If loan amount changes, then can the lender credits change?

The revised disclosures may reflect increased charges only to the extent that the reason for revision, as identified in §1026.19(e)(3)(iv)(A) through (F), actually increased the particular charge.

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. Nonspecific lender credits and specific lender credits are negative charges to the consumer. The actual total amount of lender credits, whether specific or non-specific, 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 Commentary ¶19(e)(3)(iv)(D)–1 for a discussion of lender credits in the context of interest rate dependent charges.

For purposes of conducting the good faith analysis required under §1026.19(e)(3)(i) for lender credits, the total amount of lender credits, whether specific or non-specific, actually provided to the consumer is compared to the amount of the ‘‘lender credits’’ identified in §1026.37(g)(6)(ii). The total amount of lender credits actually provided to the consumer is determined by aggregating the amount of the ‘‘lender credits’’ identified in §1026.38(h)(3) with the amounts paid by the creditor that are attributable to a specific loan cost or other cost, disclosed pursuant to §1026.38(f) and (g).

Citation(s): Commentary ¶19(e)(3)(iv)-2 and Commentary ¶19(e)(3)(i)-5 & -6
Disclaimer: The above information is intended for general information purposes with the goal of assisting Ellie Mae’s customers in complying with the new KBYO regulations. This information is provided as a courtesy to Ellie Mae’s customers and Ellie Mae makes no representation or warranty regarding the accuracy of the information set forth herein, and you may not rely on this information to ensure your company’s compliance with the KBYO regulations. This FAQ should not be construed as legal advice or opinion on any specific facts or circumstances, including the application of the KBYO regulations. You are advised to consult your own compliance staff or attorney regarding your specific residential mortgage lending questions or situation to ensure your compliance with all applicable laws and regulations.
lender credits revised Loan Estimate Closing Disclosure

CFPB announcement regarding the delay of TRID

The Consumer Financial Protection Bureau is delaying until October 3, 2015, the effective date of the TILA-RESPA Final Rule and the related TILA-RESPA Amendments. In light of certain procedural requirements under the Congressional Review Act (CRA), the TILA- RESPA Final Rule and the TILA-RESPA Amendments cannot take effect on August 1, 2015, as originally provided by those rules. To comply with the CRA and to help ensure the smooth implementation of the TILA-RESPA Final Rule, the Bureau is extending the effective date of both the TILA-RESPA Final Rule and the TILA-RESPA Amendments beyond the additional minimum period required by the CRA to October 3, 2015, as proposed. The Bureau is also making certain technical amendments to the Official Interpretations of Regulation Z to reflect the new effective date and technical corrections to two provisions of Regulation Z adopted by the TILA-RESPA Final Rule.

The full statement from CFPB Director Richard Cordray can be viewed here

Popular KBYO questions

When do the new disclosures become effective and for which transactions? Part 1: Rule Applicability What happens in October when your final forms are new but initials are old? Part 4: Loan Estimate – Timing & Consumer Receipt For electronic delivery of disclosures, after a borrower agrees to accept electronic delivery in compliance with the ESIGN Act must all disclosures be sent through an ESIGN compliant system, or can a lender email a scanned copy of a document through normal email? Can the borrower return the document by email as an attachment? Part 3: Loan Estimate – Miscellaneous Questions If an application is received prior to October 3, 2015 and a Good Faith Estimate was provided to a consumer should a HUD-1 Settlement Statement and Final TIL Disclosure Statement or a Closing Disclosure be provided to the consumer when the consummation date is on or after October 3, 2015? Part 1: Rule Applicability Do you define “exempt” to mean we are not “allowed” to use the new forms or not “required” to use them? Can we send the new forms on a HELOC for example in lieu of the old? Can we use the new disclosures on all transactions? Part 1: Rule Applicability Can you confirm coops are excluded from the new disclosures since they are not secured by real property? Part 1: Rule Applicability Are transactions with 25 acres and more exempt? Part 1: Rule Applicability When can we start the new disclosures? Part 1: Rule Applicability What if no lender credits are decided until the loan closing, does a new Loan Estimate need to be provided to reflect this? Part 9: Revised Loan Estimate – Revisions/Re-Disclosure (including Timing & Delivery) If loan amount changes, then can the lender credits change? Part 9: Revised Loan Estimate – Revisions/Re-Disclosure (including Timing & Delivery)