The CFPB recently updated their TRID FAQ’s by adding ten additional questions related to lender credits. How lender credits need to be disclosed is based on whether the creditor is absorbing (i.e. not charging) costs versus offsetting (i.e. charging and giving a credit) costs associated with a loan. One thing we learned from these FAQs is that all costs, even those absorbed and not charged to the borrower, must be disclosed on the Closing Disclosure.
The CFPB also reiterated that lender credits come from the lender. An overpayment from the consumer is not a lender credit.
Disclosing lender credits can be tricky. They must be disclosed in good faith, are subject to tolerance comparisons just like other charges and can only decrease as the result of a valid changed circumstance. When the amount of the credit is dependent on the amount of another charge (such as if you’re covering the cost of the appraisal), it’s hard to not give away more than you bargained for!
Look for us to break down each of the lender credit FAQs in the April 2020 edition of our Banking on BCC Magazine. We will also be covering how to disclose lender credits in each of our upcoming webinars, How to Complete the Closing Disclosure and Changed Circumstances & Revised Disclosures. You can also catch a discussion on how this impacts the Loan Estimate in our How to Complete the Loan Estimate webinar which is available on demand.
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