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#2246210 - 12/04/20 09:54 PM Cash to Close
mjdl1 Offline
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We've received conflicting information on how to address this scenario, so I am hoping someone can provide additional guidance.

When processing a cash out refinance transaction on a TRID applicable loan that is already held with our bank, we require the borrower to bring any interest due on the loan being refinanced to closing. We do not allow the interest to be capitalized. On the CD in the Payoffs & Payments table, we include the full payoff of the loan being refinanced, any other payoffs or payments, and a disbursement to borrowers for any funds they are to receive. This allows us to also show the amount of the interest due at closing to be calculated in the Cash to Close field on page 1 of the CD.

Our external auditor, who previously told us to process refinance transactions this way, now says we should put the interest due at closing in the Payoffs & Payments table, and the cash to the borrower in the Cash to Close field which is the exact opposite of what we are doing. If we include the full payoff in the Payoffs & Payments table, it seems odd to include the interest due at closing again in the same table.

Also, we use LaserPro if that helps understand our process. Please advise.

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TRID - TILA/RESPA Integrated Disclosures Rule
#2246213 - 12/04/20 10:45 PM Re: Cash to Close mjdl1
rlcarey Online
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rlcarey
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Galveston, TX
The payoff amount of the existing loan is the payoff amount. If you want to separately disclose the payoff of the principal and the interest amounts on separate lines in the payoffs and payments table - that would be your decision. The capitalization of accrued interest is an internal issue and has absolutely nothing to do with the disclosure that you owe the consumer. You need to worry about proving that one way or the other outside of your TRID disclosures as it has nothing to do with the consumer disclosures or the cash to close table.
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#2246222 - 12/07/20 04:50 PM Re: Cash to Close mjdl1
mjdl1 Offline
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If the intention of the disclosure is to show the amount being paid on behalf of the borrower, and the amount they need to pay at closing, how does that not have anything to do with the Cash to Close table?

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#2246238 - 12/07/20 07:11 PM Re: Cash to Close mjdl1
rlcarey Online
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rlcarey
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Galveston, TX
All I am saying is that if I am refinancing a loan and the balance due is $100,000 plus $500 in accrued interest and I show that the loan payoff is $100,500 in the payoffs and payments table and the bottom line cash to close table shows that I am bringing $500 in to closing - what else are they saying you are required to do?

Anything else is a bank policy/accounting issue or they are suggesting that you manipulate the consumer disclosure to show something that is not really happening.
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#2246342 - 12/09/20 03:55 PM Re: Cash to Close rlcarey
mjdl1 Offline
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Joined: Feb 2016
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Here is an example: If we have a loan amount of $200,000 and the loan being refinanced has a current payoff of $152,500 with $1,250 of the payoff being interest due. On the Payoffs & Payments Table, we would show the full payoff of $152,500 and a disbursement to the borrowers of $48,750. The cash to close would then reflect the $1,250 interest due at closing.

After further discussion with the auditor, he stated that if we include the $1,250 as paid in cash by borrower on the disbursement sheet, then it would be okay.

I am just curious what others are doing or if this is a non-issue for other banks.
Last edited by mjdl1; 12/09/20 03:57 PM.
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#2246347 - 12/09/20 04:46 PM Re: Cash to Close mjdl1
Truffle Royale Offline

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I don't understand the why behind your Auditor pushing for this. What's his basis?
A typical payoff statement shows the balance and adds the interest through the payoff date.
Why your auditor is saying you have to break that out on a separate line is beyond me.

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#2246350 - 12/09/20 04:57 PM Re: Cash to Close mjdl1
rlcarey Online
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rlcarey
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Galveston, TX
You do not show disbursements on the CD - hence my comment that they are suggesting that you manipulate the consumer disclosure in a manner that is not TRID compliant in order to prove that you are not capitalizing interest. You can do whatever you like on an internal disbursement sheet and that is where any of that documentation that you feel is necessary belongs.
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