I was informed yesterday that FNMA is now charging a 25bp fee for any mortgage sold to them. We sell some mortgages to Countrywide who is then passing the FNMA fee on to us by reducing the amount they pay us for the sale.

My question regards disclosure of the FNMA fee on the GFE and HUD. My mortgage people are arguing that it does not have to be disclosed as we are not passing on the charge directly to our customer. Rather we are increasing our mortgage interest rate to maintain our usual income. I think this is an interesting argument as we certainly have the right to set the price at any level we choose. However, it seems to me that this scenario is very similar to a no cost loan where the rate is increased to cover the cost of the absorbed fees. And if it is the same as a no cost, then it is clear that the fee should be disclosed as a POC to FNMA.

Any thoughts would be greatly appreciated.

This is part of the secondary transaction and falls outside of RESPA.

Thanks for the response. I don't necessarily disagree with you, but I am struggling with HUD's guidance to the Massachusetts Bankers Association in 2000. Specifically:

Question 10. If a loan is to be sold by the bank after the closing, are costs associated with this sale but paid by the borrower at closing listed as "P.O.C."? (Services will not be performed until after the closing).

Answer: See answer to Question #4. Items that are either required by the lender to close the loan or items that are payable at the closing must be disclosed on the Good Faith Estimate and HUD-1 or HUD-1A. (See Instructions). Under the situation described above, the item should not be disclosed as a "P.O.C." item since it is a charge that the consumer is paying for at closing. The name of the person or firm ultimately receiving the payment should be disclosed. (Example: "Payment to [lender] for [XYZ] Servicer.") (See Instructions).

I'm sure you have this memorized by now, but for anyone else here is a link to the FIL .

Look to 3500.5(b)(7). This fee is being charged to you by the investor. If you do not pass it to the borrower then it is not part of the Federally Related Mortgage Loan transaction. It is part of the Secondary Market Transaction.

The delivery fee is part of your pricing from the investor. Your products should be priced based on what it costs you to deliver the product.

Just to resurrect an old thread:

Our bank charges its borrowers the current FNMA fees regardless if we sell the loan to FNMA, another investor, or keep it in portfolio. Basically, we don't necessarily know prior to or at origination if the loan will be sold. As with all things, it depends on the best secondary market prices at a given point in time.

How should this fee be disclosed on the HUD-1? Should it be indicated as "POC to Bank" or "POC to FNMA?" Isn't it misleading to say "POC to FNMA" if that loan is never sold to FNMA? Is there a better way that we should be handling this?

Please help. Thanks!