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#1993656 - 02/05/15 02:26 PM "Other" Fees-Section H 1026.19(e)(l)(i)
Luv2run Offline
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With regard to Section H on the LE, I am reading that if the borrower indicates they are going to have a home inspection, then the creditor must include a "good faith" estimate of that fee on the LE. Is the consensus then that if the sales agreement lists any inspections the borrower wishes to have done, we must include an estimate for those fees in section H of the Loan Estimate? I am somewhat concerned with the lenders picking this up in the contract. I am basing this question on the assumption that the lender obtains a copy of the sales agreement prior to issuing a Loan Estimate.
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#1993703 - 02/05/15 03:10 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
Jerod Moyer Offline
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My understanding is that if you obtain the Purchase Agreement prior to delivery of the LE you must include those items in order to meet the "in good faith" requirement. The following is from the regulation:

For example, if the consumer informs the creditor that the consumer will obtain a type of inspection not required by the creditor, the creditor must include the charge for that item in the disclosures provided… but the actual amount of the inspection fee need not be compared to the original estimate for the inspection fee to perform the good faith analysis… [Commentary to §1026.19(e)(3)(iii) #3]
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#1993749 - 02/05/15 04:04 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Jerod Moyer
Luv2run Offline
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Thanks again! I love this source for clarification!
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#1993778 - 02/05/15 04:42 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
John Burnett Offline
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Susan,

One other thing you'll want to make sure you know about. See comment 19(e)(3)(iii)-3, and in particular the last sentence:

"But, for example, if the subject property is located in a jurisdiction where consumers are customarily represented at closing by their own attorney, even though it is not a requirement, and the creditor fails to include a fee for the consumer's attorney, or includes an unreasonably low estimate for such fee, on the original estimates provided pursuant to § 1026.19(e)(1)(i), then the creditor's failure to disclose, or under-estimation, does not comply with § 1026.19(e)(3)(iii)."

That is a real compliance trap, because there won't be anything in the P&S agreement concerning it. You need to determine whether borrowers in the jurisdiction where the property is located typically do engage their own attorneys for the closing. If they do, you'll need to have a bona fide estimate of the costs for that sort of representation.
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#1994467 - 02/09/15 04:20 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) John Burnett
Luv2run Offline
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Oh my. Thanks for pointing that out. We do have this situation come up from time to time.
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#1994801 - 02/10/15 02:49 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
donnac Offline
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If we receive the purchase contract after providing the loan estimate and there are other costs (such as an inspection), is this a changed circumstance and must we provide a revised loan estimate?

Thanks.

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#2012412 - 05/06/15 04:07 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) donnac
MonicaMc Offline
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Originally Posted By donnac
If we receive the purchase contract after providing the loan estimate and there are other costs (such as an inspection), is this a changed circumstance and must we provide a revised loan estimate?

Thanks.


I have this same question. We cannot require the purchase contract prior to issuing the LE, and unless the borrower specifically states that they will be getting X, Y, and Z inspections, then we do not disclose them, correct? But what about when the contract comes in? They will be in Section H, which is a no tolernace section, so it technically wouldn't be a CofC since the inspection fees didn't change the tolernaces?

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#2012482 - 05/06/15 06:11 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
John Burnett Offline
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You would not include such optional services unless you are aware of them at the time the Loan Estimate is provided. You can become aware, however, if you get a copy of the purchase agreement before the LE is issued (you can't require it, but you don't have to refuse it if the applicant volunteers it). You are also considered to BE aware if you're in an area in which the buyer in a purchase transaction usually obtains the particular service. See comment 19(e)(3)(iii)-3, for example, where it describes circumstances in which you'd have to include an estimate in section H for the cost of the buyer's optional representation at closing by an attorney.

You could also become aware during the course of conversation with the applicant. It doesn't have to be in a document. The applicant could ask whether you (the lender) know of someone who does pest inspections, because the applicant's spouse has an irrational fear of mice, and the applicant wants to ensure there's no evidence of the little rodents on the premises.
Last edited by John Burnett; 05/06/15 06:15 PM.
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#2012506 - 05/06/15 06:39 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
MonicaMc Offline
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Thats what I was thinking. Thanks John!

