We have only been charging an origination fee on our loans and management wants to add a "Documentation Fee" AND they want the fee to be a non-finance charge under 1026.4 (c)(7). For banks that are not disclosing their documentation fee as a finance charge on real estate loans, how have you documented it and have you had any issues with examiners?

What is the purpose of the fee - and what costs does it cover?

It is for the preparation and review of loan documents. I propose that it would include the preparation of LE and CD and the review of those documents by our external auditor prior to closing. I do not see where that is prohibited like the HUD statement preparation used to be.

1026.19(f)(5) No fee. No fee may be imposed on any person, as a part of settlement costs or otherwise, by a creditor or by a servicer (as that term is defined under 12 U.S.C. 2605(i)(2)) for the preparation or delivery of the disclosures required under paragraph (f)(1)(i) of this section.

Additionally, charging for the preparation of real estate documents unless you are an attorney may constitute the unauthorized practice of law in many States.

You need to get your legal counsel on board with whatever you decide.

I'd also add that if you do have the opportunity to charge this fee that you document how you derived at the amount.