Situation: The Credit report fee increased and the loan ops department was not made aware of it so the fee has not been increased on the LE's provided. Operations was notified this week that there was an increase. We will do a credit on the CD for all of those going forward. My question is will the institution have to go back and do a restitution credit to all of the loans closed since the increase? (appears the increase came at the first of the year) The borrower wasn't charged. The bank ate the additional fee. (We never thought about having to check each report to see that the fee changed). It will be going forward.

If the bank absorbed the increase in the fee, what restitution would there be?

Not disclosing it correctly on the CD????

If you did not charge the borrower for it, how could you now owe them a refund?

Ok, got it. Thank you!

Two issues here:

(1) Does the bank owe the borrowers a refund of the excess credit bureau fees? No, because the borrowers were not charged for the increased amount; they were charged for the pre-increase amount. The bank "ate" the increase, so no refunds are due.

(2) Is there a technical disclosure violation? Yes, because the borrower is supposed to get a disclosure of all costs, regardless of who pays them. There is no method provided in the regulation to correct the violation.

There are two things you can do to prevent such errors going forward. The first was taken care of when the loan operations staff was updated concerning the cost to be disclosed. The second is to ensure that when the next pricing change for credit report occurs, the loan operations staff (or whoever needs the information for completion of loan estimates and closing disclosures) is "in the loop."