[timob1973]

We do not require a pest inspection fee per our loan policy. However, from time to time, a purchase contract may indicate that a pest inspection must be completed. Under the old RESPA rules, since we did not require the fee, the fee was permitted to change.

Under the new Integrated Disclosure rules, I know the CFPB has given examples of when a pest inspection fee is required (I’m assuming that the bank is requiring the service) that the bank would need to tell the borrower that the service is shopable and that the bank should provide at least one provider on the shopping provider list (that makes sense). But what if the bank does not require the fee? Do we still need to disclose that the fee is shopable?

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[MCCompliance]

My understanding is if the inspection is known prior to the issuance of the LE, an estimate must be provided. I do not believe a provider needs to be added to the list since it is not required by your bank (but maybe someone will chime in and confirm that).

1026.19(e)(3)(iii) Commentary:
3.Good faith requirement for non-required services chosen by the consumer.
Differences between the amounts of estimated charges for services not required by the creditor disclosed pursuant to § 1026.19(e)(1)(i) and the amounts of such charges paid by or imposed on the consumer do not constitute a lack of good faith, so long as the original estimated charge, or lack of an estimated charge for a particular service, was based on the best information reasonably available to the creditor at the time the disclosure was provided. For example, if the consumer informs the creditor that the consumer will obtain a type of inspection not required by the creditor, the creditor must include the charge for that item in the disclosures provided pursuant to § 1026.19(e)(1)(i), but the actual amount of the inspection fee need not be compared to the original estimate for the inspection fee to perform the good faith analysis required by § 1026.19(e)(3)(iii). The original estimated charge, or lack of an estimated charge for a particular service, complies with § 1026.19(e)(3)(iii) if it is made based on the best information reasonably available to the creditor at the time that the estimate was provided. But, for example, if the subject property is located in a jurisdiction where consumers are customarily represented at closing by their own attorney, even though it is not a requirement, and the creditor fails to include a fee for the consumer’s attorney, or includes an unreasonably low estimate for such fee, on the original estimates provided pursuant to § 1026.19(e)(1)(i), then the creditor’s failure to disclose, or under-estimation, does not comply with § 1026.19(e)(3)(iii).

[timob1973]

Thanks for the response MCCompliance! Let me ask you this, the commentary seems to indicate that if the bank knows about a particular practice, we should list the fee on the LE. If we list the fee on the LE, would we list it in section H (page 2) and it would still be a charge that can change since we don’t require the service?

[MCCompliance]

That’s correct, 1026.37(g)(4) will have you put the fee in section H and it will have no tolerance limitations since it is not a required service.

[rcooper]

I agree with MCCompliance.

As for where to place a non-lender required fee on the loan estimate look to Comment 1026.37(g)(4)-4 (this would be section H of the form as you referenced):

Examples of other items that are disclosed under § 1026.37(g)(4) if the creditor is aware of those items when it issues the Loan Estimate include commissions of real estate brokers or agents, additional payments to the seller to purchase personal property pursuant to the property contract, homeowner’s association and condominium charges associated with the transfer of ownership, and fees for inspections not required by the creditor but paid by the consumer pursuant to the property contract. Although the consumer is obligated for these costs, they are not imposed upon the consumer by the creditor or loan originator. Therefore, they are not disclosed with the parenthetical description “(optional)” at the end of the label for the item, and they are disclosed pursuant to § 1026.37(g) rather than § 1026.37(f). Even if such items are not required to be disclosed on the Loan Estimate under § 1026.37(g)(4), however, they may be required to be disclosed on the Closing Disclosure pursuant to § 1026.38. Comment 19(e)(3)(iii)-3 discusses application of the good faith requirement for services chosen by the consumer that are not required by the creditor.

[timob1973]

Thanks everyone!!!!!

[Author]

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