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#2043908 - 10/13/15 04:39 PM Homebuyer Education Fee - No Cost
SomeBankGuy Offline
Member
Joined: Jan 2007
Posts: 78
Hello BOLers...

An interesting question came up today that I was hoping someone could opine on.

Certain mortgage products require that first time homebuyers complete an approved homebuyer education course. We currently allow the borrower to shop for this service, but all of our recommended providers offer it free of charge.

Since there is no cost associated with the recommended providers, would we list the item on the LE as $0, or just leave it off entirely? It would be odd to add a $0 cost to the LE, and I don't know if our system can even do it without changes. We would provide a service provider list either way. If the borrower ended up choosing to pay for a service for some reason, we would then list it on the CD.

I am thinking about whether it would be better just to go to a closed provider list, but would need to verify that would be acceptable under investor guidelines, and it would still not answer the question about listing a $0 "charge" on the LE.

Thoughts?

BX

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#2043983 - 10/13/15 07:50 PM Re: Homebuyer Education Fee - No Cost SomeBankGuy
Cliff Johnson Offline
Junior Member
Joined: Sep 2015
Posts: 46
We ended up reaching out to the CFPB directly for clarification on this and got back the following response:

With regards to your question about the disclosure of homeownership counseling, you may want to review section 1026.19(e)(3)(i)-(iii). If a charge is not being imposed on, or paid by the consumer, then it does not need to be disclosed. Further, you may want to also review 1026.37(f)(2) and (f)(3) which discusses the distinction between the services you can and cannot shop for.

It makes sense in the end, if there is no charge then it shouldn't be disclosed. We also had the same issue with the system as when a charge was marked as $0, it wouldn't even be shown on the LE.

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#2077481 - 05/06/16 06:19 PM Re: Homebuyer Education Fee - No Cost SomeBankGuy
Minion Offline
Member
Minion
Joined: Jun 2015
Posts: 64
Virginia
For the FNMA Home Ready program the borrower is required to take a class that has a fee of $75. Where would we put this information on the LE?

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#2077517 - 05/06/16 07:56 PM Re: Homebuyer Education Fee - No Cost SomeBankGuy
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,220
Galveston, TX
Section B or C depending if they can shop for the provider offering the class.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2159839 - 01/09/18 08:25 PM Re: Homebuyer Education Fee - No Cost SomeBankGuy
ComplyCycle Offline
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ComplyCycle
Joined: Dec 2014
Posts: 454
If the homebuyer education course is free - no cost to the applicant - are we still required to list an agency on our preferred provider list? The applicant has the option of attending various agencies for the course. If so, can someone please provide a citation? Thank you.

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#2159862 - 01/09/18 09:12 PM Re: Homebuyer Education Fee - No Cost SomeBankGuy
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
(C) Written list of providers. If the consumer is permitted to shop for a settlement service, the creditor shall provide the consumer with a written list identifying available providers of that settlement service and stating that the consumer may choose a different provider for that service. The creditor must identify at least one available provider for each settlement service for which the consumer is permitted to shop. The creditor shall provide this written list of settlement service providers separately from the disclosures required by paragraph (e)(1)(i) of this section but in accordance with the timing requirements in paragraph (e)(1)(iii) of this section.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2186775 - 07/25/18 05:12 PM Re: Homebuyer Education Fee - No Cost SomeBankGuy
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
If the required course is free to the consumer, it does not have to be disclosed on the loan estimate at all, and if it's not disclosed there, there is no need to list providers for the course in your list of available service providers.

That said, you can, and probably should, give the applicant(s) a list of providers offering the course free of charge. Just don't combine it with your list of available service providers under 1026.19.
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John S. Burnett
BankersOnline.com
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