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#2014300 - 05/15/15 02:23 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
BankRegGuy Offline
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So, just to be clear...
no CC if discovered after LE issues.
No reissuing the LE
No tolerance issues.
it just shows up on the CD.

if we have no idea the cost, can we just pick a reasonable number out of the air?

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#2014314 - 05/15/15 02:45 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) BankRegGuy
John Burnett Offline
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Originally Posted By BankRegGuy


if we have no idea the cost, can we just pick a reasonable number out of the air?


Nope. Take a look at Comment 19(e)(3)(iii)-3. The number you provide has to be based on the best information available to you at the time you provide the Loan Estimate. That's a higher standard than "pick a reasonable number out of the air." If you happen to know which provider the borrower's going to use (I don't care how you learned which provider), you should contact the provider for an estimated figure. If the borrower has volunteered he's going to spend $200 on an optional inspection, use the $200 figure. You have to make an effort to make the estimate realistic.
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#2014315 - 05/15/15 02:48 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
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And all of that within 3 days max. crazy
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#2014318 - 05/15/15 02:49 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
Jerod Moyer Offline
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John's absolutely right and Joker too. "...based on the best information available to you..." means you have three days to do your homework in order to meet the "good faith" expectation in the regulation. Out of thin air won't cut it!
Last edited by Jerod Moyer; 05/15/15 03:17 PM. Reason: Credit to Joker too.
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#2014376 - 05/15/15 04:13 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
BankRegGuy Offline
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smile "out of thin air" was a bit of an exaggeration. I shouldn't have left such a low hanging fruit out there. It has been a rough week.

The way I see it, there are 2 scenarios:

scenario 1, we have the info at application. If $/provider are unknown, we call a local inspector and get an estimate. We have to add them to the service provider list based pursuant to .19(e)(1)(vi). And it looks like this is going to be a fee in the 100% tolerance.

Scenario 2, we learn about inspection after the LE is given out. No redisclosure because .19(e)(3)(iv) only allows for CC redisclosure of (e)(3)(i) and (e)(3)(ii) fees. And 100% tolerance will be applied based on .19(e)(3)(iii)(E).

Last edited by BankRegGuy; 05/15/15 04:14 PM. Reason: added It has been a rough week.
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#2014383 - 05/15/15 04:28 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
John Burnett Offline
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If this is truly an "Other" (Section H) cost, it's not a settlement service that is required by the lender -- it's optional, and you don't include the provider on the "you can shop for these services" list.

There is a scenario 3 -- No one has told you that an optional service will be used, but it's customary for buyers in the market where the property is located to use such a service. An example given in Comment 190(e)(3)(iii)-3 is the use by the buyer of optional legal counsel to represent the buyer at settlement. Because you are aware that it's customary to employ that service, you add it to Section H and carefully note that it's optional, and you also need to provide a good faith estimate of the cost.
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#2014419 - 05/15/15 05:45 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
BankRegGuy Offline
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And the reason why Section H is not on the written list is because the commentary, -2& -3, to (e)(1)(vi) which seems to limit the list to .37(f)(3) charges, which only include LE Section C.

so much fun stuff in the commentary!

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#2014423 - 05/15/15 05:57 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
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Speaking of the 'other' category. In running a test, I have an anticipated fee of 'courier' from the closing attorney to mail a payoff, for instance (could alternately be a wire fee).

The software is showing it under 'other' with the requisite "'title'" is in front of it.

Does this seem like the correct placement for this? In the past it would have been up in the 1100's if it was coming from the attorney and not at our request/instruction.

(maybe BankRegGuy answered it...it's not shopable).
Last edited by RR Joker; 05/15/15 06:00 PM. Reason: ( )
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#2014424 - 05/15/15 05:59 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
John Burnett Offline
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Finding what you need in Regulation Z has always been a challenge. There's no consistency, for example, on where you will find a definition (some are in 1026.2; others, like the definitions of "points and fees" and "bona fide discount point" are in a "definitions" subsection within a section (such as 1026.32(b)); and still others are defined with a cross-reference to another regulation.

