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#1817438 - 05/24/13 05:26 PM Lender Credits to borrowers
luvs2trvl Offline
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Joined: Apr 2013
Posts: 110
Texas
We are having a "discussion" on the changing of the amount of lender credit to borrower if the loan amount changes. Clearly the GFE states that this can only change if the interest rate changes. To be "creative" our Sales group wants to now disclose the credit to the borrower as a percentage - but in looking at the GFE, an actual dollar amount will still be reflected and since the interest rate is not changing, I am believing that we still have to go with the amount of the credit stated at the time the rate was locked - regardless of the loan amount being changed. Am I interpreting this correctly? Thanks .

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Lending Compliance
#1817466 - 05/24/13 06:18 PM Re: Lender Credits to borrowers luvs2trvl
Truffle Royale Offline

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I think you are.
That's why I have long advocated NOT giving lender credits on the GFE.
Do a cover letter that states either:
*At time of closing, you will receive a bank credit of x% of loan amount.
*At time of closing, bank will give a credit to cover actual cost of (appraisal, cbr, etc)., not to exceed $x.
That way the bank won't burn itself giving out free money.

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#1821197 - 06/06/13 07:59 PM Re: Lender Credits to borrowers luvs2trvl
complyorelse Offline
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Joined: Nov 2007
Posts: 442
U.S.
A follow up on this. The instructions on the GFE for a lender capacity state that we can include lender credits in Block 2. If we choose not to disclose the lender credit in Block 2, am I correct in thinking that the credit does not have to be in block 1 because it is a credit? If it were a charge, we would have to include it in Block 1 though, correct?

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#1821331 - 06/07/13 12:40 PM Re: Lender Credits to borrowers luvs2trvl
complyorelse Offline
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Posts: 442
U.S.
Bump. I am so sorry to seem pushy on this, but I'd love a response as we're facing a potential violation. Any response is appreciated. Thank you.

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#1821353 - 06/07/13 01:14 PM Re: Lender Credits to borrowers luvs2trvl
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,227
Galveston, TX
Charges go in Block 1 and credits go in Block 2 - not sure what you are asking???
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#1821359 - 06/07/13 01:18 PM Re: Lender Credits to borrowers Truffle Royale
complyorelse Offline
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Posts: 442
U.S.
Originally Posted By: Truffle Royale
I think you are.
That's why I have long advocated NOT giving lender credits on the GFE.
Do a cover letter that states either:
*At time of closing, you will receive a bank credit of x% of loan amount.
*At time of closing, bank will give a credit to cover actual cost of (appraisal, cbr, etc)., not to exceed $x.
That way the bank won't burn itself giving out free money.


This is what I'm asking about. Truffle is stating that we don't have to include lender credits at all.

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#1821365 - 06/07/13 01:23 PM Re: Lender Credits to borrowers luvs2trvl
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,227
Galveston, TX
In those cases the lender credit is not shown in Block 2 and is just provided in the 200 series of the HUD-1.
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#1821373 - 06/07/13 01:31 PM Re: Lender Credits to borrowers luvs2trvl
complyorelse Offline
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Joined: Nov 2007
Posts: 442
U.S.
That's what I'm thinking as well. If we do it this way, that means the credit (or charge) will not be part of the APR because it wouldn't be in the Origination Charge. Is that correct?
I appreciate your help!!

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#1821382 - 06/07/13 01:44 PM Re: Lender Credits to borrowers luvs2trvl
RR Joker Offline
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Posts: 20,654
The Swamp
What goes in your APR has nothing to do with what is in the origination charges. A charge is either a ppfc or not and is either excluded or not by regulation.
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#1821399 - 06/07/13 02:01 PM Re: Lender Credits to borrowers luvs2trvl
ynot Offline
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Joined: Sep 2011
Posts: 81
Florida
Would a lender credit be a ppfc?

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#1821492 - 06/07/13 03:05 PM Re: Lender Credits to borrowers luvs2trvl
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,227
Galveston, TX
How can a credit to the borrower be a finance charge??
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#1821526 - 06/07/13 03:38 PM Re: Lender Credits to borrowers luvs2trvl
ynot Offline
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Joined: Sep 2011
Posts: 81
Florida
Exactly! Thank you.

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