Integrated Disclosures: Revisiting Fee Restrictions

While there are a lot of changes with the Integrated Disclosures Rule, the prohibition on imposing a fee (other than for a credit report) before a consumer has received early disclosures (and indicated their intent to proceed) remains.

The commentary to §1026.19(e)(2)(i)(A) that will be in effect on August 1st gives some examples of actions that are prohibited when looking to collect fees other than a credit report. For example, requiring an applicant to provide payment information, such as a credit card number, prior to the consumer receiving disclosures and indicating their intent to proceed is prohibited. Doing so would be prohibited even if the card will not be charged until after receipt of the disclosures and communication of the intent to proceed. If a creditor has credit card information on file (from the consumer authorizing the credit report fee) a separate authorization must be obtained for any additional fee.

Appraisal costs usually generate the most concern. Lenders understandably want them ordered quickly so closing doesn’t have to be delayed. This is especially true when the borrower needs to have a copy of the appraisal “in hand” three business days before closing. While consumer “shopping” may not be as prevalent as the CFPB tends to believe, creditors don’t want to be left eating appraisal costs if the applicant decides to go with someone else or hold off on the transaction altogether. So, lenders get a little creative. If a card won’t be charged until after disclosures are received and the applicant has indicated they want to proceed, when you actually obtain credit card information seems like a technicality. However, your practices here can result in violations and potentially bigger issues. In fact, although there’s nothing in the regulation that dictates when you can order an appraisal, last year the CFPB entered into a consent order with Amerisave Mortgage Corporation which prohibited it from scheduling an appraisal until providing early disclosures.

Diane Dean

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