Disclosing seller-paid costs and providing seller disclosures

(Changes to sub section) Section 10.7 – Page 2: Loan costs and other costs

The Loan Costs and Other Costs tables are disclosed under the heading Closing Cost Details on page 2 of the Closing Disclosure. (§ 1026.38(f), (g), and (h)). The number of items in the Loan Costs and Other Costs tables can be expanded and deleted to accommodate the disclosure of additional line items and keep the Loan Costs and Other Costs tables on page 2 of the Closing Disclosure. (§ 1026.38(t)(5)(iv)(A); Comment 38(t)(5)(iv)-2). See 10.11 below for further discussion.

However, items that are required to be disclosed even if they are not charged to the consumer (such as Points in the Origination Charges subheading) cannot be deleted. (Comment 38(t)(5)(iv)-1)

Seller-paid Loan Costs and Other Costs are required to be disclosed on the consumer’s Closing Disclosure, regardless of whether a separate Closing Disclosure is provided to the seller. Seller-paid real estate commissions are one example of seller-paid costs that may not be omitted from and must be included on the consumer’s Closing Disclosure. (§ 1026.38(g)(4); Comment 38(g)(4)-4). Additionally, non-commission real estate brokerage or agent charges for services to the seller or consumer are required to be itemized separately, with a description of the service and an identification of the person ultimately receiving the payment. (Comment 38(g)(4)-1 and -4; § 1026.2(a)(11); (a)(22))

The Loan Costs and Other Costs tables can be disclosed on two separate pages of the Closing Disclosure, but only if the page cannot accommodate all of the costs required to be disclosed on one page. (§ 1026.38(t)(5)(iv)(B); Comment 38(t)(5)(iv)-2)

When used, these pages are numbered page 2a and 2b. (Comment 38(t)(5)(iv)-2). For an example of this permissible change to the Closing Disclosure, see form H-25(H) of appendix H to Regulation Z.

(Changes to sub section) Section 11.5 – Who is responsible for providing the Closing Disclosure to a seller in a purchase transaction? (§ 1026.19(f)(4)(i))

The settlement agent is required to provide the seller with the Closing Disclosure reflecting the actual terms of the seller’s transaction. (§ 1026.19(f)(4)(i))

The settlement agent may comply with this requirement by providing the seller with a copy of the Closing Disclosure provided to the consumer (buyer) if it also contains information relating to the seller’s transaction. (Comment 19(f)(4)(i)-1)

However, the TILA-RESPA Rule affords flexibility in providing the seller those disclosures that relate to the seller’s transaction, and does not require that the seller receive the same version of the Closing Disclosure provided to the customer. Therefore, the settlement agent may also provide the seller with a separate disclosure, including only the information applicable to the seller’s transaction from the Closing Disclosure (§ 1026.38(t)(5)(v) or (vi), as applicable). (See form H-25(I) of appendix H to Regulation Z for a model form).

Added sub sections

• Section 11.6 – When a separate disclosure is provided to the seller, is the Settlement Agent required to provide the creditor with a copy of the seller’s Closing Disclosure?
• Section 11.7 – When a separate disclosure is provided to the seller, what information is required to be disclosed on the seller’s Closing Disclosure? (§ 1026.38(t)(5)(v) and (vi))

Providing revised Loan Estimates and corrected Closing Disclosures

Added sub section

• Section 12.3 – Is a new three-day waiting period required if the APR decreases? (§ 1026.19(f)(2)(ii)(A))