Tag: prorated taxes

Prorated Tax Credits for Down Payment on FHA Loan

Question: Is it true that tax prorations from the seller can be used towards the borrower’s minimum contribution on FHA loans? Answer: Not really. While the borrower can bring less money to the closing table because of tax proration credits, they have to be able to document that they had enough funds from acceptable sources […]

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Compliance – Pro-Rated Tax Credit Disclosure: The LE does not have a line item for a pro-rated tax credit from the seller. Where should this be disclosed?

Answer: There is no specific guidance regarding the location of the pro-rated tax credit on the LE, as there is on the CD.  This means it becomes a lender’s decision based on the best available information.  A consensus from our compliance experts stated the following: The purpose of the LE is to present a true […]

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