[jeffcumbee]

Historically, we have just eaten the charges to overnight payment for a payoff in a mortgage loan transaction. We have been looking at our invoices from the company who does the overnight delivery and have found it is costing us much more than we thought. We are wanting to pass this charge along to our borrowers if we can. Would we show that under section H (Other) on the loan estimate or would we have to show it under B (Services you Cannot Shop For) which would be a 10% item? The kicker is, we don’t know how much this service will cost until we get our invoice the next month. Would we need to disclose our best estimate based on past charges incurred? This would be rather hard to do, as part of the charge is based on mileage. Any suggestions?

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[jholzknecht]

The instructions for completing the LE do not specifically discuss the disclosure of overnight charges.
• Comment 37(f)-1 indicates that loan costs include services that the creditor or mortgage broker require for consummation, such as underwriting, appraisal, and title services.
• Section 1026.37(g)(4)states that the Other Amounts category includes an itemization of any other amounts in connection with the transaction that the consumer is likely to pay or has contracted with a person other than the creditor or loan originator to pay at closing and of which the creditor is aware at the time of issuing the Loan Estimate.

An argument can be made for either location. In my opinion the Services that you cannot shop for is the more logical location for the charge.

Regarding the unpredictability of the amount of the charge, Section 1026.19(f)(3)(ii) allows a creditor to charge a consumer or seller the average charge for a settlement service if the following conditions are satisfied:
(A) The average charge is no more than the average amount paid for that service by or on behalf of all consumers and sellers for a class of transactions;
(B) The creditor or settlement service provider defines the class of transactions based on an appropriate period of time, geographic area, and type of loan;
(C) The creditor or settlement service provider uses the same average charge for every transaction within the defined class; and
(D) The creditor or settlement service provider does not use an average charge:
(1) For any type of insurance;
(2) For any charge based on the loan amount or property value; or
(3) If doing so is otherwise prohibited by law.

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