In the past we charged a flat Origination Charge and did not show credit report fees, but now we have the show the credit report fee and I believe it will show as a Lender Credit. What I want to confirm is my listing on this charge. I think it should be "Services you Cannot Shop For", but I don't know then what the Charge type should be?

"Prepaid Finance Charge / Loan Fees"
"Security Interest Charge to Others"
"Charge excluded from TIL"

There have been numerous recent discussions and contact with the CFPB on this issue. If you are absorbing the cost of the credit report and the applicant will not be legally responsible for payment, it doesn't go on either the LE or CloD.

Ok thank you, where can I go to find one discussion so I can document then why I am not going to do it?

I still think there is some confusion on whether or not you show it on the CD. See the posts from John and Kathleen in the referenced thread. FWIW when I spoke with a CFPB staff attorney (many months back) they confirmed you would not show it on the LE, but would show it in the "paid by others column" and the lender credit section of the CD. There is obviously no true consensus out there on this issue and one is able to make a case for a number of different methods (e.g., show nothing on LE or CD, show it on both LE and CD, don't show it on LE but show it on CD).

In my discussion with the CFPB, they stated that when the lender is ABSORBING the cost as a cost of doing business, there is no charge at all to be disclosed. The charge is absorbed just like the bank pays salaries, mortgages and rent on real estate it owns, postage, phone lines, etc. It is a cost of doing business and not part of the transaction at all.

Therefore, it is off the table for purposes of the LE and Closing Disclosure.

This only works if the bank said "we will not charge you for the credit report, the appraisal, whatever else specific fees".

It does not work if the bank said "we will give you a credit of $500 for closing fees". It has to be specific fees being absorbed.

Then if for some reason, the bank agrees to later pay another specific fee, it will be on the closing disclosure as lender paid.

I know there's tons of nuances to consider when trying to write these rules, but I feel like I'm back on the playground playing a game where the one bossy kid just makes up rules as we go.

Am I the bossy kid? Or the CFPB?

As I said to them "I like your answer, but am surprised at your answer"!

What is not surprising...how we have all received different answers

But apparently there is now consistency in answers. I received the same answer that Jerod received and that is the same answer that has been given to other firms and to state bankers associations.

I don't know what question you might have asked to receive a different answer. I only know what I asked, which was - with examples - can the bank absorb fees such as credit report fees, appraisal fees, etc. as a cost of doing business and if that is the case, can those fees then not be disclosed to the customer...and is that based on how you are defining "will pay" and "legal obligation".

And the answer was as I stated above.

Mine was posed in the same manner referencing 1026.37(f)(2) and the "consumer will pay" language and what their interpretation of this was. When we began discussing the CD that is where it differed from the interpretation you received. My discussion was eight months ago.

I just don't see how, if the charge is off the table totally as absorbed by the bank, it can then be brought in on the CD. It is not part of the transaction.

I might just contact them again.

When I spoke with them this week, they did say they could see situations with other fees where the CD will include specific and general credits....but not these fees that the bank is absorbing "as a cost of doing business".

I've got my crystal ball and time machine out and revved up.

I predict that, five years from now, the industry will be at least as confused about these rules as they are now about HUD's RESPA rules (issued five years ago). And strangely, a lot of the head-scratching is over some of the same issues.

I also predict that five years from now, when I am (hopefully) 74 years old, I won't give a *&^%$ about it.

Kathleen I was definitely not calling you the bossy kid

I've always appreciated your help and opinion in these gray areas.

I wanted to see if there was any more recent thoughts on this or see if my situation is different. For one of our loan programs, the investor requires a pest inspection but the borrower cannot be charged for it. Normally the seller does but in this case, the bank is paying for it. Does this go on the LE and the CD?