How are “no cost” loan charges or rebated charges disclosed to the consumers/mortgage borrowers?
If I am quoting a client a rate that would give a rebate back to cover some or all of their closing costs, do I need to quote those costs on the estimate disclosure that they sign? I have always quoted all of them and then have shown the credit as “broker paid closing costs.” Does it matter which way that I disclose? This was a great e-mail question I received that I am just sure other people are wondering about it too now that I’m seeing signs advertising “no cost” loans. The short answer is that you are required to quote all the costs, even if the consumer won’t actually pay the cost out of their pocket at closing, and then mark them as POC or as broker paid closing costs. Here’s why: The good faith estimate must list all the charges that will be listed in section L of the HUD-1 or HUD-1A and that the borrower will normally pay or incur at or before settlement based upon common practice in the locality of the mortgaged property. So, what are the charges are required to be listed in S
