tiered pricing: disclosing lender credits on the GFE and HUD-1 CHFA recently implemented a tiered pricing feature which provides borrowers an opportunity to finance all, or a portion, of their closing costs through an increased interest rate. Tiered pricing is accomplished in the form of a lender credit. Lender credits must be properly disclosed on the Good Faith Estimate (GFE) and the HUD-1 Settlement Statement (HUD-1) in accordance with the Real Estate Settlement Procedures Act (RESPA) and its implementing regulations (Reg X). Some lenders may not be familiar with how to properly disclose lender credits. Appendix C to Reg X provides instructions for completing the GFE. Appendix A to Reg X provides instructions on how to fill out the HUD-1 and disclose items payable in connection with the loan, such as lender credits (see Line 800-series instructions). Also, HUD provides a number of resources to help lenders comply with RESPA requirements for disclosing lender credits including this
RESPA Roundup and
FHA RESPA Training. Lenders should consult with their compliance and legal departments regarding disclosure requirements.