[Kristin]

When calculating the “Estimated Closing Costs Financed (Paid from your Loan Amount) in the Calculating Cash to Close section on page 2 of the Loan Estimate, the commentary to 1026.37(h)(1)(ii) states that you calculate this amount by subtracting the estimated total amount of payments to third parties not otherwise disclosed pursuant to 1026.37(f) and (g) from the total loan amount.
What would be an example of a payment to third parties not otherwise disclosed? We were under the impression that any fee that we are aware of at that time must be disclosed. Is our understanding incorrect?

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[kowsley]

You are correct that the commentary states that you calculate Estimated Closing Costs Financed (Paid from you Loan Amount) by subtracting the estimated total amount of payments to third parties not otherwise disclosed in 1026.37(f) Loan Costs and (g) Other Costs. The “other” third parties that this is referring to would be the amount paid to the seller if it is a purchase transaction or the amount paid to other debtors if it is a refinance and you have payoffs. So for an example:

Refinance Transaction with Cash Out:
Loan Amount = $250,0000
Payoff of Debts in Loan = $200,000
Result is = $50,000

So this positive result would be disclosed as a negative number to the extent that is doesn’t exceed closing costs. If Closing Costs = $5,000, then it would be disclosed as a negative $5,000. If the result above had been a negative or a zero, the amount would be disclosed as a $0.

This detail can be found in the commentary at 1026.37(h)(1)(ii)-1. There is another example of this in preamble to the regulation as well:
https://www.consumerfinance.gov/eregulations/sxs/1026-37-h-1-ii/2013-28210?from_version=2015-01321

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