Updated lender credit FAQs

Happy Monday and National Nap Day, Compliance Friends!

Before you commence post-daylight savings napping, join me for a compliance blog.

A few months ago, I wrote a riveting blog about disclosing lender credits on the loan estimate. I explained that credit unions are not permitted to decrease the amount of general or specific lender credits, even if the closing costs decrease from the estimated amount. That means trying to offer a “no closing costs” loan puts credit unions at risk of having to refund borrowers cash if their estimate of lender credits ended up being higher than needed to cover closing costs.

Recently, the CFPB heard our cries for help and released 10 FAQs about lender credits. This blog will discuss a few of the questions from the CFPB’s guidance that closely resemble some of the issues we have seen.

“Question 3. Is a creditor required to disclose a closing cost and a related lender credit on the loan estimate if the creditor will absorb the cost?”

 

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