I was wondering if there has been any recent guidance on this or what everyones stance on this topic is now. I know that early on in the TRID rules there seemed to be an understanding that fees a customer would not pay should not be disclosed on the Loan Estimate. That stance seems to come from verbal statements by the BCFP as explained in this thread: https://www.bankersonline.com/forum/ubbthreads.php/topics/2037904/1

However, the preamble (as quoted by rlcarey in the referenced thread) implies that fees should be disclosed on the LE:
To merely ignore services that are
most likely going to be obtained if a creditor intends to pay for the service would be an
unreliable standard for a consumer. Information regarding the services for which the consumer
will be likely to pay, either directly or through a higher interest rate, may be useful to consumers
when comparison shopping or understanding the nature of the mortgage loan transaction.

So, do all of you think that fees that will be paid by the lender should not go on the LE, or should they be disclosed with a related lender credit?

Not being a lender myself, I can only relay what I was told by an attorney at the Bureau when I posed a question about reducing the lender credit when a disclosed cost to be absorbed by the lender was reduced (I had used the appraisal as that cost).

The attorney told me that when the creditor has committed to waiving its fees and absorbing third party costs like the credit report and appraisal fee, the credit has the option of including those costs and a lender credit in the loan estimate or omitting the costs altogether. I had, in my question, included a reference to the prefatory text Randy cited about omitting the costs might not provide the consumer with the best comparative costs for shopping for the loan. But he pointed out that neither the regulation text nor the commentary reflect that prefatory remark in the Federal Register, and the regulation itself says the LE needs to include the costs the consumer will likely pay or be responsible for.

John thank you. Now I am curious to know what the attorney told you about your question about reducing the lender credit when a disclosed cost to be absorbed by the lender was reduced?

If you disclose a lender credit it cannot be reduced unless the credit is dependent on the interest rate.

(D) Interest rate dependent charges. The points or lender credits change because the interest rate was not locked when the disclosures required under paragraph (e)(1)(i) of this section were provided. No later than three business days after the date the interest rate is locked, the creditor shall provide a revised version of the disclosures required under paragraph (e)(1)(i) of this section to the consumer with the revised interest rate, the points disclosed pursuant to § 1026.37(f)(1), lender credits, and any other interest rate dependent charges and terms.


We just recently started a no cost program. We do not disclose any costs on the LE other than those the borrower will have to pay such as insurance, taxes or the initial escrow deposit.

The CFPB continued to muddy the waters on this issue by their failure at address this in TRID 2.0, although they were requested to do so.

They specifically clarified that the creditor had the option, when a specific borrower cost was agreed to be paid by a seller that the creditor had the option on the LE of either, 1) reflecting the fee as paid by the borrower with a seller credit, or 2) omit the charge from the LE. The CD would then show the fee as paid by seller in either case.

I am really not sure why that same philosophy would not carry over to lender paid fees. That also seems to correspond to the answer received by John.

For those who haven't had the pleasure of contacting the Bureau with a regulatory question and getting a call (or, in rare cases, an email) with a response, the first thing from the Bureau representative in that conversation is a statement that the call can't be recorded and the name of the representative is not to be shared with others.

If I want to continue to have access to the Bureau and its spokespeople, I have to honor those conditions.

The Bureau did say, however, in the prefatory text accompanying both TRID 1.0 and TRID 2.0 at publication, "With respect to whether a changed circumstance or borrower-requested change can apply to the revision of lender credits, the Bureau believes that a changed circumstance or borrower-requested change can decrease such credits, provided that all of the requirements of § 1026.19(e)(3)(iv) ... are satisfied."

In other words, the specific example of a rate-connected lender credit in §1026.19(e)(iv)(D) Interest rate dependent charges and its commentary, is not the only set of circumstances that might permit a reduction in lender credits. It is simply the only example in the regulation.

However, the lender must be very careful to document that, for example, the lender credits were specifically to offset designated closing costs, that one or more of those closing costs was legitimately reduced by the service provider after the loan estimate was provided, that the change in price resulted from a borrower-requested change as permitted in 1026.19(e)(3)(iv)(C) or a changed circumstance as permitted under 1026.19(e)(3)(iv)(A) or (B) and that a timely revised loan estimate or closing disclosure was provided under 1026.19(e)(4).

I am not necessarily dealing with a No Cost Loan but more of an issue of not charging the customer for a credit report, appraisal, and title work because all those items were charged for a secondary market loan that we are doing for the customer.

So, do we simply leave those fees off of the loan estimate and closing disclosure or do we show them on the LE and indicate POC on CD? Again, these 3 fees are not even associated with this transaction.

If the costs are not associated with this loan because those services were not required, why would they show any where? I assume this a portfolio second on a purchase transaction.

I believe the customers are wanting to pay down on some credit card debit rather than rolling all of the credit card debit into the secondary market loan (which is a refinance). So, since the credit report, appraisal and title work was all done for the secondary market loan we are not wanting to charge for appraisal, title work and credit report.

To me, the POC would only come into play when the fees needed to be disclosed on the LE, because they were going to be charged, and then the customer/lender/whoever decides to pay for them prior or outside of loan.

Does the regulation spell this type of situation out anywhere?

If the services have already been performed and paid for and you don't need new ones for this loan, then you don't list them. It would be like you require a survey, but they have one that is acceptable from three years ago - you don't put the cost they paid three years ago on the loan at hand.

That's what I thought but our lending department wanted to make sure by doing this wouldn't cause Fair Lending issues.

Does the Reg spell this out anywhere? Or does the Integrated Disclosure Guide talk about this topic?

If you are not requiring the services for the consummation of this transaction, then they are not disclosed.

Official Interpretation

37(f) Closing cost details; loan costs.

1. General description. The items disclosed under § 1026.37(f) include services that the creditor or mortgage broker require for consummation, such as underwriting, appraisal, and title services.

The CFPB released an FAQ that covers this issue today. It is in line with what was already discussed on this thread, but does provide a little more formal clarification directly from the agency. https://www.consumerfinance.gov/pol...e/tila-respa-integrated-disclosure-faqs/

3. Is a creditor required to disclose a closing cost and a related lender credit on the Loan Estimate if the creditor will absorb the cost?

No. The TRID Rule does not require disclosure of a closing cost and a related lender credit on the Loan Estimate if the creditor incurs a cost, but will not charge the consumer for that cost (i.e., the creditor will “absorb” the cost). In such cases, the absorption of the cost or charge would not “offset” an amount paid by the consumer. However, a creditor must disclose a closing cost and related lender credit on the Loan Estimate if the creditor is offsetting a cost charged to the consumer. Comment 37(g)(6)(ii)-2.

This is actual freakin' fantastic news from the CFPB. It finals clears up all the controversy they created in the preamble to the original regulations.

Bravo for them

Amen, about time.