The seller agrees to pay $4,200 allocated to specific identified buyer closing charges, rather than providing an unallocated general credit. How should these payments appear in the Closing Cost Details on the buyer's Closing Disclosure?
Correct Answer
B) In the seller-paid column beside each of the charges the $4,200 covers
B. Show the allocated amounts beside the specific charges in the seller-paid columns. The allocation identifies which costs the seller is paying. The disclosure therefore preserves both the cost detail and payer attribution. Scope and exceptions: A genuinely generalized seller credit uses the Seller Credit entry instead. The original explanation was too broad in rejecting lump-sum credits. Do not disclose the same contribution twice. Source: Sections 1026.38(f), (g), (j)(2)(v); comment 38(j)(2)(v)-1 — https://www.consumerfinance.gov/rules-policy/regulations/1026/38/
Why This Is the Correct Answer
B. Show the allocated amounts beside the specific charges in the seller-paid columns. The allocation identifies which costs the seller is paying. The disclosure therefore preserves both the cost detail and payer attribution. Scope and exceptions: A genuinely generalized seller credit uses the Seller Credit entry instead. The original explanation was too broad in rejecting lump-sum credits. Do not disclose the same contribution twice.
Why the Other Options Are Wrong
Option A: It does not appear at all, since it is a matter between buyer and seller
A private agreement does not remove the disclosure requirement.
Option C: As a single $4,200 credit at the bottom, with the charges shown as unpaid
It substitutes a general credit for the specified itemized payments.
Option D: Only in the seller's own disclosure, which the buyer never sees
The buyer disclosure still identifies seller-paid closing costs.
Exam Tip
Specific cost allocation and a general credit have different disclosure treatment.
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