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Where should a seller’s closing protection letter fee be listed on a Closing Disclosure? We require closing protection letters, and the borrower was allowed to shop for the title insurance company. – IBA Compliance Connection

IBA Compliance Connection

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Where should a seller’s closing protection letter fee be listed on a Closing Disclosure? We require closing protection letters, and the borrower was allowed to shop for the title insurance company.

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In our view, the appropriate place to list a seller’s closing protection letter fee is on page 2, section C of the Closing Disclosure, which is titled “Services Borrower Did Shop For.” Section C is the place to list fees for services that the lender requires and that the borrower was allowed to shop for. Because both of those criteria are met with the closing protection letter, we believe that the related fees should be listed under Section C. If the seller pays its closing protection letter fee, then the fee goes in the “Seller-Paid” column under Section C.

For resources related to our guidance, please see:

Regulation Z, 12 CFR 1026.38(f)(3) (Under the subheading “Services Borrower Did Shop For” … an itemization of the services and corresponding costs for each of the settlement services required by the creditor for which the consumer shopped … and that are provided by persons other than the creditor or mortgage broker ….”)