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Where is a third-party fee that is charged by a realtor to the borrower as part of the sales contract recorded on the Loan Estimate? – IBA Compliance Connection

IBA Compliance Connection

Your go to source for compliance!

Where is a third-party fee that is charged by a realtor to the borrower as part of the sales contract recorded on the Loan Estimate?

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A third party fee charged by a realtor should be recorded as “other costs” in Section H on the Loan Estimate if the creditor is aware of the fee when the Loan Estimate is issued.

For citations related to our guidance, please see:

  • Regulation Z, 12 CFR 1026.37(g)(4) (“Under the subheading ‘Other,’ an itemization of any other amounts in connection with the transaction that the consumer is likely to pay or has contracted with a person other than the creditor or loan originator to pay at closing and of which the creditor is aware at the time of issuing the Loan Estimate, a descriptive label of each such amount, and the subtotal of all such amounts.”)
  • 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 commissions of real estate brokers or agents, additional payments to the seller to purchase personal property pursuant to the property contract, homeowner's association and condominium charges associated with the transfer of ownership, and fees for inspections not required by the creditor but paid by the consumer pursuant to the property contract. Although the consumer is obligated for these costs, they are not imposed upon the consumer by the creditor or loan originator. Therefore, they are not disclosed with the parenthetical description “(optional)” at the end of the label for the item, and they are disclosed pursuant to § 1026.37(g) rather than § 1026.37(f).”)