[FCSF2016]

I’m really needing some advice on an issue we are currently facing. Hopefully I can explain the situation.

Due to the stable interest rates we have not been collecting a fee for a rate lock (we don’t lock the rate until just before preparing the CD so there is little risk). With interest rates starting to trend upward some applicants are requesting to lock their rate earlier in the process so we are considering collecting a rate lock fee (with signed written agreement) in case the loan does not close. We are charged a fee from our funding bank if the loan is cancelled or doesn’t close within 45 days of rate lock. The fee is up to 1.25% of loan amount but is credited to the customer at closing (if loan doesn’t close we have the option to retain the fee to offset what we are charged from the funding bank).

I’m struggling with how to disclose the rate lock fee on the LE and CD so that it is not included in the finance charge (we do not do HPML loans) if possible. I’m hoping we can do a specific lender credit for the rate lock fee.
My thoughts:
LE: Show Rate Lock Fee in Section A and show lender credit in Section J to offset fee
CD: Show the Rate Lock Fee amount in the Paid by Others column (paid by lender)

Please let me know if this is not compliant or if there is a better way to do this. Thanks!

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