John, if the fee is a cost of doing business for the bank and not disclosable to the customer, why do you feel it belongs on the closing disclosure? You don't disclose other costs like postage you spent on the customer. What would putting it on the closing disclosure do to tolerance calculations?

Thinking this through!

Our vendor is stating that the Seller's information (summaries of transaction) does not need to be completed if the title company is providing a CD to the seller. Is that accurate? As it is, we can't say a way in our LOS to exclude that information so its a bit moot, but just wondering what everyone else is hearing.

We do offer a home equity product where the appraisal, credit, flood search and other "Services You Cannot Shop For" are not charged to the borrower. Based on the thread here, I'm getting more comfortable with them not being reported on the LE under Section B.

I would make more sense because I have been having a terrible time testing my LOS when the appraisal is disclosed on the LE at $450 (because that's the highest appraiser we have), and the actual appraiser assigned charges us $375. When I make the adjustment to the closing disclosure, I'm getting a tolerance violation - even though its lower.

So, I sent the CFPB my own question, and of course I'm waiting for the telephone call back.

Someone also quoted above that they think these fees, if not on the loan estimate, should be disclosed on the Closing Disclosure. I'm not sure about that one, and have also included that in my CFPB request.

So what is the deal if you DO build the fees into the pricing or an origination fee? It sounds like you're saying you don't have to disclose any of the fees the lender is willing to absorb.

[The discussion thus far has been about including those fees on the Loan Estimate (LE). The Closing Disclosure (CloD) has different requirements. On the CloD, you disclose all the costs, regardless of who pays them. If the creditor is picking up the credit report and appraisal costs, for example, each of those services will appear in Section B of the CloD, with the cost under the "Paid by Others" heading (optionally preceded by an L in parentheses to indicate the "other" is the lender). That's a specific lender credit.]

FWIW, I talked to a CFPB attorney yesterday who told me what John said above. Not on LE, but must be on CD when lender pays costs.

I've fired off an email to the CFPB, not that whatever response I get should be treated any differently than what has already been provided but I'll share whatever that response is and the context. Stay tuned.

I expressed my frustration to the CFPB attorney that we are getting mixed opinions on various topics. She said they might do another webinar in the near future.

I have emailed them again, because in my lengthy call with two attorneys we specifically discussed, if a bank "absorbed costs as a cost of doing business" when would specific credits be used and they gave some examples...none of which were "for the costs you just absorbed as a cost of doing business."

I just did the same thing.

Looking forward to what they say. Our attorney is taking the stance that regardless of unofficial guidance, we wont know how a court will ultimately view this issue.

The entire discussion in the Official Comments about lender credits and how they are treated would be irrelevant if the disclosures only were required for charges the borrower is legally obligated to pay. A court will look first and primarily to the language of the regulation itself and then to the Official Comments and supplementary information issued with the rule. Informal interpretations issued by CFPB staff will play no role.

I've given up on any hope that we will see anything official from the Bureau before October 3. But I continue to hope that the Bureau-crats will realize that there is so much riding on the answers to these questions that they will eventually pull together something official in writing -- which, to earn the recognition of a court ought to be at least some clarifying official interpretations. That will, of course, take some time, because it would have to go the proposal, comment and final rule route via the Federal Register.

I think I have given up! :-)

It saves quite a few awkward steps to eliminate some of these little non-essential fees that the borrower never pays. To have to show them on the CloD in the end negates any helpfulness there could possibly be by not showing them on the LE.

To show them on the LE without an offsetting lender credit clouds the purpose behind 'shopping'.

In my shop these minor fees being discussed total less than $10 on a single applicant application. It costs more to administer showing these non-fees, but if I have to end up showing them on the CloD, then I may as well account for them all the way through the process. This makes no sense.

I 'get' including a borrower ordered pest inspection that they are paying for if you know about it...that's a direct part of the total cost...but to include something they WILL NOT PAY is and has always been ludicrous.

That was what was used in examples to me by the CFPB, like if the bank made a mistake and said "we will split that fee with you" or will pay the whole thing because the customer is annoyed.

My conversation with the CFPB was similar. In context of my conversation w/ the CFPB, "paid for by others" was to be utilized if the intention was that the borrower "will pay" but the bank decided prior to closing to pay for all or a portion the service. Maybe out of annoyance as KB states or the borrower negotiated it.

See that makes sense. Which is scary. The other has NEVER made sense.

This is so frustrating! We are a week away from the effective date and still trying to interpret their intentions. Who is working the 3rd and the 4th besides me?

I'm trying not to but the odds are not looking good.

Absolutelyfreakingnot planning to.

We are all on the same page...just need the CFPB to come out with some sort of interpretive guidance on this issue to make it official. If there was never any waffling on this issue I would be comfortable applying this interpretation, but as it stands I think everyone would agree we need something official before applying it to our process.

FWIW, I received a call back from the CFPB early this morning. The response was just like my first discussion with them on this topic: if the bank is absorbing fees as a cost of doing business, the bank does not need to disclose on the LE or CloD because the fees being absorbed are not part of the customer's legal obligation and will not be paid by the customer.

Further, the attorney said that if a bank wished to disclose on the CloD as a way to provide evidence to the borrower of actually paying those fees, a bank COULD but is not required to disclose on the CloD with the (L) for lender paid.

So then there is nothing stopping lenders from absorbing all the costs, charging a higher origination fee or higher price and disclosing nothing? How does that make it easy for a consumer to shop?

Not that any lenders would do that.

In my initial discussion with the CFPB they stated that, in their opinion, it provides what a borrower needs:

Bank A has x fee and x interest rate and x costs and

Banks B has y fee, y interest rate, and y costs.

The Law of Unintended Consequences strikes again.