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#2255904 - 06/24/21 04:16 PM Lender Credits vs Absorbed Costs
StonewallBanks Offline
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Joined: Apr 2021
Posts: 9
I am having some issues figuring out how we should be disclosing appraisal fees on the LE and CD when we don't charge the customers.

For one region of our bank, all appraisals are done by third-party appraisers and our lending department is arguing that they do not need to disclose these costs on the LE because we do not charge the customer. They are citing the FAQs from the CFPB found here: https://www.consumerfinance.gov/com...tegrated-disclosure-faqs/#lender-credits
In question 3 it appears to state that if the creditor absorbs the cost, then they do not need to disclose certain fees. However immediately following that it states that if the creditor agrees to provide a lender credit sufficient to offset all of these charges then they need to disclose it on the LE. Meanwhile in question 4 it states that all of these charges need to be disclosed.

Additionally, would it make a difference whether the appraisals are done by a third-party or by a department of the bank?

Any help on this would be appreciated. Thanks.

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Lending Compliance
#2255905 - 06/24/21 04:19 PM Re: Lender Credits vs Absorbed Costs StonewallBanks
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,225
Galveston, TX
If you are absorbing the fee, then you would not include it on the LE. However, all third party fees, no matter who pays for them have to be on the CD.

Why would there be a fee if completed in-house?
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#2255907 - 06/24/21 04:36 PM Re: Lender Credits vs Absorbed Costs StonewallBanks
StonewallBanks Offline
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Joined: Apr 2021
Posts: 9
So, is the main difference for the LE whether or not the customer ever has to pay the appraisal fee? What exactly qualifies as the creditor absorbing the cost versus providing a lender credit to offset the charge when they would both show up the same on the CD?

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#2255908 - 06/24/21 04:40 PM Re: Lender Credits vs Absorbed Costs StonewallBanks
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,225
Galveston, TX
Well, if you show them paying the appraisal fee on the LE for $500 and you give them a $500 lender credit and the appraisal actually comes in at $450, then you are stuck with the $500 lender credit. Otherwise - nothing .
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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