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#1888590 - 01/21/14 05:18 PM
APR Finance charges to include
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New Poster
Joined: Mar 2011
Posts: 23
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Ok, I have a question for whoever can answer. We have an affiliate for Title with our Company. Do I need to include all the Title charges and departmentals as a Finance charge? And if we only include the portion that the Title company retains how would be do that in oour system since we will not know the amount until the loan actually closes. In our system in order to calculate the APR we would need to check to include it as a finance charge or not. I would not know the amount that they Title company retains until we close the loan so our actual estimate will be on the entire amount of the Title charge.
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#1888705 - 01/21/14 07:20 PM
Re: APR Finance charges to include
lrocha
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Diamond Poster
Joined: Nov 2004
Posts: 2,307
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Back in October, the CFPB provided some informal guidance to the MBA and ABA about their rules. One of the items addressed related to fees paid to affiliates. They said to count the portion that was actually retained by the affiliate.
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Opinions expressed are my own and not necessarily those of my employer. They are not legal advice.
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#1889073 - 01/22/14 06:15 PM
Re: APR Finance charges to include
lrocha
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Power Poster
Joined: Nov 2000
Posts: 2,701
PA
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You include the portion retained by the bank or its affiliate in the points and fees calculation, but that does not make it a finance charge. Title charges are still excluded from the finance charge under 1026.4(c)(7).
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Opinions expressed are mine and not necessarily those of my employer.
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#1889386 - 01/23/14 02:55 PM
Re: APR Finance charges to include
Deena
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New Poster
Joined: Mar 2011
Posts: 23
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Right but in our points and fees calculation we need to make it a finance charge in our system in order to calculate correctly. Or am I missing something?
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#1889391 - 01/23/14 03:02 PM
Re: APR Finance charges to include
lrocha
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Gold Star
Joined: Feb 2008
Posts: 263
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I have no clue how your system works, but if it requires you to do that you'll probably be having APR/Finance charge tolerance issues.
The charge can be included in the P&F calculation and not a FC. If your system requires you to mark it as a FC to include it in the P&F test, you are either going to have TIL errors or missed fees in the P&F test.
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#1889400 - 01/23/14 03:13 PM
Re: APR Finance charges to include
lrocha
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10K Club
Joined: Jul 2001
Posts: 83,227
Galveston, TX
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That was my question: What does the points and fees test have to do with whether are not the fee is also a finance charge?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1889420 - 01/23/14 03:39 PM
Re: APR Finance charges to include
dblack
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New Poster
Joined: Mar 2011
Posts: 23
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so your saying its not calculated as a finance charge? Then how does it test for the Points and fees if we dont include it as a Finance charge? The new reg states if we have an affiliate we need to include that portion they recieve as a finance charge
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#1889424 - 01/23/14 03:42 PM
Re: APR Finance charges to include
lrocha
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Joined: Feb 2008
Posts: 263
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The definition of a finance charge did not change with the new rules. What is included in points and fees did.
The calculation for APR/Finance charges is totally separate from the P&F test.
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#1889427 - 01/23/14 03:45 PM
Re: APR Finance charges to include
lrocha
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10K Club
Joined: Jul 2001
Posts: 83,227
Galveston, TX
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I think you need to visit with your vendor as I would think that your should be able to code fees to either be a finance charge or not and separately code them for the points and fees testing. They are two very different things as others have pointed out.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1889443 - 01/23/14 03:59 PM
Re: APR Finance charges to include
dblack
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New Poster
Joined: Mar 2011
Posts: 23
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Sorry maybe i was not explaining myself. I get the HOEPA part and points and fees where it has not changed the rule but I am testing for Section 43 HPCT and we are failing because we have included in this part the Title company who is an affiliate in the finance charge to calculate the Points and fees in this test. This is the section we need to add as a finance charge because they are an affiliate.
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#1889466 - 01/23/14 04:13 PM
Re: APR Finance charges to include
lrocha
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Gold Star
Joined: Feb 2008
Posts: 263
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We are all saying that if you have to mark a fee as a FC to get it counted in the P&F test on your system, you've got system problems.
The affiliate title fee is not a finance charge, but the portion retained by the affiliate or bank is included in P&F test.
Your APR is likely overstated if you are marking all of the fees from your P&F test as finance charges.
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#1907877 - 03/22/14 06:27 PM
Re: APR Finance charges to include
dblack
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Diamond Poster
Joined: Nov 2004
Posts: 1,005
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I just want to make sure I am understanding the points and fees test vs the APR test.
Take credit report fee and appraisal fee - both paid to 3rd parties.
