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#2139251 - 07/24/17 05:06 PM Paying for Closing Costs at Closing on a Cash-Out
Cliff Johnson Offline
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Joined: Sep 2015
Posts: 46
Got an odd scenario where the borrower is insisting on paying their closing costs and not financing them in to the loan. They are wanting $150,000 back at closing while simultaneously bringing in funds at closing to cover the closing costs. Apparently this is on advice from some accountant they know. I don't see how this would be even possible but was wondering what you all think. The only way I can see to make it work on a disclosure basis is mark all the costs POC but if they are paying the closing costs at closing, I can't really mark them POC.

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TRID - TILA/RESPA Integrated Disclosures Rule
#2139259 - 07/24/17 05:33 PM Re: Paying for Closing Costs at Closing on a Cash-Out Cliff Johnson
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 78,649
Galveston, TX
You don't make disclosure the rules - the CFPB does. What the accountant wants is irrelevant. The fact of the matter is they are bringing $150,000 to closing.
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#2139266 - 07/24/17 06:01 PM Re: Paying for Closing Costs at Closing on a Cash-Out Cliff Johnson
Cliff Johnson Offline
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Joined: Sep 2015
Posts: 46
Thank you!

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#2139272 - 07/24/17 06:33 PM Re: Paying for Closing Costs at Closing on a Cash-Out Cliff Johnson
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,557
Cape Cod
You can't use POC for closing costs, anyhow, under TRID rules.

If, and ONLY if, the borrower actually brought in the payment for the closing costs before closing (the day before or earlier), you could show the costs as paid before closing, and the $150,000 as the cash due the borrower at closing. Otherwise the disclosures will show the borrower obtained the net amount.
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