[belandis]

We recently acquired another bank and they do things differently than we, the purchasing bank, do.
With most ATR/QM loans, and especially with secondary market loans, there is a requirement to do a verbal Verification of Employment (VOE) prior to close and in the cases of borrowers with a job time of less that two years, a verification with the prior employer is required. Some employers will verify directly and others verify only by Work Number, etc., for which there is a fee.
It’s been our practice to disclose the costs of these potential VOE fees on the LE. While we do not know for sure it will be charged in all cases, we do know there is a chance it will be applicable. If they don’t, then good news for our customer at closing. And, if we underestimate the fees, we absorb the cost via a cure tolerance on the CD.
Our new staff does not do this and instead treats these fees as changed circumstances when they arise. I don’t think this rises to the level of “Changed Circumstances”.

So, the question is can/should these be treated as “Changed Circumstances” or simply disclosed on the LE upfront as potential charges?

Thank you.

[rcooper]

I believe it could be considered a changed circumstance (new information) if you didn’t know the fee would be charged. On the other hand, as long as you are disclosing the fee in good faith (it will or is likely to be charged as part of that transaction) I think your approach of disclosing it on the LE is acceptable.

With that said, you should be consistent. If you have a policy of consistently disclosing the fee (on applicable loans) but accidentally omit it from one LE it could appear it was intentionally omitted (unless it a reason was documented as to why it wouldn’t be charged then you became aware that it would) and in which case I think it would be difficult to argue that it was a changed circumstance (since you disclose it in every other case).

[belandis]

Thank you for your prompt reply.

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