Commitment Fee

Related to Commitment Fee: Management fee, Upfront Fee

Commitment Fee

Compensation paid to a lender by a borrower for the lender's promise to give a mortgage at some future time.

A commitment fee, frequently employed in real estate transactions, is an expense separate from interest charged on the loan to be secured by the mortgage. The controversy surrounding nonrefundable commitment fees arises when a borrower decides not to proceed with the loan and then demands return of the fee on the premise that the lender has performed no services to earn it. The courts have consistently rejected this contention and held that the lender is entitled to the commitment fee either as Liquidated Damages for breach of contract or as compensation for earmarking the funds for loan to the borrower.

Commitment Fee

A fee that a lender assesses on a borrower to keep a credit line open regardless of use. For example, a credit card company may charge a card holder $60 per year to allow him/her to continue to use the credit card. This should not be confused with interest, which is only calculated if a loan is made or a credit line is used.

单词	commitment fee
释义	commitment fee commitment fee n (Banking & Finance) a charge made by a bank, in addition to interest, to make a loan available to a potential borrower Translations Commitment Fee Related to Commitment Fee: Management fee, Upfront Fee Commitment Fee Compensation paid to a lender by a borrower for the lender's promise to give a mortgage at some future time. A commitment fee, frequently employed in real estate transactions, is an expense separate from interest charged on the loan to be secured by the mortgage. The controversy surrounding nonrefundable commitment fees arises when a borrower decides not to proceed with the loan and then demands return of the fee on the premise that the lender has performed no services to earn it. The courts have consistently rejected this contention and held that the lender is entitled to the commitment fee either as Liquidated Damages for breach of contract or as compensation for earmarking the funds for loan to the borrower. Commitment Fee Commitment Fee A fee that a lender assesses on a borrower to keep a credit line open regardless of use. For example, a credit card company may charge a card holder $60 per year to allow him/her to continue to use the credit card. This should not be confused with interest, which is only calculated if a loan is made or a credit line is used.
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