[Mary Frances]

I believe this is more of a safety & soundness question but was hoping someone could point us in the right direction. We are looking for the law or regulation that talks about seller credits other than credits for closing costs such as credits for repairs. On a purchase transaction where the seller is giving a credit for repairs we will deduct the credit from the purchase price when calculating our LTV. We want to read the law/regulation that pertains to this to better understand and train our processors. We started looking for this by going to FDIC’s website but was unable to find anything specific. Can anyone point us in the right direction? Thank you

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[jholzknecht]

There are several ways to approach your question. For your internal purposes it is your LTV and you decide how it’s calculated. If you are working with an investor, the investor will tell you how they want the ratio calculated. HMDA requires reporting of the LTV ratio using the ratio of the total amount of debt secured by the property to the value of the property. Regulation C does not address credits in relation to the calculation.

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