• Inspection Fees

The TRID rules require you to disclose home inspection fees on the Loan Estimate and Closing Disclosure if the fees are paid at closing and if your institution is “aware” of the fees, even when you do not require those services. The Staff Interpretation of the rule states that a creditor is “aware” of the charges if they are required by the purchase contract and the creditor “has” the contract. We read that comment to mean that if your institution has possession of or has accessed the purchase contract, you must include the charges required by the contract, such as home inspection fees, in the Loan Estimate and in the Closing Disclosure.

• Attorney Fees

In most (if not all) areas in Illinois, we believe you should disclose a borrower’s attorneys’ fees on the Loan Estimate and the Closing Disclosure. The Official Interpretation to the TRID rules states that attorneys’ fees should be disclosed and estimated “if the subject property is located in a jurisdiction where consumers are customarily represented at closing by their own attorney, even though it is not a requirement . . . .”

If you are making a loan in an area where it is not customary for borrowers to be represented by an attorney at the closing, we do not believe that you will need to disclose estimated attorney fees, unless you know that the borrower will be hiring an attorney for the loan closing. However, we believe that in most (if not all) areas of Illinois, it is customary for borrowers to hire an attorney for a loan closing, possibly with the exception of refinancing transactions, and we would suggest caution before reaching a contrary conclusion.

If you are making loans in an area where it is customary for borrowers to be represented by an attorney at the closing, you should disclose an estimate of the attorneys’ fees. Unless you know the amount of the attorney fees at the time of making the Loan Estimate, you must estimate the fees “based on the best information reasonably available to the creditor at the time the disclosure was provided,” and your estimate must not be “unreasonably low.”

These estimation requirements are very ambiguous, and we cannot predict how an examiner or a court would interpret these provisions as they apply to attorneys’ fees. To the extent possible, we recommend obtaining attorneys’ fee estimates from your borrowers, based on their attorneys’ quoted fixed charges or hourly rate times the estimated number of hours of work. This approach would be more accurate than an attempt to calculate average attorneys’ fee for loan closings in your area, since such fees could vary widely. If the estimate is based on information provided to you by the borrower, we think this would go a long way towards establishing that the estimate is reasonable and is “based on the best information reasonably available.”

Notably, after providing a Loan Estimate, you may revise your estimate of the attorney fees (or other charges) if the borrower changes the information originally provided or provides new information, such as the exact amount of the attorney fees charged for the transaction.

For resources related to our guidance, please see below:

• Regulation Z — Loan Estimate, 12 CFR 1026.37(g)(4) (requires itemization of “Other” charges of which the creditor is aware at the time of issuing the Loan Estimate)

• Regulation Z — Closing Disclosure, 12 CFR 1026.38(g)(4) (requires itemization of “Other” charges for services required or obtained in the real estate closing but which not required by the creditor and not disclosed elsewhere)

• Regulation Z — Official Interpretations, 12 CFR 1026, Paragraph 37(g), Comment 2 (“Other charges that are required to be paid at or before closing pursuant to the property contract for sale between the consumer and seller are disclosed on the Loan Estimate to the extent the creditor has knowledge of those charges when it issues the Loan Estimate, consistent with the good faith standard under § 1026.19(e). A creditor has knowledge of those charges where, for example, it has the real estate purchase and sale contract. See also § 1026.37(g)(4) and comment 37(g)(4)-3.” (emphasis added))

• Regulation Z — Official Interpretations, 12 CFR 1026, Paragraph 37(g)(4), Comment 4 (“Examples of other items that are disclosed under § 1026.37(g)(4) if the creditor is aware of those items when it issues the Loan Estimate include . . . fees for inspections not required by the creditor but paid by the consumer pursuant to the property contract” (emphasis added))

• Regulation Z — Official Interpretations, 12 CFR 1026, Paragraph 19(e)(3)(iii), Comment 3 (“For example, if the consumer informs the creditor that the consumer will obtain a type of inspection not required by the creditor, the creditor must include the charge for that item in the [Early Disclosure] . . . .”)

• Regulation Z — Official Interpretations, 12 CFR 1026, Paragraph 38(g)(4), Comment 1 (“The costs disclosed under § 1026.38(g)(4) include . . . inspection fees, and other fees that are part of the real estate closing but not required by the creditor or not disclosed elsewhere under § 1026.38”)

• CFPB Sample Mortgage Loan Transaction Closing Disclosure, page 3 — includes an entry for a “Home Inspection Fee” under Section H., under “Other Costs.”

• Regulation Z — Official Interpretations, 12 CFR 1026, Paragraph 19(e)(3)(iii), Comment 3 (“. . . . But, for example, if the subject property is located in a jurisdiction where consumers are customarily represented at closing by their own attorney, even though it is not a requirement, and the creditor fails to include a fee for the consumer’s attorney, or includes an unreasonably low estimate for such fee, on the original estimates provided pursuant to § 1026.19(e)(1)(i), then the creditor’s failure to disclose, or under-estimation, does not comply with § 1026.19(e)(3)(iii).”)

• Regulation Z — Revised estimates, 12 CFR 1026.19(e)(3)(iv) (creditor may issue revised estimates if it receives changed or new information specific to the transaction, among other reasons)