During an audit, I found that the bank is not selecting Title - Commitment as a prepaid finance charge. However, my understanding was that this fee is a PPFC and I've seen it noted as such on FC charts. The compliance officer pointed to the CFPB's Finance Charge chart, which says that a fee can be excluded if it is a charge from the closing agent that is not required by the bank.

Is the Title - Commitment Fee a PPFC? If yes, I would appreciate any insight into why it is a finance charge.

I understand it would not be present in a comparable cash transaction, but other than that, I'm struggling to tie it back to a specific cite.

The very first thing you have to do is define what a commitment fee is for and how does it compare to 1026.4. The name of a fee is meaningless in making this determination. A fee name means different things to different people and there also may be geographical differences, since title insurance is a State law issue.

Assume that the "Title - Commitment" fee is related to a document that discloses liens, defects, and burdens that affect the property and all the requirements that must be met before the title can be insured. In my opinion, this would not be considered a finance charge per 1026.4(c)(7)(i) since it is related to title insurance. Is that accurate?

Note: I haven't heard back yet from the loan department on what this title - commitment fee actually was, so I'm using the definition I'm most familiar with.

Another piece I'm struggling with is that the CO said the bank doesn't require the fee. However, it is listed in Section B - Services You Did Not Shop for, which itemizes fees required by the lender (per 1026.38(f)(2)) and it is listed on the Written List of Service Providers. Wouldn't that imply that the fee is required by the extension that we are requiring them to use a title company?

Again, any insight is appreciated!

I do not understand, the fee is listed in Section B, which are required services for which the borrower cannot shop and then you also provided a Written Service Provider List? You do that for fees in Section C and not B,

What do they mean they do not require the fee? If it is not required by the lender, it is not a condition of the sales agreement or is not voluntarily obtained by the borrower, what is it doing on the Loan Estimate?