I know this is a topic that has gotten quite a bit of traffic on how to calculate. I've read the reg and it's clear that principal, interest, mortgage insurance and total closing costs should be included in the calculation.

Has anyone out there seen the total of Other costs included as well? In a couple of examples I've reviewed from Encompass, the total of payments include the total closing costs from J on the closing disclosure.

When I see a disclosure regulation refer to a term ("Loan Costs") that identifies a specific item or portion of the disclosure form, I have to assume the choice of words is deliberate. "Loan Costs" identifies the total in Section D, not Section J. Also, when you review the items listed in sections E through H, they aren't costs of the loan (with the possible exception of the recording fee for the mortgage or deed of trust). Check with Encompass to get its logic for calculating the Total of Payments.

OK – Let’s step through this – more for my benefit than for anyone else:

38(o)(1) Total of payments.

1. Calculation of total of payments. For guidance on the amounts included in the total of payments calculation, see comment 37(l)(1)(i)-1.

On to 37(l)(1)(i)-1:

Paragraph 37(l)(1)(i).

1. Calculation of total payments in five years. Loan costs are those costs disclosed pursuant to § 1026.37(f).

On to 37(f):

(f) Closing cost details; loan costs. Under the master heading “Closing Cost Details,” in a table under the heading “Loan Costs,” all loan costs associated with the transaction. The table shall contain the items and amounts listed under four subheadings, described in paragraphs (f)(1) through (4) of this section.

(1) Origination charges.

(2) Services you cannot shop for.

(3) Services you can shop for.

(4) Total loan costs. Under the subheading “Total Loan Costs,” the sum of the subtotals disclosed under paragraphs (f)(1) through (3) of this section.

So there you have it. It does not include costs disclosed under 38(g).

Thank you Gentlemen. That is exactly what I thought. I was a bit surprised at what was included on the CLD generated out of Encompass. It could be something in the setup on the Lender's side - I am having them check into it. I've also asked them to reach out to EllieMae for an explaination.

Do I need to include the fees (in loan costs) in the calculation for total of payments on the CD when another party is paying for these cots. For example, seller is paying the total for Origination Charges, do I need to include the Origination charges into the total of payments?

The text of the regulation and commentary don't indicate that you only include those loan costs disclosed under 1026.38(f) -- and by reference back to 1026.37(f) -- to be paid by the consumer, even though the description on the form suggests it's the total the consumer will pay.

What if you have a borrower who wants to finance their fees. So those fees would be included under total loan cost in D on page 2 of CD. Those fees are included in the principal balance of the loan and then get added again with the loan cost under the definition of total of payments. When the loan officer explains to the borrower that the Total of Payments field is XXX,XXX and is the total you will have paid after you make all payments of principal, interest, mortgage insurance, and loan costs, as scheduled; but the loan cost are included twice - how is a loan officer supposed to explain that to the customer and do you think that was the intent of the CFPB for loan cost that are financed? Just interested to hear opinions. Thanks!

It is one of those - it is what it is.

Read the CFPB preamble to 1026.37(l)(1) and 1026.38(o)(1). They, even though consumer testing said this confused customers and didn't really provide them much valuable information, they decided to go with it in this manner.

I know that this discussion took place a while ago, but I have a follow up question re: verifying APR. Would you use Total of Payments amount from Closing Disclosure to enter into Total of Payments in APRWIN?

No. You don't enter the Total of Payments in APRWIN. It is calculated from the payment stream. The Total of Payments on the CD is the total of payments from APRWIN plus pre-paid interest, pre-paid mortgage insurance, and loan costs,

I have an interest only land loan with term of 12 months. Our auditor recommended that I run it in APRWIN as a single advance loan, not the installment one. Therefore, I have to enter the total payment amount. I don't know what is correct anymore.

You have to enter it based on the legal obligation. If there are monthly payments due, enter the monthly payment stream.

Thanks.

How is total of payments calculated for an ARM loan? Do you use the worst case scenario as far as rate changes?

Does anyone have the Total of Payments calculation reduced to an easy to understand calculation worksheet?

Is the Total of payments calculated differently for an ARM loan?

The Total of Payments is always calculated the same. What issue do you think you have?

(o) Loan calculations. In a separate table under the heading “Loan Calculations”:

(1) Total of payments. The “Total of Payments,” using that term and expressed as a dollar amount, and a statement that the disclosure is the total the consumer will have paid after making all payments of principal, interest, mortgage insurance, and loan costs, as scheduled.