Our risk management officer said that we have not been including the settlement agent closing fee in the prepaid finance charge calculation because 'we say we do not require that particular service'. When conducting a TRID review of 2018 loans, I saw a settlement agent listed on every purchase transaction. Is it safe to assume that an examiner would make the assumption that that is a required service? That is how it appears to me.

Official Interpretation
If you don't require the use of a closing agent, that means you close loans in-house and that this is basically an optional use by the borrower. You most likely have a problem.

4(a)(2) Special Rule; Closing Agent Charges

2. Required closing agent. If the creditor requires the use of a closing agent, fees charged by the closing agent are included in the finance charge only if the creditor requires the particular service, requires the imposition of the charge, or retains a portion of the charge. Fees charged by a third-party closing agent may be otherwise excluded from the finance charge under §1026.4. For example, a fee that would be paid in a comparable cash transaction may be excluded under §1026.4(a). A charge for conducting or attending a closing is a finance charge and may be excluded only if the charge is included in and is incidental to a lump-sum fee excluded under §1026.4(c)(7).

Thank you, Randy. I'm getting the old excuse: 'We've never been written up for this before' (even though we haven't had a Compliance exam since 2016) and I needed some verification. I appreciate the help.

One of the biggest restitution-related refunds I've ever required be done were for this exact issue [at several institutions]...a charge for closing a loan. Not to be confused with title-related required services. If it's an itemized charge to attend/conduct, then it is a ppfc.