How to show refunds of fees paid before closing on the Closing Disclosure?
Under TRID, if we refund a fee paid before closing, how do we show that refund on the Closing Disclosure?
Let's say we have the following scenario:
We collect a $450 check from the borrower before closing to pay for the appraisal. The appraisal comes back at a lower cost - only $400. How do we show the refund on the Closing Disclosure?
Question
Where does this show on the Closing Disclosure? Well, I asked my Magic 8-Ball and it said "Better not tell you now" (ironically, the same answer I got when I asked the regulators). So then I threw a dart at the board where I have a blank Closing Disclosure pinned up. The dart landed on the appraisal disclosure, which made no sense.
So then I buckled down and did some research. I also spoke to the helpful folks over at the CFPB.
Answer
Keeping with our appraisal example, we'll show the full amount on page 2 as Borrower-Paid "Before Closing." So the appraisal will look like it cost $500 and the borrower paid the full $500 at closing (which they did). For example, this would show in the right hand column below.
Next, disclose the $50 refund on page 3 in Section L. under Other Credits. You can decide what to call this, but "Overpayment of Appraisal Fee" makes sense to me. So it would look like this (except instead of "Rebate from Epsilon Title Co." for $750.00 it will be "Overpayment of Appraisal Fee from Bank ABC" for $50.00.
In Other News:
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....
Many of the people who work with me would probably say that I'm a good salesperson, but the fact is, I'm miserable at traditional sales. I don't like to talk about fees, and I don't like to go for "the close." But I love consulting, so I just go into sales meetings with the idea that I'm going to find a way to help them in some meaningful way.
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