Prepaid Finance Charge Fee Checklist
Answer by Andy Zavoina and Richard Insley, BOL Gurus
Question: Where can I get a checklist of fees that are required to be reported as prepaid finance charges on all different loan types?
Answer by Richard Insley: BIO AND CONTACT INFO
Be careful about cheatsheets -- you must investigate each fee you charge to be sure you understand its nature and classification. The only reliable list is Section 226.4 of Reg. Z.
After you've determined that a fee is a Finance Charge, then you determine if it is prepaid. To be a PPFC, the fee must be collected at or before loan closing, or withheld from proceeds at any time.
Answer by Lucy Griffin: BIO AND CONTACT INFO
Richard's answer is right on the money -- and the finance charge. What I suggest is asking lenders throughout your institution to list every charge and fee they have ever imposed or even heard of. Then you compile the list and review each fee for finance charge status. Be sure to keep the names the lenders used. Loan officers may have three different names for the same fee. You need to use all of them for your checklist.
Compile the list, review each item for finance charge status, and create a charge or checklist. If you have questions about whether certain fees should be a finance charge, or under what circumstances that would be a question, get information from the loan officer who put it on the list, and then post a question in Bankers Threads.
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