“Absorbing” Loan Costs on the Closing Disclosure

Lenders sometimes negotiate certain fees with respect to a mortgage loan application. For example, a financial institution may have a policy of requiring a credit report and passing the associated cost along to the applicant. However, there might be times where the financial institution doesn’t want to assess that fee, whether it’s to keep a customer happy, match a competitor, etc. The lender still obtains a credit report, they just absorb that cost rather than passing it along to the applicant.

The CFPB has given creditors specific instructions for how to disclose absorbed costs. When it comes to the Closing Disclosure, the CFPB states:

A creditor must disclose on the Closing Disclosure a closing cost it incurs even if the consumer will not be charged for the closing cost (i.e., the creditor will “absorb” the cost). If a creditor absorbs a cost incurred in connection with the transaction, the creditor must disclose such cost on the Closing Disclosure in the “Paid by Others” column in the Loan Costs or Other Costs table, as applicable. [CFPB TRID Lender Credits FAQ #4]

Jerod explains more in the video.

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Jerod Moyer

Jerod is the leader of Banker’s Compliance Consulting’s training productions. He is a nationally recognized speaker. Whether it’s a conference, seminar, school, webinar or luncheon, it’s easy to stay engaged when he presents due to the amount of passion and energy he brings to each and every compliance topic. Jerod has spoken on behalf of the American Bankers’ Association, BankersOnline, many state banking associations, private compliance groups and financial institutions. He is a Certified Regulatory Compliance Manager (CRCM) and BankersOnline Guru. Jerod likes to spend his time (between reading regulations and producing compliance training!) relaxing at the lake with his wife and three children, following their activities or engaged in something sports-related!

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