Where lender pays some or all of the closing costs, what is the authority for providing lender credits in the 200s section of the HUD1 and not disclosing the credit on the GFE? HUD and GFE completion instructions seem to say such lender credit needs to be shown in Block 2 of GFE.

Thank you.

*bump

BUMP

I will take a stab at this (certain there will be dissension) but if you don't pay some or all of the closing cost on all your loans it is not required to be shown on the GFE. Remember, the GFE is supposed to be a general summary of fees that anyone walking in your office and asking for that loan type would pay. You may give a lender credit on the HUD at your discretion. We avoid showing a lender credit on the GFE because then you are obligated to give that dollar amount at closing and there could be many variables that comprise that number.

This FAQ somewhat speaks to that question and seems to give the option of giving a credit on the front of the HUD or giving a credit on the GFE:

32) Q: Does a loan originator have to show an appraisal fee (or other fee) paid to a third party on the GFE and HUD-1 even if the loan originator wants to cover 100% of the fee?

A: Yes. The loan originator must list all required third party services on the GFE and HUD-1 regardless of whether the charge is paid by the borrower, seller, loan originator or any other party (except for administrative and processing services). If any party other than the borrower is paying for a service that was on the GFE, such as the appraisal fee, the charge remains in the borrower‘s column on the HUD-1. A credit from the paying party to the borrower to offset the charge should be listed on the first page of the HUD-1 in Lines 204-209 and, if the service was paid by the seller, Lines 506-509 respectively.
The credit for the appraisal fee (or other fee) could also be offset by a credit disclosed as a negative number in Line A of the GFE and listed as a negative number in Line 803 of the HUD-1.

Can you refer me to the verbiage in the Regz that support this?

You will likely have to go with their Q&A (expansion and explanation of the reg).

A little back story. We all started out putting the lender credit in Block 2. We learned the hardway that it created too many issues where we had to cure tolerance because we overestimated the actual costs.

That's where not showing it on the GFE and crediting it in the 200's instead came into play.

RR- Thank you... I made this change at my bank and people went nuts...

I heard this at a credit compliance training event, presenter said "never do this" if you can avoid it... I took that and ran, but I could never find a reference for it, I could make the argument, but could never find the answer in the reg.

Cheers!

This question has come up again... For those of you who do not disclose as a credit in Block 2 charge in Block 3, and have under gone an FDIC exam recently, how did your examiner view this?

Not well. We were cited for improperly completing the GFE and HUD.

Did your examiners quote a section of the Reg or an FAQ that supported the citation?

bump

What are you bumping?
The anon that was cited for improperly completing the GFE and HUD has offered no support for their statement.
Without an explanation as to what their examiner based the citation on, we have nothing to comment on.

fwiw, my examiners had no problems with all costs on the GFE with a credit in the 200s on the HUD.

So if I'm a borrower, I should probably insist on credit being shown on my GFE, since it sounds like the only reason for not showing it is to be able to bait & switch later?

If you are a typical borrower, you don't care about anything other than what your monthly payment is going to be......