The question has reared its ugly head again about lumping third party fees, i.e. credit report, flood determination, tax service,
into Sec. A. Has anything changed in Sec. 37 (f)(1) and (2) to permit such fees to be lumped in Sec. A under the heading of
"Origination Charges". Our mortgage department head says that's now how they did it at the other bank!

Our investor advised that, "no we will not have an issue with you not charging or disclosing those fees. Remember the loan is closing in the bank name so its based on your guidelines. Its also common for banks to combine fees into one lump sum
fee also."

Totally frustrated at this point!! Help needed. thanks.

I've read the previous threads on this issue and the responses seem to vary from whether its part of the legal obligation or
no cost to the consumer. There does not seem to be any consensus on this issue as to the treatment on the LE or CD.

In our case the "Processing Fee" in Sec. A includes third party fees. My question is whether this is in violation of
Reg. Z, .37 (f) (2) as its being charged to the consumer and is required by the lender.

Another concern is where are these third party fees a part of any legal obligation between the lender and consumer ?

I'm concerned that we are assuming that this or that is permissible where the bureau has failed to address with any clarity
these issues BOL identified. When is the bureau going to update the forms to include a Construction LE or CD that covers
the purchase or refinance as part of the transaction? I know its been addressed in the amendments, but it would be nice to see
an LE or CD that covers these situations including "gift of equity" from the seller in a purchase (some say its a seller credit, but that is not really a settlement cost is it?).

All comments are welcome as I'm sure we all have the same frustration with this rule and bureau as a whole. thanks.

If the fee ultimately goes to cover a third party fee, I do not believe that you can lump them together into 1 fee called loan origination fee or something similar. Per commentary to 37(f)(2) #2 below indicates that they have to itemized.

37(f)(2) Services you cannot shop for.
1. Services disclosed. Items included under the subheading “Services You Cannot Shop For” pursuant to § 1026.37(f)(2) are for those services that the creditor requires in connection with the transaction that would be provided by persons other than the creditor or mortgage broker and for which the creditor does not permit the consumer to shop in accordance with § 1026.19(e)(1)(vi). Comment 19(e)(1)(vi)-1 clarifies that a consumer is not permitted to shop if the consumer must choose a provider from a list provided by the creditor. Comment 19(e)(3)(i)- 1 addresses determining good faith in providing estimates under § 1026.19(e), including estimates for services for which the consumer cannot shop. Comments 19(e)(3)(iv)-1 through -3 discuss limits and requirements applicable to providing revised estimates for services for which the consumer cannot shop.

2. Examples of charges. Examples of the services and amounts to be disclosed pursuant to § 1026.37(f)(2) might include an appraisal fee, appraisal management company fee, credit report fee, flood determination fee, government funding fee, homeowner’s association certification fee, lender’s attorney fee, tax status research fee, third-party subordination fee, title – closing protection letter fee, title – lender’s title insurance policy, and an upfront mortgage insurance fee, provided that the fee is charged at consummation and is not a prepayment of future premiums over a specific future time period or a payment into an escrow account. Government funding fees include a United States Department of Veterans Affairs or United States Department of Agriculture guarantee fee, or any other fee paid to a government entity as part of a governmental loan program, that is paid at consummation.

What if you want to lump the fees (Credit report, flood and 4506T verification) into section B? Our consumer reporting agency is telling us they will bundle these fees at a cheaper rate and we can just lump as one "Verification Fee" in section B and charge our customer. Just not sure that these fees should not be itemized - any thoughts?

My understanding of the commentary in 38(f) is that the lumping of fees would not be OK (i.e. requiring an itemization of the services and corresponding costs for each service).

It may be a matter of interpretation, but 38(h)(4)-1 is something that leads me further away from lumping fees:

"On the Closing Disclosure the creditor must label the corresponding services and costs disclosed under § 1026.38(f) and (g) using terminology that describes each item"

I need to revisit this. Our consumer reporting agency is doing this and telling us it's ok to show all under Credit Report fee on the CD.
It would make life easier but I don't think it will work if the fees are line itemed on the Loan Estimate.
Thoughts and comments appreciated.

Unless they can provide something in writing naming chapter, verse and page within the regulation I would not accept their word.

From 1026.38(f)

(2) Services borrower did not shop for. Under the subheading “Services Borrower Did Not Shop For” and in the applicable columns as described in paragraph (f) of this section, an itemization of the services and corresponding costs for each of the settlement services required by the creditor for which the consumer did not shop in accordance with § 1026.19(e)(1)(vi)(A) and that are provided by persons other than the creditor or mortgage broker,

(3) Services borrower did shop for. Under the subheading “Services Borrower Did Shop For” and in the applicable column as described in paragraph (f) of this section, an itemization of the services and corresponding costs for each of the settlement services required by the creditor for which the consumer shopped


Unless I have missed something from the CFPB I'm not sure how lumping the credit report fee, flood determination fee, etc. and calling them "verification charges" would meet the itemization requirements.

There was much discussion on bundled or packaged services from the get go of TRID. Title companies, for example, wanted to package their services under one price rather then itemize their services. The CFPB tried to address this in the proposed TRID 2.0 commentary with the following:

"If the charge for a particular service for which the consumer is permitted to shop is payable by the consumer, the creditor must specifically identify that service and an available provider of that service on the written list of providers unless, based on the best information reasonably available to the creditor at the time the disclosure is provided, the creditor knows that the service is provided as part of a package (or combination of settlement services) offered by a single service provider. Specific identification of each service in such a package is not required provided they all are services for which the consumer is permitted to shop."

Notice this was specifically for services for which the consumer could shop. There was no similar proposal for services that the consumer could not shop.

Regardless, this all got rejected in the end and individual services are require to be itemized.

I have a question related to this. If we choose to order verifications through a third party and do not wish to pass the fee onto our borrowers, I know we can opt not to charge them, but are we required to show this fee on the LE and CD and show it as lender paid? For tax transcripts we have been disclosing that fee on the LE and charging it on the CD when we do need to order them, but would like to just increase our processing fee and not itemize the tax transcript fee anymore. Too many issues with disclosing it on the LE not knowing if it would be needed and then having to remember to remove it if they were not ever ordered. I never see the fees itemized on LE's and CD's from other lenders. Neither of those fees the borrower can shop for, we choose and choose when we need to order. Thanks!

If you decide to absorb the tax transcript fee, then you would not place it on the Loan Estimate, but all services have to be disclosed on the CD, so it would be shown as paid by lender.

Read FAQ 3 and 4: https://www.consumerfinance.gov/com...tegrated-disclosure-faqs/#lender-credits