Does TRID require the lender to disclose a fee for a separate review of the P+S contract by the clos
We march forward to October 3rd, 2015. Hope to help out again this week on another issue related to mortgage compliance.
So the question is this ... Where/how do I disclose on the TRID disclosures a fee that the closing attorney charges to review the Purchase + Sale Contract?
But perhaps it is more helpful to expand that question: What charges are disclosed in Section H. of the Loan Estimate (if known) and the Closing Disclosure? Does this include a P+S review?
Let's take a look.
General Rule
A fee will fall into Section H. if it meets the following criteria:**
It does not already go anywhere else on the LE/CD
It is not paid to the creditor or mortgage broker
It is required or just obtained in connection with the real estate closing
**Note the difference between the LE and CD here. If a Section H. charge is not known at the time you disclose the LE, it does not need to be disclosed. However, the CD, which will always be accurate - must include all fees, including these.
Examples
What are some easy examples of this?
Real estate broker commissions
Owner's title policy
Home inspection
Pest inspection
Note: Some of this fit into Section H. only because they are not required by the lender. For example, on a VA loan, the lender will require a pest inspection. In this case, it must fall into Section B. or C. as a settlement service that is "required" by the lender. Where such charges are not required, but are nonetheless voluntarily obtained, the fee will be disclosed in Section H.
Attorney Charge for P+S Review
So let's look at a specific example: a separate charge by the closing attorney to review the borrower's Purchase and Sale Contract.
This fee should not go anywhere else on the LE or CD, as it is not something the lender is requiring the borrower to pay for. Therefore, if it goes anywhere, it will go on Section H.
So first of all, many attorneys do not charge extra for this service. They may just consider this to be part of the general fee to close the loan. Either way, if the fee is not charged, then it does not need to be disclosed on the LE or CD.
But some attorneys do charge separately for this service. Where that's the case, Yes, this should be disclosed and it should be in Section H. Why? Check the list above: (1) this is not a fee disclosed anywhere else on the LE/CD; (2) it is not paid to the lender; and (3) it is obtained by the borrower in connection with the real estate closing. [On the other hand, if the attorney happened to be doing some work on the borrower's Will & Testament- this should not be disclosed on the LE/CD because it is not "in connection with the real estate closing."]
In Other News:
The CFPB is up to 677,000 complaints that they've handled so far, many of them made public recently (which I could probably just print off verbatim to use as fact patterns for compliance quizzes - or maybe an endless supply of newsletter topics). 28% of them are mortgage related, with Bank of America the most complained-about lender overall. Here's the report if you're really interested.
The North Shore Consumer Credit Association (NSCCA) is celebrating their 45th anniversary this year! Their next meeting will be held on Wednesday September 23, 2015 at Danversport Yacht Club. Kelsey Read, from the Massachusetts Clean Energy Center, will be discussing the exciting new Mass Solar Loan program. Here's a link to their registration page. If you go, be sure to say hi to my colleague Colin Quillinan. He's a NSCCA board member and has done a great job contributing to their "Banking Compliance" blog. Here's his most recent article discussing compliance concerns when dealing with private mortgage insurance.
Hope everyone has a great time in Newport this week at the NEMBC - always the best time. Not sure I'll see you there personally, but maybe you'll run into someone else from SCA! (I wish the conference was after October 3rd!)
We all live with labels. Labels that we should fight off. Labels that we should aspire to live up to. Labels we place on ourselves, and those others place upon us. Labels, if you tolerate them, can define you in a negative way. "I'm not a morning person." "He's a typical Jets fan." (there are some exceptions I guess) "She's not a team player and won't let anyone help with assignments." But you should control the label, not the other way around. Label yourself an overachiever, as dependable, as someone with high ethics. And live up to it.
I ran across this passage from a book the other day (The Trust Edge, by David Horsager):
"Who do you trust more, firefighters or mortgage brokers? Librarians or lawyers? Nurses or salespeople? [As a lawyer in the mortgage industry who sometimes has to do sales calls, I was pretty riled up by this point.] Firefighters and nurses care for others by nature of their jobs. But we wonder if the salesperson really has our best interest in mind. Don't worry if you are in a less trusted line of work. Resolve to be among the trusted in your field. Show that you think beyond yourself; you will be unique and successful in your industry."
Despite how personally offended I might have been, the overall point is well- taken. Labels don't need to define me; I can define myself and then use labels if I so choose.
"Efficiency is intelligent laziness."
- David Dunham
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