Escrow Prep Fees

Question: In a previous Q&A, you discussed some reasons to avoid charging fees for preparing escrow account notices. Most of the answer was based on Truth in Lending. Does RESPA permit the fee or is it prohibited?

Answer: Actually, even without the TIL considerations (the fee would be a finance charge), the fee would be illegal. RESPA outright prohibits the charging of such a fee. See section 12. No matter what your reason, don't do it.

Copyright © 2001 Compliance Action. Originally appeared in Compliance Action, Vol. 6, No. 3, 4/01