We are providing 100% financing for a sale of ORE by giving a 1st Mtg and a 2nd Mtg for the down payment. Since no cash is being provided as a downpayment do we still need to complete the 5th box on the 1st Mtg Truth in Lending Statement?

And similar question. We have had a situation whereby a small amount of cash was provided as a downpayment but we did a 2nd for LTV reasons. However, in the 5th box we only entered the amount of the actual cash downpayment; not any of the borrowed downpayment. Is this acceptable?

You have to use the credit sale disclosure on any credit sale regardless of whether there is a downpayment or not. It would apply for both the 1st and 2nd lien loan, as they are both credit sale financing. Only the reference to the downpayment may be eliminated if there is no downpayment.

Paragraph 18(j) Total Sale Price

1. Disclosure required. In a credit sale transaction, the total sale price must be disclosed using that term, along with a descriptive explanation similar to the one in the regulation. For variable rate transactions, the descriptive phrase may, at the creditor's option, be modified to reflect the variable rate feature. For example, the descriptor may read: “The total cost of your purchase on credit, which is subject to change, including your downpayment of * * *.” The reference to a downpayment may be eliminated in transactions calling for no downpayment.

I hate to show my ignorance but I'm at a loss as to what exactly has to go in the 5th box. Is it:
Sales Price - 'cash' downpayment (if any) + finance charges + prepaids?
Let's say sales price is $200,000; $5,000 is cash downpayment; Fin chg is $22,000; and prepaids are $300.
Total Sales Price - The total cost of your purchase on credit including your dowpayment of $5,000 is $217,300
Is that correct?

From 1026.18

(j) Total sale price. In a credit sale, the total sale price, using that term, and a descriptive explanation (including the amount of any downpayment) such as “the total price of your purchase on credit, including your downpayment of $__.” The total sale price is the sum of the cash price, the items described in paragraph (b)(2), and the finance charge disclosed under paragraph (d) of this section.

(b)(2) Adding any other amounts that are financed by the creditor and are not part of the finance charge;


Let's say your selling price is $400,000 with a $100,000 down payment. You are financing $300,000 plus costs.

Loan Amount $300,000
Closing Costs $5,000
Finance Charges $125,000
Down Payment $100,000
Total Sales Price $530,000

So - if bank (seller) pays closing costs would you remove the $5,000 from the equation.

If the sales price is $400,000; 1) loan amount $300,000; 2) cash downpayment of $25,000; 3) 2nd DSD for remainder of downpayment of $75,000, would the 5th box include the 1st Mtg of $300,000 and the 2nd Mtg of $75,000?
ie:
Loan Amount $375,000
Downpayment 25,000
Finance charge 125,000 (for 1st & 2nd)

Total Sales Price = $525,000

OR should we use
Loan Amount $300,000
Downpayment 100,000
Finance Charge 125,000

Total Sales Price = $525,000

The 5th box would indicate "total price of your purchase on credit, including your downpayment of $__.” ??? $100,00? or $25,000?

And whichever one is correct, the 5th box on TIL's (1st and 2nd) would be identical? Right?

THX -

I've never done a piggy back loan for a credit sale but IMHO the 5th box must include the total cost to the borrower which would include the cost of both loans.

THX - and what would we use for the downpayment in the 5th box? The cash amount of $25,000 or $100,000 (cash and 2nd DSD?)

IMHO this is 100% financing using 2 loans instead of 1 loan therfore there was no down payment.