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How should we classify a rate-lock extension fee on a revised Loan Estimate? Is it considered an “origination charge”? We charge this fee when we extend the time period for a rate-lock. – IBA Compliance Connection

IBA Compliance Connection

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How should we classify a rate-lock extension fee on a revised Loan Estimate? Is it considered an “origination charge”? We charge this fee when we extend the time period for a rate-lock.

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Yes, a rate-lock extension fee is an origination charge. Under Regulation Z, “origination charges” include each amount that the consumer will pay to the creditor for originating and extending the credit. Such items may include, for example, “application fee, origination fee, underwriting fee, processing fee, verification fee, and rate-lock fee.” As an extension of the rate-lock service, a rate-lock extension fee also would be considered an origination fee.

For resources related to our guidance, please see:

  • Regulation Z, 12 CFR 1026.37(f)(1) (“Under the subheading ‘Origination Charges,’ an itemization of each amount, and a subtotal of all such amounts, that the consumer will pay to each creditor and loan originator for originating and extending the credit.”)
  • Official Comments, Regulation Z, 12 CFR 1026, Paragraph 37(f)(1), Comment 3 (“Items that are listed under the subheading ‘Origination Charges’ may include, for example, application fee, origination fee, underwriting fee, processing fee, verification fee, and rate-lock fee.”)