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#2267605 - 03/14/22 04:48 PM HELOC 3rd party fees on initial disclosure
FSLICBanker Offline
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North Carolina
Even after reading prior threads on this subject, I’m still confused. Thanks in advance for assistance and comment.

Situation: HELOC initial account opening disclosures required by 1026.40(d)(8) provided to applicant only state $500 appraisal fee but the regulation, noted below, appears to indicate that attorney and recording fees be either itemized or lumped summed into a range of fees. If all attorney and recording fees are required to be disclosed on the initial HELOC disclosure, is it easiest to simply note” Third party fees may range between $1200 - $2000” along with a statement that the itemization of such fees may be provided?

Reg - 1026.40(d)(8)Fees imposed by third parties to open a plan. "A good faith estimate, stated as a single dollar amount or range, of any fees that may be imposed by persons other than the creditor to open the plan, as well as a statement that the consumer may receive, upon request, a good faith itemization of such fees. In lieu of the statement, the itemization of such fees may be provided."

Commentary: " Fees to be disclosed include appraisal, credit report, government agency, and attorneys fees."

Sample bank representative charges for one HELOC: Closing fee - $395; Title search - $100; title binder - $150; CPL - $35; title insurance premium - $180; and mortgage recording fee - $30. Total = $890.00.

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#2267608 - 03/14/22 05:09 PM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
rlcarey Online
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rlcarey
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Galveston, TX
I am confused and not sure what your question might be. The early HELOC disclosure under 1026.40 may contain estimates and you may use ranges. Your initial HELOC disclosure under 1026.6 has to itemize fees and be exact.
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#2267612 - 03/14/22 06:23 PM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
FSLICBanker Offline
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Sorry RLC. The initial HELOC disclosure provided at the time of application only disclosed one possible third-party fee (e.g. Appraisal -$500). However, attorney fees (closing, title search, etc) associated with all bank HELOCs are typically $800- $1000. Should the attorney fees such as closing, title search, etc be disclosed on the initial HELOC disclosure either as a lump sum or itemized or are they somehow excluded from third party fees that need to be disclosed in the initial HELOC application disclosures? Ditto for recording fees? Thanks.

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#2267624 - 03/14/22 07:43 PM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
rlcarey Online
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rlcarey
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Galveston, TX
All fees to open the account must disclosed, whether charged by the lender or a third party.

Third party fees may be lumped together or separately itemized. If lumped together, you have to tell them you will provide an itemization on request.
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#2270266 - 05/10/22 05:08 PM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
tryin2comply Offline
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To carry on this thread...I've recently been asked if we can add a sentence about a maximum the bank will pay on appraisals. Historically, the bank has paid all closing costs. But the appraisal costs are becoming higher and higher. To offset that, the head of lending has asked about placing a cap on what we we will pay. Example: Bank will pay up to $XXX for the appraisal and/or appraisal review fees. If the appraisal and/or appraisal review are in excess of $XXX, the borrower(s) will be responsible for the excess amount.

This isn't a "range" but does tell that the borrower will be responsible for in excess of $X. Would this work? Or does it have to be listed as the cost of the appraisal range?

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#2270270 - 05/10/22 05:57 PM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
rlcarey Online
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rlcarey
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You would have to give them an estimated cost that they would be responsible for, regardless of how much the bank will pay. If you are advertising a no closing costs HELOC, that is going to make that advertising a UDAAP.
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#2270272 - 05/10/22 06:00 PM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
tryin2comply Offline
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Thanks! I wanted to make sure I was thinking about this correctly.

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#2277199 - 10/27/22 04:56 PM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
bcompliance Offline
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Our bank pays up to $400 on the appraisal and covers title and recording fees. All fees are disclosed on the application disclosure with an estimated range. On the Note, it says "you agree to pay all security interest charges related to your credit line as set forth below:" and then it goes on to list those fees and gives a total. We are listing the fees paid by the bank here (Ex. Recording Fee - paid by lender $XX) and those fees are listed in the total. Should we be listing the fees paid by the bank there since the borrower is not paying them?
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#2277214 - 10/27/22 06:12 PM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
rlcarey Online
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rlcarey
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First of all, let me guess - LaserPro - correct. That has been screwed up for almost 20 years now, I think.

There is no requirement under 1026.6(a) to disclose costs paid by the lender on a HELOC.
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#2277217 - 10/27/22 06:14 PM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
bcompliance Offline
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LOL, bingo! I know there are issues with all vendors, but man do I feel like we pick all of the worst ones.
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#2278590 - 12/08/22 12:24 AM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
Mel in WA Offline
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Even though we are not required to itemize costs paid by the lender on a HELOC (1026.6(a)), would it be an issue if you want to list them? Our retail/marketing director wants to show the borrower all the stuff we are paying for them in order to close the loan.

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#2278593 - 12/08/22 02:32 PM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
Inherent_Risk Offline
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Why would that be an issue?

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#2278600 - 12/08/22 03:41 PM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
Mel in WA Offline
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It's not a TRID loan, so I'm hesitant to make if more complicated (and prone to error) by doing TRID things.

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#2278603 - 12/08/22 05:24 PM Re: HELOC 3rd party fees on initial disclosure FSLICBanker
rlcarey Online
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rlcarey
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Galveston, TX
It really comes down to a business decision and whether your doc prep system is capable of handling it accurately and efficiently.
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#2278643 - 12/09/22 04:21 PM Re: HELOC 3rd party fees on initial disclosure rlcarey
Mel in WA Offline
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Thanks everyone!

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