My bank offers a coupon of up to $250 off of closing fees. The fee that is reduced is our own processing fee. So far example, our fee is $750 and the customer, depending on the product will receive a reduction in the fee that goes to the bank of up to $250. My question, since what this amounts to is a reduction in the fee that the customer pays and there is no fee actually paid to the bank, do we have to disclose on the HUD-1 the coupon amount or can we just simply disclose the reduced fee? I know that if we apply this fee towards another fee paid to a third party, such as an appraiser, then we must disclose that as being paid by the bank.

I would think that this would be a question for your accounting department. They might have reasons to track this fee possibly for marketing and/or other purposes.

I think this fee should be disclosed as a POC (coupon). That is what I used to do when we had one.