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.