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For loans subject to TRID, for purposes of determining the "tolerance" category, must lenders separate fees that are included in a settlement service provider's fees but are being paid to a third party?

Under Regulation Z, for mortgages, lenders must disclose estimated fees prior to loan closing and then disclose actual fees at closing. If the closing fee is higher than the estimated fee, the lender may have to refund all or part of the difference between the estimated and final fees. Fees fall into one of three categories: 0% tolerance, in which case any difference must be refunded; 10% tolerance in which case amounts greater than 10% must be refunded; and unlimited, in which case no fee need to be refunded. For loans subject to TRID, for purposes of determining the "tolerance" category, must lenders separate fees that are included in a settlement service provider's fees but are being paid to someone else? For example, a title agent or attorney may use a courier service in providing its services.

Yes, the courier service fees must be listed and categorized separately, according to the Commentary to 1026.19(e)(3)(i) which addresses "fees paid to a person." Generally, fees for which the customer did not and could not shop must be itemized separately, though there are rare exceptions. It appears that a courier service is a service for which the customer did not and could not shop.

Thus, the courier fee is in the "zero percent tolerance" category, and the name of the courier service would be listed as receiving the fee (fee "paid to" a person). The fees the title agent or attorney paid to the courier service should be disclosed in the Services You Cannot Shop For section (on the Loan Estimate) and in the Services the Borrower Did Not Shop For section (on the Closing Disclosure), with the name of the party ultimately receiving the payment for those services. (August 2016)

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