TRID. Seller forms

My bank has a question about the alternate table without a seller and when it should be used for the LE and CloD.

During the recent monitoring, it was discovered that some loans were starting with the alternative table being used and then the CloD was processed with a seller. The processors were apparently going back into the application phase and changing this.

In our research we have found that using the CloD with a seller opens up additional fields that allow a more robust disclosure of loans paying off and hold back funds.

My question is what would be the downside of always using the seller disclosures for the LE and CloD even when a seller is not part of the transaction?

We are using [vendor name redacted] for our loan software and have the option at the LE processing to choose “seller information is unknown” or “use seller disclosures for non-seller transaction”.

We are thinking about changing procedures so that this does not happen, but want to understand the ramifications of always using the seller disclosures.

 The rules require that you be consistent within the loan process: If you start with the LE version with seller, you have to use the standard (with seller) version of the CloD. If you start with the alternate LE (no seller), you have to use the no-seller version of the CloD.

There is a special no-seller version with a large Section K that can be used for payoffs and funds hold-backs (as in construction and many home improvement situations).

You can always use the “with seller” version of the LE and CloD, omitting seller information when there isn’t a seller, just as you could use the full HUD-1 Settlement Statement under the “old rules.” The alternate version, however, can often be easier to use.

Over time, you might find that you have identified certain types of transactions that can more easily be handled using the alternate disclosures. I’d suggest you use the alternates when it makes sense once you have identified those loan types. Otherwise, if it works for you, use the “with seller” form.