We don't charge a separate credit report fee but include it within our processing fee. I'm seeing conflicting information in the regs and in the forums about this. First, 1026.37 indicates that we determine the level if itemization of origination charges. 1026.4 indicates that application fee can include services such as a credit report fee. TRID commentary also states the following: "The TRID Rule does not require disclosure of a closing cost and a related lender credit on the Loan Estimate if the creditor incurs a cost, but will not charge the consumer for that cost (i.e., the creditor will “absorb” the cost). In such cases, the absorption of the cost or charge would not “offset” an amount paid by the consumer. However, a creditor must disclose a closing cost and related lender credit on the Loan Estimate if the creditor is offsetting a cost charged to the consumer. Comment 37(g)(6)(ii)-2." 1026.38 indicates that if the fee is ultimately paid to a third party that it need to be itemized. Lastly

1) are we allowed to include the cost of credit reports within processing fee? Essentially charging a higher processing fee and absorbing the cost of the credit report fee.
2) If it has to be itemized and shown as paid by lender, then wouldn't other costs paid to 3rd parties such as AUS, MERS, Investor Costs, etc. that we include in out processing fee have to be itemized? Wouldn't AUS be a part of the underwriting process and since it's a tool we use as part of the underwriting that we just include that as part of the underwriting cost. How would that be different from a credit report?

We have a fixed processing fee, where fees such as MERS, AUS, etc. are essentially included. However, we itemize the credit report, because we've found the cost of a credit report, especially a tri-merge, can vary quite a bit based on number of borrowers or having to run updates to credit. We want to be able to charge for those increased fees, so we break the credit report fee out.

However, several of our competitors charge a higher processing fee and don't itemize out all the minor fees, including the credit report. It probably all washes out in the end.

Any direct fee that is absorbed using a processing or admin fee still has to be disclosed on the CD as paid by lender.

AUS, MERS, etc., are costs associated with you selling the loan and not making it, like a credit report.

Thank you! I appreciate it.