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#2089022 - 07/20/16 07:29 PM Specific Lender Credit
Owlman Offline
Member
Joined: Dec 2015
Posts: 54
Perhaps I'm beating a dead horse here, but I've been reading the posts regarding this and am still confused.

If lender advertising $200 off closing cost coupon how would we disclose on the LE/CLoD?

Two thoughts. We could list the normal origination charge , then show lender credit on CLoD, but wouldn't this affect the APR since it could drop it by more than .125%?

We simply lower the origination fee by $200 prior to issuing the LE, but then we have nothing to show in the file why it is lower and the borrower would have to trust that we "normally charge $400".

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#2089043 - 07/20/16 08:40 PM Re: Specific Lender Credit Owlman
PCBDebbie, CRCM Offline
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Joined: Aug 2015
Posts: 151
Why not just apply it as a general lender credit? Then it would be easy for the borrower to identify and wouldn't have any affect on your APR.

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#2089045 - 07/20/16 08:47 PM Re: Specific Lender Credit Owlman
raitchjay Offline
Power Poster
Joined: Oct 2009
Posts: 8,759
OK
Agree. "$200 off closing costs" is by definition a general (as opposed to specific) credit, no?
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#2089058 - 07/20/16 09:27 PM Re: Specific Lender Credit Owlman
Owlman Offline
Member
Joined: Dec 2015
Posts: 54
Let me throw in one more twist. Our operating system "does not currently have the capabilities to list general lender credits" for in-house loans. So I was trying to back into it by listing as a specific credit, but obviously, that isn't the best way to handle that.

I guess we could list it as an adjustment and document the file as to what specifically that is.

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#2089065 - 07/20/16 10:08 PM Re: Specific Lender Credit Owlman
Kat Offline
Junior Member
Joined: Apr 2014
Posts: 41
Montana
There is one other option that may work. The way I understand it the credit is going towards the origination fee. Could you allocate the $200s of the Origination Fee as Lender Paid on the CloD in the "Paid by Others" column?
Also, you don't need to worry about APR tolerance differences between LE and CloD, just between CloD and actual APR charged or subsequent CloDs.
Hope that helps.

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#2089071 - 07/20/16 11:16 PM Re: Specific Lender Credit Owlman
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,625
Galveston, TX
We simply lower the origination fee by $200 prior to issuing the LE, but then we have nothing to show in the file why it is lower and the borrower would have to trust that we "normally charge $400".

Hmmm. I assume you would have the coupon in the file that they presented. When do they have to present it to get the discount - at closing? Are you going to know they have one when you issue the LE? How is the coupon worded? Does it specifically say off of the origination fee?
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#2089099 - 07/21/16 01:19 PM Re: Specific Lender Credit Owlman
Owlman Offline
Member
Joined: Dec 2015
Posts: 54
No, it does not specifically say off origination fee, just closing costs in general. You also brought up a good point. The coupon was intended to be presented at time of application, although somehow that wording was omitted prior to the ad running. So now it is a general statement of "bring in this coupon for $200 off closing costs" with some other disclosures regarding consumer purpose only, etc. and we include the coupon in the file.

So far only a couple borrowers have brought in the coupon when applying and we omitted the fee from the LE as they aren't being required to pay this fee, but I don't like this way of doing it and I can see this being an issue going forward.

Needless to say I will be happy when this ad runs out and it isn't an issue any longer...

Thank you all for your help!

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#2089102 - 07/21/16 01:39 PM Re: Specific Lender Credit Owlman
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,625
Galveston, TX
"bring in this coupon for $200 off closing costs"

Sounds like you have to treat it as a general lender credit to me.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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