We wish to start charging a $50 fee to other banks to subordinate our lien position. For example, we have a 2nd lien, the 1st lien is paid off which would move us to the 1st lien position - another bank then makes a loan and wants us to subordinate our 1st lien to them (would move us back to the 2nd lien position).

Is it legal to charge a fee for this? Would the other bank then be able to pass the fee on to the borrower? Any other considerations?

The fee is permissable (assuming state law allows). If you charge the bank the fee and they pass it on then it becomes a FC for them on their disclosures but not for you as it is a subsequent event.

We are also considering charging a subordination fee. The question has been raised regarding whether we need to charge this in all cases where a subordination is requested or if we could charge it at our discretion? For fair lending reasons, I would think it should be charged in all cases ... with the occasional exception that always seems to occur. I realize its the requesting bank who is being charged the fee but they are more than likely going to pass it on to the consumer.

I can't speak for all, but we charge the subordination fee in all cases (of course unless we are subordinating one of our own loans).

I'm not very well versed in subordinations so would appreciate any assistance. We are also going to charge a fee for agreeing to subordinate a customer's loan. At first we were going to have the mortgage company pay the fee but a question has come up about whether there would be any concerns with the customer paying the fee to us. From the various threads I've read it appears we wouldn't have any disclosure requirements but it seems strange to me that there wouldn't be anything to document that the customer would pay this fee. Is it just a best practice to have the mortgage company pay this fee? Thank you.

I'm adding to my post above. If this loan is a HELOC (we have the HELOC) and we don't disclose subordination fees in the early plan disclosures, if the customer writes a check off their line to pay this fee, is it a correct understanding that it will just show up as an advance? Just trying to understand how this would work. Thank you!