Does anyone know of any guidance out there that would say that it is ok to have the top two partial payment boxes checked on a closing disclosure? Our situation is that we have secondary market loans which we do accept partials, put them in holding until the rest of the payment is made and then apply the loan, then our portfolio loans, we allow partial payments and apply them right away.
I read in some CFPB Q&A where having both boxes checked might be ok. But in what scenario. I did not see any commentary in the regulation that clears this up either, just a reiteration of what the boxes are and how they should read.
I found the CFPB Q&A on the Compliance Monitor:
Q: Is a lender required to choose only one of the three options for the Partial Payments disclosure required by § 1026.38(l)(5), or is it possible to check multiple boxes?

It depends. A creditor may check multiple boxes in certain circumstances. A creditor should check the first and second box if the creditor accepts partial payment and applies it to the loan balance in some circumstances. However, a creditor should not check the third box if it accepts partial payment in any circumstance that is applicable to the borrower’s loan. In this case, the creditor should only check the third box and not check the first or second boxes.

Couldn't you check which box is applicable to the specific loan type you're disclosing? Like, a secondary market LE would have one thing and an in house would have the other?

Yes we could, but the trouble is we have been checking both for both secondary and inhouse.
From what the Q&A states above, it looks like in some cases that is acceptable if both types of offerings are made.

Any one else check both of the boxes?

But if you don't apply partial payments on your secondary market loans, it sounds like you're disclosing it improperly to your customers by checking both boxes. Can't training be implemented to ensure that only the correct box is checked? Or maybe templates within your LOS?

IMO the box, or boxes, that applies to the specific loan should be checked. IOWs you shouldn't be checking both boxes as a CYA for all loans.

Totally understand your point. But is it a violation of some sort by having the two boxes checked as we were doing? Going forward we are changing the specs to ensure that one box is checked for the one loan product and the other box is checked for the other. But it appears that the CFPB has given a little latitude to having both of the boxes checked. It is coming up as a finding in our compliance audit and I am thinking that it is a great recommendation but to be a finding??? Not sure about that.

I agree it should be loan specific. This gets into "scheduled" vs. "non-scheduled" notes which can greatly affect interest paid over the life of the loan. (for instance if payments are applied early as received, even if partial or held until received in full or applied as of the scheduled payment date).

If you disclosed that you accept partial payments and apply them as received, and you don't for that specific loan type I would definitely change that.

Ok, thank you for all of your feedback.