24 MAY / JUNE 2023 between the buyer and the seller. How is this properly disclosed? Well, the most common way to disclose this, since it is not reflected in the note or credit agreement, is to disclose this as a Seller Credit. Since this is not considered discount points that either the buyer or the seller is paying to the bank, the bank would not disclose in Section A. The bank is not involved in the scenario where a buydown agreement is solely between the borrower and the seller. Rather, the regulation and commentary do not specify that this must be disclosed in any particular way, so it is viewed generally as just a concession from the seller, which has multiple ways of compliant disclosure. Disclosing as a Seller Credit as noted above being the more common. This would be found in the Calculating Cash to Close Tables (LE & CD) and in Section L on the CD, as it is not a credit that is paying any specific fee listed on page 2 of the disclosure. It could also be disclosed in Section N of the CD as a seller credit due at closing. If it is a situation where the buydown funds are from the seller to the bank, it would be disclosed in Section A in the Seller Paid column, and not Section H because the recipient of Section H fees are third parties, and the bank is the one receiving the fee. In this instance, the money from the seller is specifically being used to buy down the rate, which is a Section A fee, since that is paid to the bank. There are other arrangements in which the seller just gives the borrower some money to make up the difference in what the borrower is paying between Rate A and Rate B with no actual buydown of the rate taking place. This is a Section N disclosure. But in the instance in which the bank will actually be the recipient of the fee and the fee from The views expressed in Bankers Alliance articles are those of the writers in their individual capacities and do not necessarily reflect the position of Bankers Alliance or its affiliates. The information in Bankers Alliance articles is for general informational purposes only and is not a substitute for specific legal advice. the seller is to pay for a specific loan cost, it should be disclosed in Section A. The remix is happening – the early 2000s are repeating themselves. But even more so now with the increased examiner focus and scrutiny on consumer harm, it is important to make sure the bank is aggressively reviewing its buydown loan programs for the risks they can bring – reputational, compliance, legal, credit and fair lending – and diligently documenting justifiable business decisions, reviewing investor requirements and examining for proper disclosure and fair lending implications. HB HONORABLE MENTIONS Alliance Bank, Francesville, presented Laura Myers, relationship manager, with the Terry Stevens Spirit of Alliance award. The honor, named for former bank president Terry Stevens, recognizes a team member who exemplifies service, reliability and teamwork. Myers was described as positive, helpful, warm and kind, with exemplary client service skills and a person who defines quiet leadership. Mark Schroeder, retired chairman and CEO of German American Bank, Jasper, was inducted into the Junior Achievement Evansville Regional Business Hall of Fame May 9. Laureates are presented with a crystal award symbolizing the spirit David Findlay, president and CEO (right), presents Chris Merrill, vice president and technology services manager, with the 2022 Lake City Bank Commitment Award. of free enterprise. Schroeder worked for German American for more than 40 years, beginning as a vault attendant and working his way up to the top of the company. He has volunteered with numerous organizations and boards, including the Indiana Bankers Association, Community Bankers Association of Indiana, Independent Community Bankers of America, the Board of Overseers of St. Meinrad School of Theology and the Strategic Steering Committee of Memorial Hospital. Schroeder is the current vice chairman of the board for the Indiana Department of Financial Institutions and a member of the IBA 40 Year Club. He attended Vincennes University and the University of Evansville and is licensed as a certified public accountant. Lake City Bank, Warsaw, presented Chris Merrill, vice president and technology services manager, with the 2022 Commitment Award at the bank’s quarterly officer meeting in February. The award goes to an individual who has gone above and beyond in representing the bank, both internally and externally. The teammates who nominated Merrill noted that he managed through key transitions on the technology services and information security teams, ensuring a smooth transition for team members, leadership and the bank as a whole, while leading the bank through two key examinations in which the bank maintained the highest rating possible for all technology-related areas. Merrill has been with the bank since 2006. He also serves as president of the Warsaw Community Public Library Board of Trustees. HB Alliance Bank President and CEO Shane Pilarski presents the Terry Stevens Spirit of Alliance Award to Monon Relationship Manager Laura Myers.
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