For APR calculation, both of these fees are excluded.
For P&F test, both of these fees are included.
Am I on the right path?
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#1907944 - 03/24/14 03:07 PM
Re: APR Finance charges to include
river girl
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#1908633 - 03/26/14 12:54 PM
Re: APR Finance charges to include
lrocha
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Joined: Nov 2002
Posts: 20,654
The Swamp
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I hope not, because I don't have either marked when it's 3rd party. (My in-house evals are included).
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#1908771 - 03/26/14 04:38 PM
Re: APR Finance charges to include
lrocha
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Member
Joined: Jun 2011
Posts: 64
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Jumping off your last remark.
Do you consider in-house eval as a prepaid finance charge or a finance charge or neither
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#1908802 - 03/26/14 05:34 PM
Re: APR Finance charges to include
lrocha
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10K Club
Joined: Nov 2002
Posts: 20,654
The Swamp
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PPFC
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#1908812 - 03/26/14 05:46 PM
Re: APR Finance charges to include
lrocha
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Member
Joined: Jun 2011
Posts: 64
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So it is included in the P & F test, in the amount financed calc, and doesn't have to be subtracted out again from the amount financed to get to TLA because it's a PPFC. Correct?
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#1908825 - 03/26/14 05:59 PM
Re: APR Finance charges to include
lrocha
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10K Club
Joined: Nov 2002
Posts: 20,654
The Swamp
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Right.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1909087 - 03/27/14 02:34 PM
Re: APR Finance charges to include
lrocha
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10K Club
Joined: Jul 2001
Posts: 83,227
Galveston, TX
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Why is an in-house evaluation a PPFC????
4(c)(7) Real-Estate Related Fees
1. Real estate or residential mortgage transaction charges. The list of charges in ยง1026.4(c)(7) applies both to residential mortgage transactions (which may include, for example, the purchase of a mobile home) and to other transactions secured by real estate. The fees are excluded from the finance charge even if the services for which the fees are imposed are performed by the creditor's employees rather than by a third party.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1909123 - 03/27/14 03:11 PM
Re: APR Finance charges to include
lrocha
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Posts: 64
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#1909135 - 03/27/14 03:16 PM
Re: APR Finance charges to include
lrocha
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Member
Joined: Jun 2011
Posts: 64
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okay, more questions.
Do you separate it from the origination charge or include?
As a separate line item that rolls up into 801 then you would have to subtract the fee from the amount financed to get to the Total Loan Amount, if it was financed. correct?
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#1909144 - 03/27/14 03:23 PM
Re: APR Finance charges to include
lrocha
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10K Club
Joined: Nov 2002
Posts: 20,654
The Swamp
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Since the origination charge would be a FC and the in-house is not, it's separated for APR calculation, but it would need to be subtracted to get the TLA since it's not a FC.
I believe you are correct, Always. This matches up with a prior thread where it was broken down nicely (I think dblack did the breakdown)
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1909148 - 03/27/14 03:27 PM
Re: APR Finance charges to include
lrocha
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Joined: Jun 2011
Posts: 64
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#1909234 - 03/27/14 04:32 PM
Re: APR Finance charges to include
lrocha
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Member
Joined: Jun 2011
Posts: 64
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Care to share where you put the in-house eval on the GFE and HUD? line items?
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#1909272 - 03/27/14 05:31 PM
Re: APR Finance charges to include
lrocha
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10K Club
Joined: Nov 2002
Posts: 20,654
The Swamp
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Origination charge Block 1/801.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1909278 - 03/27/14 05:34 PM
Re: APR Finance charges to include
lrocha
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Member
Joined: Jun 2011
Posts: 64
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thanks so much! So Hud - Totaled up into line 801 on HUD, so we could use line 809 or another line and have it roll up. right?
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#1909293 - 03/27/14 05:46 PM
Re: APR Finance charges to include
lrocha
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10K Club
Joined: Jul 2001
Posts: 83,227
Galveston, TX
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Block 1 and Line 801.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1909294 - 03/27/14 05:47 PM
Re: APR Finance charges to include
lrocha
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10K Club
Joined: Nov 2002
Posts: 20,654
The Swamp
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No...it's simply part of 801...it is a lump sum.
for instance.
Loan fee - $200.00 In HOuse Eval - $100.00 Processing fee - $150.00
Block 1 and 801 will list the total of $450.00 with no further itemization (unless required by State or VA or something!)
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1909297 - 03/27/14 05:49 PM
Re: APR Finance charges to include
lrocha
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Member
Joined: Jun 2011
Posts: 64
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