Escrow / Taxes Flashcards
Hazard Insurance Endorsement Letter
Shows the lenders information (loss payee information) that should appear on the borrower’s HOI (Home Owner’s Insurance) May or may not require a signature
Initial Escrow Account Disclosure
Shows the itemization of the Property Taxes, HOI, and any PMI. Indicates that, of the total payment “x” will be escrowed for the payments.
Tax Record Information Sheet
This form should be filled out by the closing agent- it should accurately report to the lender the status of taxes, along with where tax payments from the escrow should be sent. This is normally signed by the closing agent.
Right to Discontinue Escrow
In the State of Minnesota, if your loan conforms to specific requirements, the lender may allow you to pay your taxes and insurance as they come due in lump sum payments. Normally, the loan will need to be in place for 5 years and meet lender guidelines.
Request for Transcript of Tax Return (4506-T)
This document will allow for the lender to pull the borrowers tax return anytime in the next 12 months for the purpose of Audit. They would be auditing that a) the borrower didn’t provide fraudulent tax returns, and that the loan officer didn’t manipulate the returns for the purpose of qualifying a buyer. - Most forms will have an “attestation” box right above the signature lines that will need to be checked.
W-9
Verifies the borrower(s) social security number is the number tied to their income tax returns. It also keeps track of the interest paid on the mortgage over the 12 month period. At the end of each year a lender will send out a 1098-INT form which will report the amount of interest paid over the year. That information can be provided to a borrowers account, and may be deductible.
Hazard Insurance Authorization, Requirements, and Disclosure
States the borrower has to have Home Owners Insurance in place, and that the lender is required to be listed as a loss payee. Provides specifics that the Insurance Company must be a reputable one.
Also in the event of a claim, (hail storm fire etc) the lender will likely be a payee on the claim check. At which point a borrower will need to work with their lender.
Borrower Consent to the Use of Tax Return Information
Where as the buyer has signed the 4506-T (request of transcript of tax return) this consent give the lender the ability to share information found with affiliates for the purpose of loan qualification and compliance.
