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#2197569 - 11/07/18 11:21 AM Option Fee on final Closing disclosure
jmancha Offline
New Poster

Registered: 06/25/07
Posts: 20
Loc: Tx
Good morning!

I am working on a closing of a land purchase. The title company is telling me they WILL NOT allow the option fee to be included with the Deposit in section L. of the CD. They are telling me that this violates their disclosure requirement and that all other banks show the option fee as a separate item in the Other Credits Section.

Am I misunderstanding the rule (see clip below)? Can anyone else weigh in on their current practice or any argument I can make with the title company?

LE:

§1026.37(h)(1) (iv) Deposit. (A) In a purchase transaction as defined in paragraph (a)(9)(i) of this section, the amount that is paid to the seller or held in trust or escrow by an attorney or other party under the terms of the agreement for the sale of the property, disclosed as a negative number, labeled “Deposit”;

CD:

§1026.38(j)(2) Itemization of amounts already paid by or on behalf of borrower.

(ii) Any amount that is paid to the seller or held in trust or escrow by an attorney or other party under the terms of the agreement for the sale of the property, labeled “Deposit”;

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TRID - TILA/RESPA Integrated Disclosures Rule
#2197581 - 11/07/18 11:37 AM Re: Option Fee on final Closing disclosure [Re: jmancha]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 68045
Loc: Galveston, TX
There is only one rule that applies to the CD - Regulation Z, of which it is the lender's sole responsibility to comply. Tell them to mind their own business. Any State disclosures that are required to be delivered by a title company should be delivered under separate cover and have nothing to do with your disclosure responsibilities under the regulation.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2198205 - Yesterday at 01:32 PM Re: Option Fee on final Closing disclosure [Re: jmancha]
jmancha Offline
New Poster

Registered: 06/25/07
Posts: 20
Loc: Tx
Update to my initial post (and thank you rlcarey for your response!),

I spoke with a representative over at the CFPB about the option fee and how it should be disclosed. After some research he determined that the rule does instruct us to include the option fee in the deposit BUT that this might not necessarily be the correct location for the item and the option fee was not considered when writing this section of the rule. He mentioned that he felt placing the option fee in the other credits section would be acceptable and he did not feel it would create any violation. He also said he would put this in the "suggestions box" so maybe one day there will be a comment in the rule that addresses the option fee.

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