The CFPB recently updated its TILA-RESPA Integrated Disclosure (“TRID”) FAQs with guidance related to disclosing lender credits on the Loan Estimate (“LE”) and Closing Disclosure (“CD”).
The new FAQs describe existing interpretations of the TRID rule relating to disclosure of lender credits and do not provide any new groundbreaking changes to the general understanding in the industry of these rules.
The FAQs define the meaning of “lender credit”, discuss the differences between specific and non-specific (aka, general) lender credits, and how these relate to the tolerance rules for providing a good faith estimate of a lender credit.
Interestingly, the FAQs clarify the different disclosure requirements of the LE and CD when it comes to costs incurred by the lender in connection with the transaction, but which the lender absorbs by not passing on the cost to the consumer. In this case, these need not be disclosed on the LE, though they may be, but these must be disclosed on the Closing Disclosure, as the CD must disclose all costs incurred in the transaction, by all parties. This illustrates the difference between a lender “absorbing” a closing cost vs. “offsetting” a closing cost.
