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Disclosing Payoff Amount on Closing Disclosure

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When disclosing the payoff of an existing lien on the collateral property, should the amount listed on page 3 of the Closing Disclosure just show the principal balance, or should it show the principal balance, plus the interest due? I do not believe the reg goes into detail on what the amounts listed should be. My thought is we would need to list the amount that would fully pay off that existing lien (principal, interest, late charges, etc. ). There have been discussions about not capitalizing off interest, but as long as we are not financing the interest due into the new loan amount, I do not see how we would be capitalizing off previous interest. In addition, if we list the full payoff amount, would we need to list just one payoff amount, or would we need to list separate lines for principal, interest and late charges on the Closing Disclosure? I believe either way would be okay, but my thoughts are we would just need to list one line item with the full amount.

A loan payoff consists of principal, interest and any accrued fees that are due. How you choose to break that out, if you choose to break it out on the CD, is a business decision. Whether or not you are capitalizing interest, that subject is an internal issue and not one that impacts the consumer's closing disclosure.

First published on 09/22/2019

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