So we have a construction loan that clearly has an understated finance charge and are trying to determine what to do about it. I have run it through the APRWIN program and it identifies the finance charge is understated, but the APR is within .25%. When you ask it for a reimbursement at the .25% tolerance it gives no refund. I can't find any support to say the FC understatement is OK, but the APRWIN doesn’t give a reimbursement, I'm sure I'm missing something here. Any help in getting my thinking straight would be greatly appreciated.

APRWIN implements the interagency enforcement policy as an overlay to its Reg. Z calculations. Under the policy, lenders are permitted to apply "cross tolerances" when determining the need for reimbursement. Although a loan with an understated FC violates Reg. Z and causes civil liability under the TILA, the policy allows a higher FC tolerance. In effect, the reimbursement tolerance is the larger of (a) the Reg. Z tolerance, or (b) the dollar equivalent of the Reg. Z APR tolerance. If you reimburse according to the policy, you could still be sued under the TILA and you would lose.

Thanks Richard, I knew I was missing something.

I really appreciate your help.