I just need someone to confirm or tell me that I don't have this right-

1. Subordination fee charged by originating bank to subordination their own lien to their own lien. (Ex: Customer Refi first-also has second with us.) The Sub fee would be in box 1 and the recording fee with other gov fees, but both would be PPFC . . .right?

2. Sub fee charged by attorney to prepare Sub agreement for originating bank to subordination their own lien to their own lien. (Ex: Customer Refi first-also has second with us.) The Sub fee would be in box 1 and the recording fee with other gov fees, but both would be PPFC . . .right? (No other title work is completed.)

3. Sub fee charged by attorney or title company to prepare Sub agreement to assure bank's title in first lien position. The Sub fee would be in box 4 and the recording fee with other gov fees. Are both fee still PPFC?

4. Sub fee charged by another bank for subordinating their lien position to ours. (Ex: We are refi-ing first, they have second.) The fee would be placed in box 3, the recording fee in the gov. fees. Are both fee still PPFC? (This may be a fee for just agreeing to subordinate their lien position and/or may be a fee for actually preparing the document. The fee ususally covers both.)


Please confirm if where I think the fees go are correct and when/if they are PPFC. Thank you .

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Help . . . .Pretty Please?

I'll take a stab at it.

1. The filing fee would not be a PPFC. Otherwise you are correct. Although I'm not sure why you would charge a fee to subordinate your own loan?

2. Neither would be a PPFC. Otherwise you are correct.

3. Neither would be a PPFC. Otherwise you are correct.

4. Fee would be in Box 1. The filing fee would not be a PPFC.

Thank you-I was just trying to cover every situation that could ever come up. Thanks.

1. The filing fee would not be a PPFC. Otherwise you are correct. Although I'm not sure why you would charge a fee to subordinate your own loan?

I don't disagree with Randy very often but I do take a differing opinion on this issue.

Government filing fees to record your lien are exempt from the finance charges but in the case of a subordination you do not need to file it to record your lien. You only need to record it to insure your lien is recorded in the position that you want it to be. Therefore I would have to opine the subordination filing fee would be a finance charge because the subordination was a condition and charge relating directly to the loan transaction.


PS. We also include the cost for the preparing the subordination agreement, again because it is a requirement and charge related directly to the loan transaction.

Dan, I guess I read this section a little more broadly than you do. They are all charges directly related to the loan transaction.

4(e) Certain security interest charges.

1. Examples.

i. Excludable charges. Sums must be actually paid to public officials to be excluded from the finance charge under § 226.4(e)(1) and (e)(3). Examples are charges or other fees required for filing or recording security agreements, mortgages, continuation statements, termination statements, and similar documents.....

I'm basing mine on the Commentary to the section you cite.

(e) Certain security interest charges. If itemized and disclosed, the following charges may be excluded from the finance charge:

(1) Taxes and fees prescribed by law that actually are or will be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest.

You don't need to file a subordination agreement to perfect your security interest, you only need it to insure your perfected security interest is in the lien position you want.

My break is just about up and I have to get back to the "dungeon". But it very well may be a matter of interpretation but in this case I would have to opine as I am because you really don't need the subordination agreement to file (perfect) your security interest.