No, in our view this $3 fee should not be included in the finance charge when it is passed on to the borrower. Regulation Z exempts certain real-estate related fees from the scope of finance charges, including fees for title insurance “and similar purposes.” We believe this fee is excluded from the finance charge because it is so closely tied to the issuance of title insurance.

For resources related to our guidance, please see:

• Illinois Title Insurance Act, 215 ILCS 155/14(b) (“Each title insurance company shall remit, for all of its title insurance agents subject to this Act for filing an annual registration of its agents, an amount equal to $3 for each policy issued by all of its agents in the immediately preceding calendar year.”)

• Regulation Z, 12 CFR 1026.4(c)(7) (“The following charges are not finance charges: . . . (7) The following fees in a transaction secured by real property or in a residential mortgage transaction, if the fees are bona fide and reasonable in amount: (i) Fees for title examination, abstract of title, title insurance, property survey, and similar purposes. . . .”)