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Loans, Attorney's Fees, and the APR Calculation
Answer by: Andy Zavoina, BOL Guru
BIO AND CONTACT INFO
Question: On APR Calculation for traditional conv. fixed rate/term refinancing. Will attorney's fees (line 1107 of HUD) affect the final APR calculation?
The amount of $275 was excluded from the APR that was reflected on the signed TIL at closing and has since been discovered.
The investor insists this affect the APR, my memory tells me it doesn't.
Answer: HUD-1 instructions state that this line's amounts include "fees directly related to the transfer of title (title examination, title search, document preparation) and fees for title
insurance".
Reg Z excludes from a finance charge at §226.4(i) Fees for title examination, abstract of title, title insurance, property survey, and similar purposes.
(ii) Fees for preparing loan-related documents, such as deeds, mortgages, and reconveyance or settlement documents.
Ask why the investor believes it is included? Some err on the side of caution and overstate the FC since the requirements changed and this is no longer a violation.
First published on BankersOnline.com 10/28/02
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