Topic: Finance Charge
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Can we charge a credit report fee on consumer installment loans?
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Of course, a credit report fee would have to be included in the finance charge calculation, but we are not aware of any prohibitions or limitations on charging credit report fees. 12 CFR 1026.4(b)(4). If the loan is not subject to RESPA, there are no restrictions on “upcharging” with what could be considered an unearned…
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We are thinking about charging a “coupon book fee” to customers that request a coupon book for loan payments. Would this be considered a finance charge? Would we have to rebate the fee if the customer prepays the loan before the end of its term?
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We believe that the fee for providing a coupon book would be considered a finance charge, as it would not be charged in a comparable cash transaction and does not fall into any of the categories that are exempted from the definition of a finance charge. 12 CFR 1026.4(a). Whether it is a prepaid finance…
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Do we need to disclose loan release fees on the GFE and HUD-1 forms? How can we disclose the fee upfront, since it may have increased significantly by the time the loan is terminated?
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Yes, you should disclose a mortgage lien release fee in both the HUD-1 and in your TILA disclosures. The RESPA regulations require that you disclose all charges paid by the borrower on the HUD-1. 12 CFR 1024.8(b)(1). The HUD-1 instructions clarify that you must disclose “all charges imposed upon the Borrower and the Seller by…
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Is a closing protection letter fee considered a prepaid finance charge?
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We believe that a closing protection letter fee charged by a title insurance company should not be considered to be a prepaid finance charge for purposes of the Truth in Lending Act (TILA). Regulation Z specifically exempts certain real-estate related fees from the scope of finance charges, including an exemption for fees for title insurance…
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Is it possible that an interest rate and APR on a dealer loan can be the same? Are Electronic Registration and Titling (ERT) and “doc fees” considered prepaid finance charges?
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If either of the fees charged, the ERT fee or the “doc fee,” are considered finance charges, then it is likely that the dealer did not calculate the APR correctly. The ERT program fee is probably not a finance charge, as it is usually charged in comparable cash transactions. 12 CFR 1026.4(a)
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If a bank received notice from the FDIC that it did not comply with Truth in Lending Act disclosure requirements but the finance charge was overstated and annual percentage rate was within tolerances, how should the bank rebut the notice?
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If the finance charge was overstated in the original disclosure, then the disclosure should be considered accurate under the TILA regulations. 12 CFR 1026.18(d)(1)(ii). Your written rebuttal should include the regulation and an explanation of why you believe the FDIC should reconsider its conclusion that the disclosure was inaccurate.