Trying to find some of the technical requirements of the TRID rules is even worse. It's as if parts of the regulation were written by different groups of people, and the results weren't harmonized to make the three pieces of the rule (sections 19(e) and (f), section 37 and section 38) work the same way. Sometimes they are in the regulatory text; sometimes they are in the commentary to the text; and still other times they are in the separate "form of disclosures" sections 37(o) and 38(t).

Just needed to vent.
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#2014437 - 05/15/15 06:24 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
BankRegGuy Offline
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Joker, I would definitely say Section C not H.
.37(f)(3)(i) For any item that is ... for conducting the closing, the introductory description “Title – ” shall appear at the beginning of the label for that item.

Unless, of course, you could somehow directly attribute the fee to a .37(g)(4) service.

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#2014481 - 05/15/15 07:52 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
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Thanks RegGuy...I was torn on which category to place those in when I was working with the fees structure and 'services you can shop for' (since in the big scheme of things you don't!)just didn't feel right! crazy
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#2014492 - 05/15/15 08:08 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
John Burnett Offline
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If the fee isn't one that's required by the lender, it won't fall under paragraph 37(f)(1) or (2). It becomes a 37(g)(4) item (Section H), but it won't be labeled as "(Optional)" because there's no optional nature to it.

If it is a cost required by the lender, and the lender isn't going to allow shopping for it (I can't imagine a lender allowing shopping for a courier service) it's subject to 37(f)(2) [Section B], not (f)(3) [Section C].
Last edited by John Burnett; 05/15/15 08:11 PM.
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#2015133 - 05/20/15 01:40 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
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I am confused by what you are saying John.

Title companies have tons of little fees. I think there was 7 or 8 on one I saw last week.

We are requiring Title insurance. To get that title insurance, there are going to be little fees like wire fee, notary fee, copy fee, name search fee, courier fee ect.

I would think that by us requiring TI (but allowing them to shop for it), we are also indirectly requiring the mini fees. However, since they are allow to shop for the title insurance, they are also allowed to shop for their mini fees.

therefore, we are talking about a required fee (not H), they can shop for it (not B) and we are left with C, which has instruction to "include ANY ITEM that is for the closing..."

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#2015146 - 05/20/15 02:14 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
John Burnett Offline
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This thread is long and involved. I believe the cost in question is a courier fee that is imposed not by the lender but by the closing attorney for delivery of a payoff to a third party. I believe the problem is that it's been labeled in a test environment using a prefix of "Title --" and it's been placed by the software company in Section H.

First, I question the use of the "Title--" tag in the description. The courier service is not "an item that is a component of title insurance [nor is it] for conducting the closing" [see 1026.37(f)(2)(i) and (f)(3)(i) and (g)(4)(i)], so the "Title" tag seems inappropriate.

Second, since the fee is not for a service required by the lender (it's apparently required by the closing agent/attorney), it's not covered by 1026.37(f), but would be under .37(g), and therefore under .37(g)(4) - Other.
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#2015300 - 05/20/15 08:37 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
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This is just hard to wrap my brain around. Maybe I am just stuck in the old reg x way of listing fees on the gfe.

I also haven't been around long enough, but I always thought back in the good old days, the "closing fee" was the only fee coming form the TI company. Then the closers/title companies discovered they could itemize out portions of the closing fee (courier/copy) while still charging the closing fee and make a couple extra bucks. To me, the fact that the fees are going to the same company for the same (back in the day) set of services, sounds like those itemized fees should still be included in the .37(f) sections.

has there ever been a definition of closing fee?

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#2016589 - 05/28/15 03:38 PM Re: "Other" Fees-Section H 1026.19(e)(l)(i) Luv2run
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John, in a very basic way, I would think the fee to overnight the payoff would be 'title' related as it is necessary to track in order to perfect the title for us.

I have moved mine to section C at the present time.

We don't require it, but the attorney doing the title/closing will if there is a payoff to another lender involved.

BRG - Typically 'closing/settlement' fee is a fee charged to conduct the actual closing - and it's a finance charge.
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