The disclosure of a principal reduction under § 1026.38(j)(1)(v) or (t)(5)(vii)(B) includes the following elements: (1) The amount of the principal reduction (2) the phrase ‘principal reduction’ or a similar phrase (3) for a principal reduction disclosure under § 1026.38(t)(5)(vii)(B) only, the name of the payee (4) if applicable to the transaction, the phrase ‘Paid Outside of Closing’ or ‘P.O.C.’ and the name of the party making the payment and (5) if the principal reduction is used to satisfy the requirements of § 1026.19(f)(2)(v), a statement that the principal reduction is being provided to offset charges that exceed the legal limits, using any language that meets the clear and conspicuous standard under § 1026.38(t)(1)(i). “A principal reduction that occurs immediately or very soon after closing must be disclosed in the summaries of transactions table on the standard Closing Disclosure pursuant to § 1026.38(j)(1)(v) or in the payoffs and payments table on the alternative Closing Disclosure pursuant to § 1026.38(t)(5)(vii)(B).
TRID 2.0 provides new guidance on how a principal reduction should be disclosed on the Closing Disclosure, which (primarily) includes the following:
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