Our bank is preparing to run a special for the summer months offering $300 off closing costs for new mortgages. We have never done something like this in my time here, so want to make sure we don't do something to get ourselves in trouble.

This would be a general Lender Credit (not specific to appraisal, etc.). Is it best to continue to show our Doc Prep/Underwriting Fees ($200 each/$400 total) under origination charges with a $300 Lender Credit in Section J? Or just reduce our origination charges to a $100 doc prep fee with no shown credit? This would change the APR calculation as well, I do not want to understate the actual APR.

I'm leaning toward option #1 (show fees as usual, offer general credit at the end).

Thoughts and/or guidance? Appreciate it!

If you are advertising a lender credit, I suggest giving them one. Otherwise how would I know what your normal charges might be? You could tell them you are giving them $2,000 off - how would they know?

Continue to show your normal fees and give the $300 as a lender credit. Straightforward, less confusion

Randy - Good point. LOL

Thank you both for your input and confirming my thoughts.

So this $300 figure just goes in section J on both the LE/CD, correct? Seems simple and trying not to over think it, but also don't want to miss anything since this is the first time we have done something like this.

Just remember, once it's on the LE, it's ground in stone. You cannot adjust the amount to match the fees.
I've seen bank coupons stating exactly which fees will be paid for, often with an 'up to $x amount' on it.
That way if the fees only equal $250, you're not handing the borrower $50 in cash at closing.

We have a promotional coupon now for up to $500 off the appraisal fee. The customer has to pay for the appraisal upfront (after we receive intent, of course) and if the loan originates we credit $500 at closing. This is all stipulated on the coupon itself.

If the bank controls the fees that are being reduced for its promotion, there's no risk in putting the lender credit on the LE.

Is there anything that prohibits an FI from giving a cash card, like a prepaid VISA/MC to a borrower on a promotional deal instead of it being a lender credit on a LE/CD? If so, can you point me to where that would be? I have a weird situation and I'm trying to come up with a way to give a credit regardless of the type of financing someone ends up getting.

Nothing that I can think of would prevent it.

You are the MAN!