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#2102650 - 10/12/16 02:08 PM Small Entity Guide Update
PCBDebbie, CRCM Offline
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I came across a few things that I am now questioning..

In the case of a tolerance violation, we (the lender) were paying the difference under the paid by others column instead of showing it as a general lender credit. From what I am reading now in section 10.12, tolerance violations need to be disclosed as general lender credits on page 2, with the “exceeds legal limits” verbiage on page 3. Are we no longer able to do as we were?

The settlement provider list we always listed title services and 3 providers. Section 7.4 seems to require that we now itemize every title fee to match the LE. This goes against the proposed rule where if it is part of a package we do not need to disclose every possible fee. I know I have seen varying comments on this. What seems to be the general consensus?

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#2102694 - 10/12/16 04:38 PM Re: Small Entity Guide Update PCBDebbie, CRCM
JC (Darth HMDA) Offline
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Haven't had a chance to go through all the version log changes. Hopefully will be able to this week. smile
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#2102699 - 10/12/16 04:44 PM Re: Small Entity Guide Update PCBDebbie, CRCM
Compliance NABW Offline
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Not sure about the second piece of what you wrote yet, but I did a bunch of research about the first piece a while back. My conclusion was that it depends on when you "catch" the tolerance violation. If you catch it in the course of closing or prior to, then you disclose it by using the "Paid by Others" column. If you "catch" it after closing and need to issue a corrected CD and "Cure Check," then you disclose it in the manner you mentioned (General Lender Credit with verbiage).

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#2102793 - 10/13/16 02:02 PM Re: Small Entity Guide Update PCBDebbie, CRCM
John Burnett Offline
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Justin -- I like your analysis on the specific lender credit (no "cure" required) vs. the general lender credit (for "cure" payments). For what I think are obvious reasons, putting those overages (or enough to avoid the need for a "cure") in the Paid by Others column and tagged "(L)" to show they are lender-paid, is the preferred way to handle known over-tolerance cost increases. But the only way to cure an over-limit violation identified post-closing is to make a cure payment that's reflected in the Lender Credit amount in a revised closing disclosure, with all of the "mea culpa" verbiage that goes into the labeling of the credit.
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#2102794 - 10/13/16 02:04 PM Re: Small Entity Guide Update PCBDebbie, CRCM
John Burnett Offline
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As far as the service providers list (SPL), there needs to be one-for-one match-up between the services listed in section C of the LE and the services listed in the SPL. You can "bundle" the services if there is a bona fide "package deal" offered by the service provide you use for your estimates, but then you "bundle" on both the LE and the SPL.
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#2102837 - 10/13/16 03:24 PM Re: Small Entity Guide Update PCBDebbie, CRCM
Docs Offline
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The revised Small Entity Guide says "To the extent there are any refunds from the creditor to the consumer for a violation of the good faith standard, the refund should be disclosed with lender credits on page 2 of the Closing Disclosure."

If the lender catches the problem before closing, the CD can show the lender payment in the "paid by others" column and there would be no violation of the good faith standard. As a result, the above Small Entity Guide information would not apply. However, if at closing the borrower paid more than permitted by the applicable tolerance, then a revised CD provided after closing would follow that instruction for disclosing the lender credit.
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#2102868 - 10/13/16 04:58 PM Re: Small Entity Guide Update PCBDebbie, CRCM
PCBDebbie, CRCM Offline
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John-

In the event of a "package deal" typically title services, how would we know what is included for APR calculation purposes?
In my experience, title services typically include costs that can be PPFC and some that are not.

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#2102879 - 10/13/16 05:51 PM Re: Small Entity Guide Update PCBDebbie, CRCM
John Burnett Offline
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That's when you have to go back to § 1026.4 and work your way through the finance charge definition to determine whether all of some of the package deal price has to be included in the FC.
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#2102887 - 10/13/16 06:09 PM Re: Small Entity Guide Update PCBDebbie, CRCM
PCBDebbie, CRCM Offline
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Thank you all for your input.

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