We are a bank that keeps all of our loans in house, we do our own underwriting and own document preparation. In the past we have been told, by examiners, that we should not let our doc prep fee affect the APR of real estate transactions (not considered a finance charge). However, according to the RESPA FAQs it states all loan originator charges including processing, application, administration fees, underwriting, document preparation, wire, lender inspection, mortgage broker, loan handling, and other misc. fees are contained in Block 1 of the GFE.

In going forward, should we be letting the doc prep fee (which is bonafide and reasonable) affect our APR?

What is on and combined in your GFE has no relevance to Reg Z. Nothing has changed with Z and it's definition of what is and what isn't a finance charge.

226.4(c)(7) of Reg Z specifically excludes doc prep fees from the finance charge. The new GFE form has no bearing on Regulation Z finance charge rules.

The first poster is probably asking that because now we have to put a total in Block 1 and we can't distinquish what is a finance charge or what isn't with this new GFE and loan system we have.

The old way we listed each fees and could check what was a finance charge and what wasn't.

The data to populate block 1 has to come from somewhere. So in preparing the ETIL, the preparer would have to go to that source.

Maybe it's our loan system but you cannot do anything with the fees on our ETIL. We put the total for Block 1 on a fee screen through the HUD side.

You should call your vendor and have them upgrade your system. They need to fix it so you can itemize your fees in the system for TIL calculations. Then total specific fees to fit in the boxes for the HUD and GFE.

Thanks for the info. I will check into this.

Thanks all for speaking up- with the new way it's confusing and I did work with the lending people and we have it worked out now.

Refering to the orginal poster's question...

To make sure I understand this correctly....

Under RESPA, a loan document preparation fee is a loan originator charge. Loan orgination charges are finance charges. However, doc prep fees under are not considered a finance charge under Reg Z because of the specific exemption, but should be included with the loan orignation charges on the GFE.

Doc prep fees are exempt as a FC under Reg Z if they are bona fide and reasonable. If you charge $500 to prepare docs then it would be my opinion that with today's software and the time it takes to enter the information that most likely would not be a reasonable and bona fide fee. I have known regulators to ask you to justify the fee with a detailed cost analysis if you were excluding it from the FC.

Also be careful labeling them doc prep fees. You could be looking at a criminal citation for practicing law without a license if you are not having an attorney prepare the docs. IN revised this issue several years ago.

For the purposes of my question the document preparation fee is $100. The loan doucments are prepared by the bank and the fee is retained by the bank. The bank is excluding this fee from the finance charge.