[Angie Cowell]

We have a verification of employment (VOE) fee that we have been disclosing on the LE & CD although we do not pass this fee on to the borrower. We have been able to use an “other” type of fee in our system and it has worked fine. With the new URLA this creates an issue as “other” type of fee gives us an error when submitting loans to our underwriting engine LPA. The only other option is to indicate this as lender paid which will flow to our lender credit field, which won’t work because that then affects our pricing.

Are we required to disclose the VOE fee on both the LE & CD if we are not passing on to the borrower?

[rcooper]

We got some clarification from the CFPB through TRID FAQs that they released in 2020. I think looking at the Lender Credits FAQs, especially #3, will be helpful to you. Here’s the link to the FAQs: https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/tila-respa-integrated-disclosures/tila-respa-integrated-disclosure-faqs/#lender-credits.

CFPB TRID FAQ Lender Credits #3:
“Is a creditor required to disclose a closing cost and related lender credit on the Loan Estimate if the creditor will absorb the cost?

No. The TRID Rule does not require disclosure of a closing cost and a related lender credit on the Loan Estimate if the creditor incurs a cost, but will not charge the consumer for that cost (i.e., the creditor will “absorb” the cost). In such cases, the absorption of the cost or charge would not “offset” an amount paid by the consumer. However, a creditor must disclose a closing cost and related lender credit on the Loan Estimate if the creditor is offsetting a cost charged to the consumer. Comment 37(g)(6)(ii)-2.

To illustrate, assume a creditor will require an appraisal, credit report, flood determination, title search, and lender’s title insurance policy in connection with a particular mortgage loan transaction. Further assume, that the creditor will incur attorney fees for loan documentation and recording fees in connection with the transaction. If, based on the best information reasonably available, the consumer will only pay an application fee of $500 and the creditor will absorb all other costs, the creditor is not required to disclose the appraisal fee, credit report fee, flood determination fee, title search fee, lender’s title insurance policy premiums, attorney fees for loan documentation, and recording fees on the Loan Estimate. Conversely, if the creditor agrees to provide a lender credit sufficient to offset all of these charges, except the application fee, the creditor must disclose the charges in the Loan Costs table and Other Costs table, as applicable, and include a corresponding total amount in the Lender Credits disclosure on the Loan Estimate.

Alternatively, the TRID Rule does not prohibit creditors from including amounts for costs that the creditor absorbs (i.e., does not charge the consumer) when the creditor is disclosing Lender Credits in the Total Closing Costs section of the Loan Estimate. Note, however, that the restrictions on decreasing lender credits, discussed in TRID Lender Credit Question 10, apply to any amounts the creditor includes in the Lender Credits disclosure on the Loan Estimate.

Updated Feb. 26, 2020“

[Author]

Posts