CFPB TRID Sec. 14.18 - How are construction inspection and handling fees disclosed?

Compliance > Regulation Z - TILA / TRID Specific > General Info
Q:  How are construction inspection and handling fees disclosed?
 
A:  Construction inspection and handling fees are disclosed on the Loan Estimate and Closing Disclosure differently depending on when they are collected. Construction inspection and handling fees are disclosed either:
 
  • Collected at or before consummation. If collected at or before consummation, the total of such fees is disclosed in the Loan Costs table, and is included in the Calculating Cash to Close table. A fee collected at consummation includes a loan proceeds advance taken at consummation to cover inspection and handling fees.
  • Collected after consummation. If collected after consummation, the total of such fees is disclosed in a separate addendum, and the fees are not counted for purposes of the Calculating Cash to Close table. (Comments 37(f)-3 and 37(f)(6)-3)
 
In either case, inspection and handling fees are included in the loan cost charges added to the In 5 Years disclosure as well as the Total of Payments disclosure. (Comment app D-7.vii)
 
If the inspection and handling fees are unknown at the time the disclosures are provided, the creditor uses the best information reasonably available to disclose the amount. For fees collected after consummation, if subsequent events cause the Loan Estimate and Closing Disclosure to become inaccurate, this does not necessarily cause a good faith tolerance violation. (§ 1026.17(e))
 
If the inspection and handling fees are collected after consummation, requiring disclosure on an addendum, the addendum follows the formatting requirements of other addendums to the disclosures. It may be a separate addendum, or included on other required addendums. (Comments 37(f)(6)-3 and 38(t)(5)-5)
 
Note:  Construction inspection and handling fees are Loan Costs and are subject to the good faith tolerances for the category in which they fall, regardless of whether they are collected at or before consummation or after consummation. If the fees are collected after consummation, and become inaccurate due to an event that occurs after the disclosures are provided, the inaccuracy is not a tolerance violation. (§ 1026.17(e))
 
 
This information can be found in the CFPB's TILA-RESPA Integrated Disclosure rule compliance guide - http://www.consumerfinance.gov/regulatory-implementation/tila-respa/
 

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