent surprises and associated delays at the closing table.
* Will the buyers be out of town for the signing? There will be a signing fee. I would venture to guess that this occurs in at least 40% of the summertime closings.
* Will one or more of the parties require a Special Power of Attorney for their transaction? IF a POA gets approved by the lender, there will likely be a doc prep fee as well as additional recording fees for the document.
* Will the buyers be in California for the signing? You may be looking at additional recording fees. The next article is about one such experience.
Isn't is surprising how these small items can cause such a big affect?
RESPA is clear that any violations of the 10% tolerance must be cured by the lender within 30 days of closing and it is solely the lenders responsibility, but keep in mind that any re-disclosure necessary may delay the closing. As professionals we all should work together for a smooth and "seamless" closing experience for our customers.
California Notary Laws Change Again
I have noticed throughout the last 10-15 years that California Notaries are passionate about their jobs. They attend Notary Seminars and are well informed about the laws in California and are therefore emphatic about using the California Notary Acknowledgement form.
This became a particular challenge when Washington State imposed their 1" rule on documents that are to be recorded. Escrow Officers throughout our state have created BIG flyers warning notaries about the pitfalls of changing the Notary Acknowledgments on the documents, as the California forms do not  meet Washington's margin requirements.
Now with the new RESPA laws on Tolerance that took affect in January, this has really become an issue.
On 2 separate transactions this last month, California Notaries have ignored my requests (and lengthy verbal discussions) and proceeded to use their own forms.
Why? As it turns out: Because of a new California statute that added the words "under penalty of perjury" on their acknowledgement
A-ha! This is now making some sense to me. Now what happened to my sales?
On the first transaction, the title company was able to get it recorded as is (somehow) but the 2nd transaction, not so easy. Title called to tell me that the recording was "bouncing" at the courthouse without a $50 coverpage. A $50 coverpage would have: 1) tossed us out of our 10% tolerance 2) Required new lender approval on the HUD before closing 3) Required the buyer to deposit additional funds.
What happened? Title graciously agreed to eat the additional cost, as I had faxed this document over for their approval earlier in the week due to the entity question I had (another story) and they were a company that FEE AVERAGED. We got lucky - none of the parties had any idea of the drama at 3 p.m. on that Thursday.
Solution for future transactions: I will be writing to the Notary Division of the Department of Licensing in Washington State and asking for matching language on our documents. Maybe they will consider the change?
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Julie Booth
This Newletter is dedicated to issues that arise with the 10% tolerance requirements of RESPA.
Would you like to learn more about the Tolerance issue, on the new GFE or HUD 1? Here is a link to the most current edition of the RESPA FAQ's, dated April 2, 2010
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