The Paid By Others column on page two of the Closing Disclosure is one of the more challenging columns when it comes to funding and disbursing. The reason for this is the numerous scenarios for which an item may be listed in this column. One use of this column is to simply reference a fee the lender has paid outside of closing for a specific charge. In this example the figure would be listed in the paid by others column but would not affect funding and disbursing. Another scenario is for charges the lender is paying for at closing and wants the settlement agent to disburse. In this scenario the charge listed in this column would increase the funding amount from the lender and a disbursement would need to be created to pay for that service at closing. Intuitively there is no way to tell which scenario is occurring by simply looking at this form. For whatever reason the CFPB nixed the idea of having two columns for items paid at and before closing, like the Borrower-Paid and Seller-Paid columns.
To handle PAID BY OTHERS programmatically we have built in some functionality in the detail input windows for each line on page 2. If you click on the line number, ie B04, a red window will appear. You'll notice on the right hand side there is a drop-down box labeled "Paid by Others - Create Disbursement - Funds From:". Using this drop-down box you can select if a disbursement needs to be created for the charge entered in the Paid By Others column and whose funds the charge will be paid from. The most common scenario will be funds from Lender and the charge will be offset by an increase in the funding amount from the lender. In this window you can also mark a charge in the Paid by Others column as being Paid by Lender which will add (L) next to the amount listed in this column. Once you are finished you can click on the Save Changes button and you will also need to Update your CD.