Does Farwynd's ability (see Gates of the Citadel spoiler) also apply to penalty reductions (e.g. from the Neutral house card and Hollow Hill), i.e. would people have to pay the penalty for playing out-of-House characters with Farwynd out despite them running the Neutral house card or Hollow Hill?

Saturnine said:

Your concern is whether or not gold penalties can be reduced. The answer is "it depends."

There are a couple of steps when you play a card. They are:

1. Determine the cost (this is where, when a card gives you a choice like "kneel 3 influence or a Noble character." you determine if the cost is 3 influence or a Noble character).
2. Check play restrictions (including verification that required targets are present)
3. Apply (modified) cost penalties (including OOH penalties).
4. Apply other active cost modifiers
5. Pay the cost
6. Marshal the card/trigger the effect (including choosing targets)

You can see that any gold penalty is checked, modified, then applied, in #3. It's not until you get to #4 that you are trying to lower the cost to play the card. So it is #4 that Farwynd mucks with, not #3.

For practical reference, though, if an effect specifically talks about adjusting the gold penalty, Farwynd will not apply. Determining the gold penalty is separate from determining the cost. Before the gold penalty is actually added into the cost of the card, lowering it is not technically lowering the cost to "play;" it is simply modifying the penalty with will, eventually, modify the cost. Once the gold penalty is added in, though, you cannot use a "lower the cost to play" effect and claim that it only takes out the portion of the cost created by the gold penalty.

Hope that made sense. "Lower the gold penalty to play..." is fine; "Lower the cost to play by X," where X is less than or equal to the gold penalty already applied.

I felt there could be arguments made for both cases, that the penalty is part of the cost and such affected by Farwynd, and that the penalty is merely attached to the cost. Re-reading the FAQ though, it states about the third step: "Apply any penalties to the cost(s). (Any effect that modify a penalty are applied to that penalty before [emphasis added] it becomes part of the cost)." So once again, some careful reading of the FAQ is all that was needed. Oh well.