CFPB Publishes TRID FAQs on Treatment of Lender Credits
March 5, 2020
The Consumer Financial Protection Bureau (CFPB) on Feb. 26 published 10 new FAQs for the TILA-RESPA Integrated Disclosures Rule (TRID) related to lender credits. Previously, the CFPB staff provided informal verbal guidance on the topic. The FAQs are designed to address confusion about how to disclose lender credits and the ability to change the credit amounts for tolerance purposes when there is a changed circumstance.
FAQ No. 10 addresses the treatment of lender credits for tolerance purposes. The CFPB considers a lender credit as "a negative charge to the consumer subject to the good faith requirements of the TRID Rule." Thus, when "[t]he actual total amount of the lender credits, whether specific or general ... provided by the creditor" is less than initially disclosed, it increases the consumer charge when determining tolerances. The important part is that the FAQ now clearly states that a lender credit can be reduced without a tolerance issue if "there is an accompanying changed circumstance or other triggering event" allowing a tolerance reset pursuant to 1026.19(e)(3)(iv).
FAQ No. 3 addresses lenders that offer "no closing cost" loans or agree to fully absorb the cost so it will not be charged to the consumer. Under the FAQ, "the TRID Rule does not require disclosure of a closing cost and a related lender credit on the Loan Estimate if the creditor incurs a cost, but will not charge the consumer for that cost (i.e., the creditor will 'absorb' the cost). In such cases, the absorption of the cost or charge would not 'offset' an amount paid by the consumer. However, a creditor must disclose a closing cost and related lender credit on the Loan Estimate if the creditor is offsetting a cost charged to the consumer. Comment 37(g)(6)(ii)-2." The FAQ then goes on to provide some examples.
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