When can a fee be charged in the loan modification process?

A fee can be charged in the loan modification process after the borrower has signed a written modification offer but before the modification documents are recorded. This specific timing is important because it indicates that the borrower has accepted the terms of the modification, and the lender has entered the formal negotiation stage with the borrower. The signing of the written modification offer signifies a commitment from the borrower to the new terms, making it reasonable for the lender to collect a fee associated with the processing or setup of that modification.

Charging a fee at this stage is aligned with practices that ensure that all parties are engaged in a formal agreement and that the lender is compensated for the administrative work involved in updating the loan terms. The recording of the modification documents is a later step that finalizes the changes but does not affect the appropriateness of collecting fees once the agreement is in place.