Question from a borrower:

I have a quick question about my Deed of Trust. The Deed of Trust is pre-dated by the lender for March 7th, but today is March 10th. Shouldn’t I date it to reflect the day in which I’m signing the document?

No. Lenders are strict when it comes to dating documents. The Deed of Trust allows for borrower’s signatures, but the escrow staff helping you navigate through your documents are usually Notaries and they notarize the last page of the Deed of Trust for the day you are signing the documents.

Question from a client during a signing:

The form “Itemization of amounts financed (IAF)” is a page in which the summary of charges in connection with making your loan are itemized. Why is it that some of these itemized fees are different than on the Settlement Statement?

Answer:

The fees on the IAF form are the Annual Percentage Rate (APR) effective fees. At the time that the lender draws the documents, they do not know the EXACT fees. The fees on the loan application form (commonly referred to as the “1003″) are also just estimates. These fees can be over disclosed, but not under disclosed with the exception of those fees that are not APR effective which are often located on the bottom section of the IAF.

APR effective fees are those that influence the annual percentage rate. The APR is disclosed on the separate Truth in Lending document.

As the House of Representatives recently passed the Mortgage Foregiveness Debt Relief Act of 2007, there may be wrinkles that will come to light as more people turn to this Act for relief from having to pay tax on home mortgage indebtedness.

This is a brief from my recent issue from Berntson Porter & Company, CPA’s & Consultants (page four of the .PDF document):

“….. is a possible downside to this bill for those taxpayers who
wish to make their second home their primary residence for
the home-sale exclusion. After 2007, if a home is sold within
five years after becoming your main residence, part of the gain
will be taxed even if the two-out-of-five-year test is met. The
portion of the gain that will be taxed is based on a percentage
of the time before the sale when the home was used as a second
home or rented out.”

This is not tax advice and is for general informational purposes only, consult your beloved tax advisor or tax attorney for your specific circumstances.