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#1994590 - 02/09/15 07:38 PM Specific Lender Credits 1026.37 (g)(6)(ii)
Luv2run Offline
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If the credit is specific (e.g., listed as credit for the appraisal), can it change if the appraisal cost is lower? I was informed from another source that it could, however that is not what I am getting from below. And how would one disclose it as a "specific" Lender Credit? Can you itemize in section J?

From the Rule:

Lender credits. The disclosure of "lender credits," as identified in 1026.37(g)(6)(ii), is required by 1026.19(e)(1)(i). "Lender credits," as identified in 1026.37(g)(6)(ii), represents the sum of non-specific lender credits and specific lender credits. Non-specific lender credits are generalized payments from the creditor to the consumer that do not pay for a particular fee on the disclosures provided pursuant to 1026.19(e)(1). Specific lender credits are specific payments, such as a credit, rebate, or reimbursement, from a creditor to the consumer to pay for a specific fee. Non-specific lender credits and specific lender credits are negative charges to the consumer. The actual total amount of lender credits, whether specific or non-specific, provided by the creditor that is less than the estimated "lender credits" identified in 1026.37(g)(6)(ii) and disclosed pursuant to 1026.19(e) is an increased charge to the consumer for purposes of determining good faith under 1026.19(e)(3)(i). For example, if the creditor discloses a $750 estimate for "lender credits" pursuant to 1026.19(e), but only $500 of lender credits is actually provided to the consumer, the creditor has not complied with 1026.19(e)(3)(i) because the actual amount of lender credits provided is less than the estimated "lender credits" disclosed pursuant to 1026.19(e), and is therefore, an increased charge to the consumer for purposes of determining good faith under 1026.19(e)(3)(i). However, if the creditor discloses a $750 estimate for "lender credits" identified in 1026.37(g)(6)(ii) to cover the cost of a $750 appraisal fee, and the appraisal fee subsequently increases by $150, and the creditor increases the amount of the lender credit by $150 to pay for the increase, the credit is not being revised in a way that violates the requirements of 1026.19(e)(3)(i) because, although the credit increased from the amount disclosed, the amount paid by the consumer did not. However, if the creditor discloses a $750 estimate for "lender credits" to cover the cost of a $750 appraisal fee, but subsequently reduces the credit by $50 because the appraisal fee decreased by $50, then the requirements of 1026.19(e)(3)(i) have been violated because, although the amount of the appraisal fee decreased, the amount of the lender credit decreased.
Last edited by Susan E; 02/09/15 07:53 PM.
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TRID - TILA/RESPA Integrated Disclosures Rule
#1994655 - 02/09/15 09:04 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Jerod Moyer Offline
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If you indicate a credit in Section J of the Loan Estimate generally it cannot be reduced (save for interest rate dependent terms). The regulation as you've quoted is clear that if the credit is for the appraisal, let's say $500 and the actual cost ends up being $400 you're in violation of the "good faith" requirement if you don't provide a $500 credit. Section J is always a lump sum and is not to be further itemized.
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#1994841 - 02/10/15 03:54 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Jerod Moyer
Luv2run Offline
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Thank you for your repsonse. Currently, if we are paying the fees(appraisal, credit, flood )as part of a loan promotion, we disclose the fees on the GFE and then give a general lender credit to the borrowers on the HUD1. If I am understanding the new requirements correctly, we will now have to quote the lender credit on the Loan Estimate if we are anticipating the lender to pay the costs associated with the loan. Is this correct?
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#1998525 - 02/26/15 08:54 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
raitchjay Offline
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OK
To piggyback on this: i've read this section and my question is: where would the lender specify anywhere on the Loan Estimate that the lender credit was "specific" or "non-specific"? I don't see anywhere that instructs that. I assume it's because it doesn't matter if they're "specific" or "non-specific", they both are zero tolerance?
Last edited by raitchjay; 02/26/15 08:59 PM.
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#1998551 - 02/26/15 09:19 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
raitchjay Offline
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OK
I guess i'm wondering because of "However, if the creditor discloses a $750 estimate for "lender credits" identified in 1026.37(g)(6)(ii) to cover the cost of a $750 appraisal fee, and the appraisal fee subsequently increases by $150, and the creditor increases the amount of the lender credit by $150 to pay for the increase, the credit is not being revised in a way that violates the requirements of 1026.19(e)(3)(i) because, although the credit increased from the amount disclosed, the amount paid by the consumer did not." If this were a specific credit ("we'll cover the cost of your appraisal"), then you'd have to increase the lender credit, whereas if you had just said "we'll give you a general credit of $750", you wouldn't have to bump the credit up $150 when the appraisal came in higher......so it seems to me like there would be somewhere to specify whether the credit is "specific" or "non-specific" on the LE.
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#1998914 - 02/27/15 07:51 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Jerod Moyer Offline
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Credits are not "specified" on the loan estimate. So in theory you could state that you are giving the $750.00 credit for the appraisal and only give them $750.00 even if the actual cost comes in $150.00 higher or you could bump the credit up on the closing disclosure when you get there. It really depends on what you said to the customer and remember you can't decrease a credit. In other words it's not necessarily a TILA issue at this point rather it's UDAAP. Do what you say and say what you do.
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#1998924 - 02/27/15 07:58 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
raitchjay Offline
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OK
Thanks Jerod....got it.
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#2019553 - 06/10/15 04:38 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
SnuffytheSeal Offline
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So non-specific Lender Credits - where would I disclose negative points? i.e. the credit is interest rate based. (Right now working through system issues)
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#2019851 - 06/11/15 03:58 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Indy Banker Offline
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Another scenario - creditors who choose not to disclose any lender-credits on the GFE (soon to be LE), then issue a general lender credit on the HUD-1 (soon to be CD) when they know what the actual costs end up being. Our understanding is that the CFPB did not clarify in the new TRID rules, commentary or preamble if this practice is now or will still be acceptable. It certainly hurts the creditor if the applicant is shopping lenders based on their LE.

