We have a third party that our secondary market uses to service loans. We are going to use them for our in house HPML's that require escrow.

They charge a fee of $8 per month for a loan and management wants to pass that monthly fee on to the borrow.

How would this be disclosed?

We have a fee similar to this that is collected in Block 1 of the GFE. The reason for that being that we collect it but a flat monthly fee is paid to the 3rd party, so the amount collected at closing is not paid directly to the 3rd party but is retained by us.

The way it was explained to me is that they do not want to collect the fee up front. They want to add the $8 to the monthly payment and collect it then.

Can we even do it that way?

Would this fee go in block 3 like the tax service fee if it is be conducted by a third party?

Depends on when it will be collected. It will be a finance charge also now matter how it is collected.

I think the plan is to add the $8 to the monthly payment and collect it with their payment.

If nothing is collected up front, how do we disclose it as a finance charge?

Also, going back to my original post, can we even pass the fee along to the borrower this way?