Settlement fees not listed on LE but charged on CD

If we have an SSPS that lists, say 5 settlement charges which corresponds to the LE but our final CD has 2 additional charges listed AND the settlement agent is NOT on our SSPS do those additional fees fall into the 10% category?

No

That is what I thought. I don't suppose there is anything in the regs that I can send out regarding this?

19(e)(3)(ii) Limited increases permitted for certain charges.

3. For example, if, in the disclosures provided pursuant to §§ 1026.19(e)(1)(i) and 1026.37(f)(3), a creditor discloses an estimated fee for an unaffiliated settlement agent and permits the consumer to shop for that service, but the consumer either does not choose a provider, or chooses a provider identified by the creditor on the written list provided pursuant to § 1026.19(e)(1)(vi)(C), then the estimated settlement agent fee is included with the fees that may, in aggregate, increase by no more than 10 percent for the purposes of § 1026.19(e)(3)(ii). If, however, the consumer chooses a provider that is not on the written list, then good faith is determined according to § 1026.19(e)(3)(iii).

§ 1026.19(e)(3)(iii) Variations permitted for certain charges. An estimate of the following charges is in good faith if it is consistent with the best information reasonably available to the creditor at the time it is disclosed, regardless of whether the amount paid by the consumer exceeds the amount disclosed under paragraph (e)(1)(i) of this section:

(D) Charges paid to third-party service providers selected by the consumer consistent with paragraph (e)(1)(vi)(A) of this section that are not on the list provided pursuant to paragraph (e)(1)(vi)(C) of this section;

THANK YOU!!!

Related to this issue... We issued a LE and the total amount for settlement services is fine, however, we didn't mark the settlement fee as a pre-paid finance charge. The settlement agent is on our list. When we put together the Closing Disclosure, we marked the $395 settlement fee as a finance charge and this increased the APR by more than 1/8% as it was a small loan. So, our closing disclosure is accurate, but the finance charge went up by $395 and the APR went up from 2.99% to 3.219%. The total costs from the 10% tolerance category did not increase to cause a tolerance cure, BUT do I owe my borrower something due to the understated Finance Charge and APR from the LE that was corrected for closing?

No

Another somewhat related situation to this discussion, settlement fee disclosed in Section C of LE, disclosed Shoppable Providers List names a settlement agent (who is selected by the borrower); then at closing, billing invoices identify that the settlement agent engaged another party to complete the service. Is this service then subject to 0, 10 or unlimited tolerance?

Who did you pay?

Randy- can you provide more insight into Hunker's scenario, and the no reimbursement to the customer at closing? We have had this situation occur, and have been told by our audit firm that we do need to provide the reimbursement to the customer. Its for the settlement fee that is charged to the borrower by our settlement agent (who we pay).

They made an error on the LE by not treating the settlement fee as a prepaid. They corrected that problem on the CD and the APR and Finance Charge was correct. Do they have an uncorrectable violation on the LE - sure. Does this trigger any sort of reimbursement to the customer - no. APR and finance charge reimbursements are only based on the figures disclosed on the CD.

I get that- we are being told that we did not "in good faith" accurately report the APR (because the settlement fee was not marked as a PFC), and therefore when comparing the LE to the CD, the APR will be inaccurate and therefore a reimbursement is needed.

You need to find a new audit firm - they are nuts.

So you are telling me that if a LE gets issued at time of application without a fee being included in the finance charges and APR, goes through the process with no one catching it, and then the CD gets prepared, and doing the comparison of the fees (increase), APR (increase) and finance charges (increase), the error is found that all that needs to be done is correct it on the CD?

Yes, because they have the required 3 days before closing that they would get for that same error pre-TRID.

well I just don't know what to say. We have been told that in those cases, we are to provide the customer a credit on the CD for the fee not disclosed in the APR/Finance charges.

What if its discovered post-closing?

The LE is an estimate. Did you make error - yes. Is it a violation - yes. Is it correctable - no.

Have them produce at least one iota of support for their claim that you have to cure this error. They won't find any. This is someone's wacky opinion of the regulations and the regulatory framework of the TRID mortgage disclosure spectrum.

APRs between the issuance of a LE and CD change all the time for a wide variety of reasons.

In response to "who did we pay?"

Disbursement on the CloD notated the service provider on the billing notice.

They selected your listed service provider, the fact that they sublet the service out, I don't think changes the tolerance from 10%. If it causes you a problem, I suggest removing them from your list.