When filling out the new Loan Estimate form, where should we place the following fees? (1) FHA initial mortgage insurance premium, (2) VA initial funding fee, and (3) Conventional Single Premium Borrower/Lender Paid Mortgage Insurance.

We believe that all three fees should be disclosed under “Services You Cannot Shop For.”

The Regulation Z Official Interpretations state that “government funding fees” and “upfront mortgage insurance fees” should be listed on the Closing Disclosure under the heading “Services You Cannot Shop For.” The FHA and VA fees are government funding fees, since they are “paid to a government entity as part of a governmental loan program” and are paid at consummation. The mortgage insurance premiums are upfront mortgage insurance fees, “provided that the fee is charged at consummation and is not a prepayment of future premiums over a specific future time period or a payment into an escrow account.” (However, note that if the mortgage insurance premium is paid by the lender and not by the borrower, you are not required to disclose it in the Loan Estimate — you are required to disclose only the fees that “the consumer will pay for settlement services” on the Loan Estimate.)

Also, we do not believe it would be appropriate to list these fees under the heading “Other Costs.” Regulation Z states that the “Other Costs” heading should be used only for costs that are not listed in “Services You Cannot Shop For,” “Services You Can Shop For,” or “Closing Cost Details.” Because these costs are covered by the “Services You Cannot Shop For” heading, the “Other Costs” heading would be inapplicable.

For resources related to our guidance, please see:

Regulation Z, 12 CFR 1026.37(f)(2) (“Under the subheading ‘Services You Cannot Shop For,’ an itemization of each amount, and a subtotal of all such amounts, the consumer will pay for settlement services for which the consumer cannot shop in accordance with § 1026.19(e)(1)(vi)(A) and that are provided by persons other than the creditor or mortgage broker.”)

Official Interpretations, 12 CFR 1026, Paragraph 37(f)(2), Comment 2 (“Examples of the services and amounts to be disclosed pursuant to § 1026.37(f)(2) might include [a] . . . government funding fee . . . and an upfront mortgage insurance fee, provided that the fee is charged at consummation and is not a prepayment of future premiums over a specific future time period or a payment into an escrow account. Government funding fees include a United States Department of Veterans Affairs or United States Department of Agriculture guarantee fee, or any other fee paid to a government entity as part of a governmental loan program, that is paid at consummation.”)

Regulation Z, 12 CFR 1026.37(g) (“Under the master heading ‘Closing Cost Details,’ in a table under the heading ‘Other Costs,’ all costs associated with the transaction that are in addition to the costs disclosed under paragraph (f) of this section.”)