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#2019888 - 06/11/15 04:54 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Indy Banker
Here4Life Offline
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I am glad you asked this question! I spoke with an FDIC examiner regarding our No Closing Cost Product (Specific Lender Credits) and how to disclose on the LE. He advised me not to show a credit on the LE but disclose on the CD in the Paid By Others column. He said this way our credit will exactly match the invoices for the closing costs incurred.

Currently we disclose the credit on the GFE because FDIC said we had to, now they are saying we don't? I think I get more confused everyday!

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#2020035 - 06/12/15 12:53 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Michelle M. Offline
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A similar question was posed to the CFPB at a conference in Orlando in February. They were asked, Can I just wait and add the lender credit on the final Closing Disclosure and leave it off the Loan Estimate? They responded that the Loan Estimate figures would not be "in good faith" and "using the information available" because if you know there will be a lender credit, you should have it on the Loan Estimate.

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#2020038 - 06/12/15 01:13 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Michelle M.
Kathleen O. Blanchard Offline

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Michelle is correct. All planned credits must be shown on the Loan Estimate or costs will be overstated and the LE is not in good faith. The practice some banks had of providing a side letter stating a credit to avoid a cure will no longer work, if it was ever legitimate. Make your credits something that the bank is prepared to pay regardless of final costs.

The LE does not break out specific and general lender credits. They are together in Section J, under the total of Lines D and I, and are netted out on line J.

On the Closing Disclosure, specific credits are listed with the related charge and general credits are again in Section J and netted out from the total on J.
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#2020137 - 06/12/15 04:49 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Here4Life
Indy Banker Offline
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Originally Posted By Here4Life
I am glad you asked this question! I spoke with an FDIC examiner regarding our No Closing Cost Product (Specific Lender Credits) and how to disclose on the LE. He advised me not to show a credit on the LE but disclose on the CD in the Paid By Others column. He said this way our credit will exactly match the invoices for the closing costs incurred.

Currently we disclose the credit on the GFE because FDIC said we had to, now they are saying we don't? I think I get more confused everyday!


