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#1994590 - 02/09/15 07:38 PM
Specific Lender Credits 1026.37 (g)(6)(ii)
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Platinum Poster
Joined: Jan 2015
Posts: 610
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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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#1994841 - 02/10/15 03:54 PM
Re: Specific Lender Credits 1026.37 (g)(6)(ii)
Jerod Moyer
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Platinum Poster
Joined: Jan 2015
Posts: 610
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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
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Power Poster
Joined: Oct 2009
Posts: 9,088
OK
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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
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Joined: Oct 2009
Posts: 9,088
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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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#1998924 - 02/27/15 07:58 PM
Re: Specific Lender Credits 1026.37 (g)(6)(ii)
Luv2run
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Power Poster
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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
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Gold Star
Joined: Oct 2009
Posts: 270
State of Confusion
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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
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Platinum Poster
Joined: Aug 2010
Posts: 528
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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
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100 Club
Joined: Feb 2010
Posts: 121
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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
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New Poster
Joined: Jun 2014
Posts: 13
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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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#2020137 - 06/12/15 04:49 PM
Re: Specific Lender Credits 1026.37 (g)(6)(ii)
Here4Life
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Platinum Poster
Joined: Aug 2010
Posts: 528
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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! 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
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100 Club
Joined: Feb 2010
Posts: 121
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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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#2080613 - 05/26/16 03:41 PM
Re: Specific Lender Credits 1026.37 (g)(6)(ii)
Luv2run
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Diamond Poster
Joined: Dec 2013
Posts: 1,399
CA
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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
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Diamond Poster
Joined: Dec 2013
Posts: 1,399
CA
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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
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Gold Star
Joined: Mar 2014
Posts: 293
back home again
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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
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Diamond Poster
Joined: Dec 2013
Posts: 1,399
CA
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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
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Diamond Poster
Joined: Dec 2013
Posts: 1,399
CA
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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
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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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
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Diamond Poster
Joined: Dec 2013
Posts: 1,399
CA
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Right - already on it 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
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Diamond Poster
Joined: Dec 2013
Posts: 1,399
CA
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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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The opinions expressed are mine, do not represent the opinions of my employer, and they are not to be taken as legal advice.
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#2098133 - 09/12/16 11:20 PM
Re: Specific Lender Credits 1026.37 (g)(6)(ii)
Luv2run
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Diamond Poster
Joined: Dec 2013
Posts: 1,399
CA
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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
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Diamond Poster
Joined: Dec 2013
Posts: 1,399
CA
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bump
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