We are doing two separate loans for a customer. The secondary market lender is doing the large loan and we are doing a small home equity loan. Both loans are closed-end subject to TRID. The secondary market lender is ordering the appraisal, lien search, and credit report. They disclosed those fees on their Loan Estimate, and so on.

We also need those 3 items, but we will not order them again. We will rely on the appraisal, lien search, and credit report the secondary market lender already ordered. I believe we don't have to disclose those 3 items in our disclosures. While it is a required service, there is no additional charge for the customer. Loan Costs (Section A, B, C) are those costs paid by the consumer to the creditor and third-party providers of services the creditor requires to be obtained by the consumer, generally during the origination of the loan. (§ 1026.37(f)). Based on this description, it doesn’t seem we have to disclose. We are just using the items already ordered by someone else and already disclosed to the customer.

While it is not the exact same scenario as the simultaneous closing addressed in the amendments, it is a similar situation. I am thinking if the applicant is not going to be legally responsible to pay the fees, I can omit them from the LE or CD.

Is that the correct analysis?

Thank you.

If a cost is attributable to the junior-lien loan, it should appear on the disclosures for that loan. But if the bank is not using a separate appraisal, lien search and credit report (a most sensible decision, by the way), there is no cost to disclose, as you have already reasoned. What you will include on the CloD for the junior loan is the recording fee for the mortgage securing that loan and any other costs specifically for that loan. You'll treat it the same as, or very much like, the treatment suggested in TRID 2.0 rules for simultaneous secondary loans. Show the proceeds of the junior loan in a payoffs and payments schedule so that it reduces the Cash due from borrower at closing to the amount of closing costs for the junior loan. Then show the proceeds of the junior loan as a credit to the borrower on the CloD for the first-lien transaction.

Thank you John