We had a field examiner (not CFPB) recently say the same thing. CFPB chose not to address in the TRID rules. Other than the "in good faith" rationale, there is nothing I've seen in writing from any of the agencies that indicates that practice is a violation. If anything, it hurts the lender if the applicant is shopping around and the creditor is showing higher costs than Bank X. One thing that the CFPB could do to put the whole issue to rest is to revise the regulation so that if a creditor offers to pay for a specified settlement service and the actual cost is less than estimated, the creditor isn't required to pay the extra windfall to the borrower. That might make too much sense, however.

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#2020149 - 06/12/15 05:09 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Indy Banker
Here4Life Offline
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I agree, but we all know that won't happen! It would make our jobs a little easier.

How are you going to handle this? (If you don't mind sharing)

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#2020169 - 06/12/15 05:53 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Kathleen O. Blanchard Offline

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I would not want to be the test case. If you have to disclose everything you know about, including fees for services you do not require, how do you leave your own credits off?
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#2080613 - 05/26/16 03:41 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Darth HMDA, CRCM, CAMS Offline
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Hello everyone,

Reviving this thread. The Bank has decided to run a promotion giving $300 off closing costs for all applications taken within a certain period of time.

As a general non-specific credit I instructed the department how to disclose the general credit in Section J of the LE and CloD, pursuant to 37(G)(6)(II) and COMMENT - 19(e)(3)(i)-5.

There was an issue in the system disclosing the fee in section J. The OS's compliance check was not recognizing the credit and showing a tolerance violation. They tried to get the system to recognize the fee to no avail.

They decided to now disclose the fee as $300 off the origination fee in Section A. So now section A of the LE would show as such:

LOAN COSTS
A. Origination Charges
Bank Lender Fee $1000
Spring Campaign ($300)

The credit does not show in section J. I think it is beneficial to the consumer as the credit is front and center but I do not believe we can disclose this way. How are others disclosing this type of specific promotional credit.

Thank you!!
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#2080618 - 05/26/16 03:47 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Darth HMDA, CRCM, CAMS Offline
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Saw this post from John Burnett back in October -

You can't disclose a specific credit on the LE. There's one number, period. The total lender credit (specific credits plus any general credit) must be equal to or greater than the lender credit amount disclosed on the LE.

Seems to support my opinion.
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#2080625 - 05/26/16 04:00 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
justsayjulie Offline
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Right, Darth. Only a lump sum lender credit can be on the LE; specific lender credits are on the CloD.
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#2080640 - 05/26/16 04:20 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Darth HMDA, CRCM, CAMS Offline
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Thank you Julie!
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#2080641 - 05/26/16 04:21 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Darth HMDA, CRCM, CAMS Offline
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Darn operating systems haha.
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#2080676 - 05/26/16 05:37 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
John Burnett Offline
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I'd bring some heavy pressure on your provider to get this glaring error corrected.
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#2080692 - 05/26/16 06:27 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Darth HMDA, CRCM, CAMS Offline
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Right - already on it smile

wound up doing as a specific credit with no issues. correctly maps to J on the LE and shows as credit towards origination fee on CD.

thanks everyone!
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#2098131 - 09/12/16 11:03 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Darth HMDA, CRCM, CAMS Offline
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Bringing this thread back to life. The bank currently offers an employee discount on mortgage loans. The bank waives the origination fee (a specific credit).

Based on my understanding of §1026.37(g)(6)(ii) and §1026.19(e)(3)(ii) #5 the Bank is required to disclose the cost of the origination fee and provide a specific lender credit (section J of the LE, and line item in section A of the CD).

Does anyone disagree with me, or is this how you would disclose the fee? (just reviewed a file where Section A was blank). I wanted to verify before I document findings and provide recommendations.

Thank you in advance for your help!
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#2098133 - 09/12/16 11:20 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Darth HMDA, CRCM, CAMS Offline
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Checked with QC and they stated someone informed them at the time of implementation that since it was the Bank's policy not charge this fee on employee loans it did not need to be disclosed. They are researching to see where the guidance came from.

Very much on the fence on this one, leaning toward disclosure. Anyone?
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#2098203 - 09/13/16 03:19 PM Re: Specific Lender Credits 1026.37 (g)(6)(ii) Luv2run
Darth HMDA, CRCM, CAMS Offline
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bump
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