[GwenM]

Thanks Jack and Robin! Sounds like leaving it blank is the best practice for now and shouldn’t be cited as a violation. I want to be sure our written procedures and actual practices are consistent. I would appreciate you letting know what you learn from the CFPB.

[GwenM]

Hi Amy,

In your opinion, do you agree that showing the surplus of a lump-sum lender credit as a principal reduction on page 3 is compliant? The CD would show $1,000 lenders credit in section J on page 2 and a $200 principal reduction to the bank on page 3 under section K. The regulation does not allow the lender credits to be lowered so the surplus is given to the borrower by paying it toward the principal balance. Is this okay?

Commentary to 1026.19(e)(3)(i)-5. Lender credits. The disclosure of “lender credits,” as identified in § 1026.37(g)(6)(ii), is required by § 1026.19(e)(1)(i). “Lender credits,” as identified in § 1026.37(g)(6)(ii), represents the sum of non-specific lender credits and specific lender credits. Non-specific lender credits are generalized payments from the creditor to the consumer that do not pay for a particular fee on the disclosures provided pursuant to § 1026.19(e)(1). Specific lender credits are specific payments, such as a credit, rebate, or reimbursement, from a creditor to the consumer to pay for a specific fee. Non-specific lender credits and specific lender credits are negative charges to the consumer. The actual total amount of lender credits, whether specific or nonspecific, provided by the creditor that is less than the estimated “lender credits” identified in § 1026.37(g)(6)(ii) and disclosed pursuant to § 1026.19(e) is an increased charge to the consumer for purposes of determining good faith under § 1026.19(e)(3)(i). For example, if the creditor discloses a $750 estimate for “lender credits” pursuant to § 1026.19(e), but only $500 of lender credits is actually provided to the consumer, the creditor has not complied with § 1026.19(e)(3)(i) because the actual amount of lender credits provided is less than the estimated “lender credits” disclosed pursuant to § 1026.19(e), and is therefore, an increased charge to the consumer for purposes of determining good faith under § 1026.19(e)(3)(i). However, if the creditor discloses a $750 estimate for “lender credits” identified in § 1026.37(g)(6)(ii) to cover the cost of a $750 appraisal fee, and the appraisal fee subsequently increases by $150, and the creditor increases the amount of the lender credit by $150 to pay for the increase, the credit is not being revised in a way that violates the requirements of § 1026.19(e)(3)(i) because, although the credit increased from the amount disclosed, the amount paid by the consumer did not. However, if the creditor discloses a $750 estimate for “lender credits” to cover the cost of a $750 appraisal fee, but subsequently reduces the credit by $50 because the appraisal fee decreased by $50, then the requirements of § 1026.19(e)(3)(i) have been violated because, although the amount of the appraisal fee decreased, the amount of the lender credit decreased. See also § 1026.19(e)(3)(iv)(D) and comment 19(e)(3)(iv)(D)-1 for a discussion of lender credits in the context of interest rate dependent charges.

Thanks!
Gwen

[GwenM]

Agree, logic and regulations do not always go hand-in-hand. However, the below comment from the regulation indicates that if the information is not applicable the fields can be left blank. Brent, you indicate above that examiners are not likely to cite this as a violation but we can’t be sure. It depends on the examiner. Doesn’t the below comment support leaving the fields blank? I want to be certain written procedures clarify which way we go and we follow it consistently. During reviews, when the bank is closing the loan, I see the bank listed as the settlement agent but the agent number is NA, or left blank or has the loan ID#.

Comment 1 to 1026.38 Disclosures not applicable. Where a disclosure is not applicable to a particular transaction, form H-25 of appendix H to this part may not be modified to state “not applicable” or “N/A.” The portion of the form pertaining to the inapplicable disclosure may be left blank unless otherwise provided by § 1026.38. For example, the disclosure required by § 1026.38(r) of the consumer’s or seller’s real estate broker may be left blank for a transaction that does not involve real estate brokers, such as a refinance or home equity loan . . .

Thanks!
Gwen

[GwenM]

Just following up to be sure you hadn’t missed or overlooked this question sent 03.15.21.

Thanks!

[GwenM]

Hello, Just following up to be sure you hadn’t missed or overlooked this question sent 03.15.21.

Thanks!

[Author]

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