Partial Payment Policy Disclosure (Closing Disclosure)

Updated 2026-05-17

The Partial Payment Policy Disclosure is a specific disclosure required on the Closing Disclosure (CD) that informs borrowers about the creditor's policy regarding the acceptance and application of partial mortgage payments. This disclosure is mandated by Truth in Lending Act (TILA) and Regulation Z under the TILA RESPA Integrated Disclosure (TRID) Rule.

Purpose

The purpose of this disclosure is to provide transparency to borrowers about how their lender will handle payments that are less than the full amount due. This is important because different lenders may have different policies, which can impact a borrower's account status and potential fees.

Content of the Disclosure

The disclosure typically states one of the following:

• Accepts Partial Payments: The creditor accepts partial payments and applies them to the loan.
• Does Not Accept Partial Payments: The creditor does not accept partial payments.
• Accepts Partial Payments Under Certain Conditions: The creditor accepts partial payments only under specific conditions (e.g., during a forbearance plan, if the remaining balance is small).

Understanding the partial payment policy is crucial for borrowers, especially if they anticipate situations where they might not be able to make a full monthly payment. It helps them avoid misunderstandings and potential negative consequences such as late fees or default.