In our loans for a property in an HOA, we know we have to have a questionnaire done, but there are times where the HOA will complete the questionnaire with no charge. Since this questionnaire is always done on a property in an HOA, but the fee always varies or isn't charged at all, would it be out of compliance if we did not disclose upfront until we knew if the HOA was going to charge or what they would charge if they do?

It is going to based on a number of good faith factors that you would have to defend.

1. Do you know or suspect that the property is in a HOA on a given transaction based on either the information at hand or the knowledge of the area?
2. If you do, then is failing to provide an estimated cost, when you know that there is a chance that there will be a charge actually in good faith?

I agree with Randy. Better to disclose a best estimate of the potential cost and not have to actually charge it on the CloD than to eat the cost because you omitted it when you know that it's often charged. It is always better to have a positive surprise at the closing table, even for minor amounts.

We did end up paying the fee and have enacted a policy to disclose an average amount of what we were able to see through pulling reports on Condo loans. Thank you, gents!

If we disclose that fee, but then the HOA ends up charging us more than our estimate, is that considered a changed circumstance such that we can increase that fee? Or would the lender absorb the difference?

What changes occurred besides the amount of the fee? A change in a fee amount alone is never a changed circumstance.

It was just the amount of the fee - when the processor requested the evidence of insurance from the HOA, they gave a higher amount than our estimate. So, lender will absorb the difference.

Thank you!!

Someone should be checking the prices before the LE is provided. If the bank knows there is a fee, it can make a call to find out what it is.