Are gifts of equity and 1031 exchanges both disclosed in the same manner as gift funds - disclosing in the Summaries of Transaction > L. > Other Credits?

Well considering a 1031 exchange cannot be involved in a consumer purpose transaction - it is a little hard to say without knowing all the facts and circumstances.

A gift of equity would be an adjustment and not a gift.

Thanks for the help.

Regarding 1031 exchanges - the secondary market investor we sell to requires that purchases of 1-4 family dwellings used for overnight vacation rental or month to month rental/lease be disclosed as a consumer transaction. For that reason, sometimes we do have 1031 exchanges. The investor prepares the CD for us. They have been disclosing the 1031 Exchange under L. > Other Credits > line 06. Do you agree that this would be the appropriate place to disclose this in this situation?

Whether I agree or not - why would you care if the investor is both doing it and buying the loan???

I do agree however

Paragraph 38(j)(2)(vi).

1. Credits from any party other than the seller or creditor. Section 1026.38(j)(2)(vi) requires disclosure of a description and the amount of items paid by or on behalf of the consumer and not disclosed elsewhere under § 1026.38(j)(2). For example, credits a consumer receives from a real estate agent or other third party, other than a seller or creditor, are disclosed pursuant to § 1026.38(j)(2)(vi). However, if the credit is attributable to a specific closing cost listed in the Closing Cost Details tables under § 1026.38(f) or (g), that amount should be reflected in the paid by others column on the Closing Cost Details tables and not in the disclosure required under § 1026.38(j)(2)(vi). Similarly, if a real estate agent rebates a portion of the agent’s commission to the consumer, the rebate should be listed as a credit along with a description of the rebate, which must include the name of the party giving the credit.

The loans close in our name, so I thought we were responsible for the accuracy of the CD even if we didn't prepare it? Is that not correct?

I just reviewed a CD where they disclosed a principal reduction as a fee to the borrower in section H Other on page 2 instead of under Adjustments in section K on page 3? Will we not be held responsible with our regulator for these types of errors even if we didn't complete the CD?

Are you responsible, I suppose you are, but what is the liability for technical disclosure errors on a CD? In my experience, I have not seen examiners do much testing on loans that a lender sells. But I could be wrong. If they are preparing the disclosures for you, I surely hope your purchase agreement doesn't include put back rights for errors that they create.