Bank eats escrow waiver fee - disclosed on GFE

Posted By: Valley Girl

Bank eats escrow waiver fee - disclosed on GFE - 11/30/11 04:26 PM

Customer originally applied for loan with escrow. Now customer has changed their mind and wants to waive escrow. There is an escrow waiver fee. Instead of issuing a revised GFE to show the escrow waiver fee; the lender just wants to "eat" the fee.

Is that okay? I originally thought that all fees needed to be disclosed on the GFE regardless of who paid them but then I read one of the FAQs which said that the loan originator must list all required third party services on the GFE and HUD regardless of who paid for it.

Thanks!
Posted By: rlcarey

Re: Bank eats escrow waiver fee - disclosed on GFE - 11/30/11 04:28 PM

Who is the escrow waiver fee going to be paid to?? Is this a fee that the bank pays at the time of the sale into the secondary market?
Posted By: Valley Girl

Re: Bank eats escrow waiver fee - disclosed on GFE - 11/30/11 05:08 PM

I guess the bank will be paid less for the loan if there is no escrow.
Posted By: Truffle Royale

Re: Bank eats escrow waiver fee - disclosed on GFE - 11/30/11 05:13 PM

Then it IS a secondary market fee.
If that's the case, it's not a condition of the loan so it does not have to show on the GFE.
Posted By: Valley Girl

Re: Bank eats escrow waiver fee - disclosed on GFE - 11/30/11 05:37 PM

Okay - thanks!!
Posted By: Dan Persfull

Re: Bank eats escrow waiver fee - disclosed on GFE - 12/01/11 03:09 PM

Originally Posted By: Truffle Royale
Then it IS a secondary market fee.
If that's the case, it's not a condition of the loan so it does not have to show on the GFE.



The borrower either escrows or pays a fee for not doing so. How is that not a condition of the loan?

The fee is being paid to the investor. In this case by the lender.
Posted By: Truffle Royale

Re: Bank eats escrow waiver fee - disclosed on GFE - 12/01/11 04:01 PM

Not necessarily, at least as I understand it, Dan.
The borrower either escrows or not.
Further, not every investor charges a fee for non-escrow.
The fee occurs after closing at the time the loan is sold on secondary.
So wouldn't it be up to the bank to decide if they want to pass on the fee thereby making it a condition of the loan or not?
Posted By: rlcarey

Re: Bank eats escrow waiver fee - disclosed on GFE - 12/01/11 05:55 PM

I'm with T/R on this one. It all depends on whether the bank is trying to recoup this secondary market sale cost. Otherwise, it is just part of the secondary market transaction.
Posted By: Truffle Royale

Re: Bank eats escrow waiver fee - disclosed on GFE - 12/01/11 06:12 PM

whew! Thanks, Randy. smile
Posted By: RulesFollower

Re: Bank eats escrow waiver fee - disclosed on GFE - 12/01/11 06:15 PM

Wouldn't you have a fair lending issue if you passed the charge on to some customers and not others?
Posted By: Truffle Royale

Re: Bank eats escrow waiver fee - disclosed on GFE - 12/01/11 06:20 PM

I don't see how if all investors don't charge it to begin with.
Further, if known at the time of application, it's lumped in with the origination fee so how would anyone even know to raise a fair lending issue?
Posted By: RulesFollower

Re: Bank eats escrow waiver fee - disclosed on GFE - 12/01/11 06:52 PM

But with an investor that DOES charge it, wouldn't it be a fair lending issue if some people with escrows waived paid a fee and others didn't?
Posted By: rlcarey

Re: Bank eats escrow waiver fee - disclosed on GFE - 12/01/11 07:19 PM

Only if is was done based on a prohibited basis.
Posted By: RulesFollower

Re: Bank eats escrow waiver fee - disclosed on GFE - 12/01/11 07:52 PM

Thanks rl, that makes sense.