Cutting right to the chase, we charge our applicants a fee up front that is later credited to the borrower at closing. We do not retain the fee as income, it is simply credited towards the closings costs every time. This fee has gone by various names in the past (Origination Fee, Application Fee, Commitment Fee)....but the nature has not changed. In the event that an applicant cancels their application we would refund the fee less any charges incurred already in processing the file. We currently quote this fee on the LE in the Origination charges, then show a lender credit to offset.
I would argue that this is not a fee at all and should not be quoted on the LE as such. For all intents and purposes, this is a deposit or a prepayment of other fees quoted. My preference would be to leave it off the LE completely and possibly include a disclosure in the application documents that explains the fees and details the borrower and lender rights and responsibilities. I could change the name to a "deposit" or "prepayment" if that helps in anyway.
Does anyone have a similar fee or does anyone have an opinion on this matter. Can anyone point me to any regulatory language or other sources that would confirm or deny my assertion?
Thank you for the help,
Eric