Q: How does the creditor disclose charges for third-party administrative and processing fees?
A: The TILA-RESPA Rule requires some charges to be disclosed in a specific manner. For example, points charged as a percentage of the loan and loan-level pricing adjustments charged to or passed onto the consumer as a flat fee must be itemized. (§ 1026.37(f)(1)(i); Comment 37(f)(1)-5) .
Similarly, if the creditor requires the consumer to pay for a third-party settlement service in order to originate the loan, the settlement service and charge must be itemized. The question of whether the third- party settlement services and the related charge must be separately itemized depends on whether the creditor requires the consumer to pay for that charge. If the creditor treats the charge as a normal business overhead expense, such as rent, utilities, wages, etc., the charge should not be separately itemized. (Comment 37(f)(1)-1). Additionally, the creditor is not required to provide a detailed breakdown of all administrative and processing fees that are not required by the creditor, but may be charged to the consumer. For example, if a creditor requires lender’s title insurance, the creditor must disclose this service (i.e., lender’s title insurance) and the related fee, but the creditor is not required to provide a detailed breakdown of related fees that are not explicitly required by the creditor but may be charged to the consumer (i.e., notary fee, title search fee, or fees for other administrative services related to title insurance).