We believe that the title registration fee required by Illinois law should be excluded from the finance charge calculation, as with other title insurance fees. For mortgage transactions, Regulation Z excludes “fees for title examination, abstract of title, title insurance, property survey, and similar purposes” from the “finance charge” definition. 12 CFR 1026.4(c)(7)(i). In our view, the Illinois registration fee charged by the title company should be treated like the fee for the title examination, or at least as a fee for “similar purposes” to the other title insurance fees listed in the regulation. The Illinois Title Insurance Act requires title insurance companies to pay the $3 fee “for each policy issued by all of its agents in the immediately preceding calendar year.” 215 ILCS 155/14(b). Because the fee is tied to “each policy” for title insurance, it seems to us to be a title insurance related fee that should be excluded from the finance charge calculation. In addition, a second argument for excluding a fee related to an owner’s title insurance policy from the finance charge calculation is that it is “payable in a comparable cash transaction.” 12 CFR 1026.4(a). (This secondary argument likely wouldn’t apply to a fee for the lender’s title insurance policy, however.)

There is also an exclusion from the “finance charge” definition for recording fees such as the e-recording fee that you mentioned. In any type of transaction, fees “prescribed by law that actually are or will be paid to public officials for . . . perfecting, releasing, or satisfying a security interest” are excluded from the finance charge calculation. 12 CFR 1026.4(e)(1). Under that provision, any charge for recording a mortgage or perfecting your lien should be excluded from the finance charge, provided that the full fee is actually paid to a public official.