We have identified a few situations at our bank where the loan officer/assistant has not disclosed a revised GFE within 3 days of finding out when a fee such as a final inspection, termite inspection, or employment verification fee will be required by the lender (it was not required at the time of application/original GFE). We realize this is an error as a revised GFE should have been issued within 3 days of finding out about a changed circumstance.

When the revised GFE is not issued, how do we handle disclosing the fee? Which, if any, of these resolutions should we follow?
1. Do we disclose the fee on a revised GFE (maybe at the time the closing is being prepared when someone realizes it has been missed) and then POCL the charge on the HUD since we did not disclose it timely?
2. Do we disclose the fee only on the HUD (not on the GFE at all) and cure the tolerance if necessary?
3. Do we leave the fee off of the GFE and HUD and the lender has to eat the cost since it was never disclosed to the borrower on the GFE?

We are working on process improvements to make sure revised GFEs are issued timely; however, we have a few where they were missed and want to determine how to appropriately handle them.

PS: We (Compliance) has identified some instances where our processor/loan officer didn't do a revised GFE so they just put the fee on the HUD and expect to cure the tolerance (if necessary), but we (Compliance) feel that all settlement fees must be listed on the GFE or they should not be charged. It seems as if there has been some confusion on which practice is appropriate in these situations so any clarification is appreciated.

#2. To do what compliance feels should be done would be wrong...same way just because you absorb the cost of a credit report (many banks do) doesn't mean you aren't supposed to disclose it.

The reason for our (Compliance) stance above was because our FDIC examiners stated that all settlement fees should be disclosed on the GFE during our exam this past summer. However, further research (including a webinar's Q & A's from Jack Holzknecht in 2009) shows that disclosing the fee on the HUD and curing the tolerance if necessary is what we should do. Thanks for your response!

Yes, your examiners were right....all fees SHOULD be disclosed on the GFE but if they are not they still must show on the HUD as a cost of getting the loan and you will have to deal with any tolerance cures that may come as a result of untimely redisclosure.

Question along these same lines....a title insurance fee was forgotten on the GFE, obviously we can't go back and fix it. But, if I'm reading this correctly, it still has to be on the HUD Settlement statement. Our difference then jumps up to 24%. So, do we have to both refund the borrower down to the 10% tolerance AND pay the title insurance fee out of pocket?

The title insurance fee goes on the HUD on the proper line.
It carries over to p3 of the HUD in the 10% box.
The line under GFE will show $0.
Under HUD it will show the actual cost.

The difference is now 14% more than is allowed. (24% - 10% allowable tolerance)
Your cure is the 14%...period.

No out of pocket paying of anything required.