I know we've beaten this poor horse to death already, but I'm dragging the ragged carcass back around again.

We've got a refi happening in which all of the fees are being paid by the bank, including the escrow deposit (no, I have no idea why). I cannot figure out how to show this correctly on the LE. If we put everything in as lender paid, our LOS is going to lock us into a Lender Credit amount and start throwing up tolerance issues on the closing side. Also, the only way I can think of to show the escrow deposit as lender paid is to put it in as cash and then enter a general lender credit for the same amount...once again locking us into a Lender Credit amount that will cause problems on the closing side.

Does anyone have any suggestions? I know we can just leave off our loan fee because it's silly to pay ourselves, but don't we need to show the flood, VOE, appraisal, etc. that *should* be borrower costs the bank is paying?

Yes. Any of your required services must be shown.

I guess I am not sure what the problems posed at closing would be if the lender was paying for everything. If the sum of all fees drops below the disclosed credit and cash to close runs negative, the lender will have to hand the customer a check at closing for the difference to prevent a tolerance variance.

I am not trying to be flippant, but that's just a cost of doing business on a "no-cost" loan isn't it?

Another possibility is to leave the LE virtually blank when it comes to closing costs. And, then just disclose everything accurately on the CD and put everything in the "Paid by Other" column. This is because the LE discloses costs to be paid by the consumer for the most part. For Sections A, B, and C on the LE, the Regulation mentions "amounts the consumer will pay for such-and-such." This is even taken a step further with Section E for Recording Fees and Transfer Taxes, where it specifically states,"If an amount required to be disclosed by this paragraph (g)(1) is not charged to the consumer, the amount disclosed on the applicable line required by this paragraph (g)(1) must be blank." So, basically, in a "no cost" loan paid by the lender, there are not many fees or line items at all that would require disclosures, as none of these are "paid by the consumer," or "charged to the consumer."

So we should issue a blank LE?

Not completely "blank." You would fill out all relevant fields, i.e. Loan Amount, Purpose, estimated payments, etc., etc., but I do believe much of the Section A, B, C, and E information could be blank if you chose to disclose based on this method.

I'm in favor of the method Justin describes. There are those who feel that you need to list each charge and a lender credit, and I can almost understand that when there is a consumer who is going to shop a new loan. But this is a refi. You've already told the consumer you're picking up the costs, so what sense does it make to complicate matters by listing those costs and a lender credit in the loan estimate? Yes, you have to list the third-party costs in the closing disclosure, and put them in the paid by others column or in a lender credit.

I think there has been further movement since this thread in terms of the CFPB preference that "no-cost" loans should still show the estimated costs of all of the various fees so that the applicant/borrower can still "shop around," i.e. the applicant should still be able to know that ABC Bank charges $500 for an appraisal, while XYZ Bank only charges $400, even if ABC Bank pays for the appraisal, such that the applicant/borrower pays $0 to ABC Bank.

With that being said, for the method of showing in the "Paid by Others" column, I am confused on how this should show up in Section J. I am questioning my original understanding on how this is supposed to look. Let's say a Specific Lender Credit is issued by ABC Bank for $500 to cover the appraisal, per the scenario above, we all agree that the $500 goes in the "Paid by Others" column in Section B. Does this amount flow down to the "Lender Credit" line in Section J? Or, does it show up in the "Paid by Others" column on the "Closing Costs Subtotals" Line in Section J?

A number of people asked for clarification on this issue in comment letters to the TRID 2.0 proposal - the CFPB chose not to address the issue. It remains in the Paid by Others total column.

Seller-Paid and Paid by Others amounts will get totaled on the Loan Costs Subtotals and Other Costs Subtotals lines under lines D and I, but do not flow into the lender credit entry in section J. Lender credits in section J are ONLY general lender credits, not specific lender credits.

Thank you John and Randy. Everything does seem to point that way, now that I look into it further. Seems kind of stupid for HMDA reporting and also for the mismatch for what is conveyed on the LE vs. the CD. But, that's the way the ball bounces.

Here we go again on this one.

We offer "no cost" Home Equity Loans and we are currently not disclosing a lender credit on the LE because we are interpreting the LE to be for the purpose of disclosing the costs of the proposed loan to the borrower (which are zero). Further, if we over estimate the costs that we are paying for, we could be out of tolerance on the lender credit.

We then disclose the specific costs in the "Paid by Others" column on the CD and total these up as paid by the lender (L).

My concern is that the regulation states that we are required to disclose any lender credits on the LE either general or specific. I would argue that by doing so complicates matters for the borrower and we are not really giving a "credit", we are paying for the costs of the loan. Also, when we list the Settlement Services Providers that the borrower can shop for, do we state that the cost is zero? This is what we are currently doing.

I also do not see where we could be cited for consumer harm disclosing in this manner- it is clear, concise and accurate.

Thank you- Lisa Due

37(g)(6) Total closing costs.

Paragraph 37(g)(6)(ii).


2. Credits or rebates from the creditor to offset a portion or all of the closing costs. For loans where a portion or all of the closing costs are offset by a credit or rebate provided by the creditor (sometimes referred to as “no-cost” loans), whether all or a defined portion of the closing costs disclosed under § 1026.37(f) or (g) will be paid by a credit or rebate from the creditor, the creditor discloses such credit or rebate as a lender credit under § 1026.37(g)(6)(ii). The creditor should ensure that the lender credit disclosed under § 1026.37(g)(6)(ii) is sufficient to cover the estimated costs the creditor represented to the consumer as not being required to be paid by the consumer at consummation, regardless of whether such representations pertained to specific items.