Repulling Credit Report for Secondary Market

Good morning everyone. I have something I want to run by everyone to see how others are handling this.

For our secondary market loans we of course pull a credit report for the loan initially to be able to evaluate the credit application. However, in some cases, not always, the investor requires that we re-pull the customer's credit report right before closing.

Here is my question. How should we be disclosing this on our Loan Estimate? Do we go ahead and disclose the cost for 2 credit reports and then if the 2nd one isn't required we can put just 1 cost on the closing disclosure?

And if we typically collect the credit report cost upfront and we collect the cost for 2 reports. But only end up needing one report. Would I disclose this as a Lender Credit on the bottom of page 2 of the Closing Disclosure?

I hope this makes sense.

Collecting two fees upfront is going to be a problem.


1026.19(e)(2)(i)(B) Exception to fee restriction. A creditor or other person may impose a bona fide and reasonable fee for obtaining the consumer's credit report before the consumer has received the disclosures required under paragraph (e)(1)(i) of this section.

Let me make a clarification. I shouldn't have used the word upfront. This is collected after the early disclosures and intent to proceeds has been returned by the customers.

Thanks for catching that Randy.

We sell everything on secondary and do a soft credit pull within five days prior to closing on all our loans. Not only does it satisfy the investors that want a second pull, it has saved us on any number of occasions where the applicant has run up credit after loan approval that affects the underwriting. So we include the cost of the soft with the estimate for the original cbr on the LE.

If you're issuing the LE in a float rate environment, I think you can justify including the soft pull cost on the LE. You can collect for the original cbr at time of receiving intent. Then, if the borrower doesn't lock with an investor that requires the soft pull, you just leave it off the CD.

If you're locking at time of issuing LE, then you should know that the second pull cost must show.

I'm not sure I would want to have to justify the second pull being a cost of locking the rate with an examiner so that would be my last option choice if I were in your situation, NSF.

Thanks Truffle. This helps me a lot.

Would you list the fees separately on the LE or combine the 2 fees as one "Credit Report Fee"?

We list them as one because pulling the soft second is only an option as a tag along to the original pull.