Thread Options
#1748009 - 10/10/12 03:30 PM HELOCs - fees and charges
Many Hats Offline
Platinum Poster
Joined: May 2008
Posts: 915
Orlando, FL
If the HELOC early disclosure says the fees and charges may range from $400 to $750 (and the fees are not separate out - it is just a simple range) but the borrower ends up paying $1400 in fees, is the bank required to reimburse the amount over $750?

Return to Top
Lending Compliance
#1748015 - 10/10/12 03:32 PM Re: HELOCs - fees and charges Many Hats
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 76,987
Galveston, TX
No, not under Regulation Z. UDAAP maybe. You need to figure out why and fix your early disclosures.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1748050 - 10/10/12 03:58 PM Re: HELOCs - fees and charges Many Hats
Many Hats Offline
Platinum Poster
Joined: May 2008
Posts: 915
Orlando, FL
Okay...on a related note....if the first draw on a HELOC was for the closing costs, is it sufficient to indicate on the periodic statement "Loan Advance", or is more required?

Return to Top
#1748060 - 10/10/12 04:09 PM Re: HELOCs - fees and charges Many Hats
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 76,987
Galveston, TX
Review the commentary to 1026.7(a)(6)(ii) Other Charges.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1748091 - 10/10/12 04:48 PM Re: HELOCs - fees and charges Many Hats
Many Hats Offline
Platinum Poster
Joined: May 2008
Posts: 915
Orlando, FL
Okay...I read it and it indicates that "closing costs or settlement costs, for example, may be used to describe charges imposed in connection with real estate transactions that are excluded from the finance charge."

So, essentially does this mean that the total charges that were NOT finance charges should be reflected on the periodic statement as "closing costs" (for example), and the costs that ARE finance charges (i.e. flood, closing fee) should be reflected as "Other Charges Financed".???

Return to Top
#1748150 - 10/10/12 05:58 PM Re: HELOCs - fees and charges Many Hats
Many Hats Offline
Platinum Poster
Joined: May 2008
Posts: 915
Orlando, FL
FYI...I noticed that the HELOC agreement refers to the charges that are not finance charges as "Security Interest Charges"; however, they are referred to as "Other Charges Financed" on the Disbursement Request and Authorization.

And, the items that are finance charges (such as flood and closing fee) are referred to as "Additional Finance Charges" in the HELOC agreement; however, they are referred to as "Financed Prepaid Finance Charges" on the Disbursement Request and Authorization.

Okay, so having said all that.....it seems to me that the way these charges are referred to on the HELOC agreement and the periodic statement should match. For example, the periodic statement should say something like "Closing Costs - Security Interest Charges" (for those items that are NOT finance charges) and the those that are finance charges, say something like "Closing Costs - Additional Finance Charges".

Does this sound right?

Return to Top
#1748430 - 10/11/12 02:41 PM Re: HELOCs - fees and charges Many Hats
Many Hats Offline
Platinum Poster
Joined: May 2008
Posts: 915
Orlando, FL
Bump

Return to Top
#2258014 - 08/10/21 08:41 PM Re: HELOCs - fees and charges Many Hats
bcompliance Offline
Diamond Poster
Joined: Sep 2014
Posts: 1,224
on our HELOC early disclosure under Third Party Fees, we list the types of fees that the customer will have to pay and then we state a dollar amount or a range for the fees. We then have a "when charged" column that states "at account opening". When the HELOC does not close (denial, withdrawn, etc) we are collecting fees or attempting to collect these fees when they fall within the disclosed range. Is this a UDAAP issue since we're disclosing they'll be charged "at account opening" and the loan didn't open? We have the option to change this to "upon each occurrence" but again, we don't really charge those fees when they occur, it's either at account opening or when the decision is made that the loan isn't going through. Thoughts on this?
_________________________
CRCM, CAMS

Return to Top
#2258019 - 08/10/21 09:23 PM Re: HELOCs - fees and charges Many Hats
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 76,987
Galveston, TX
It may or may not be a UDAAP but under what agreement or legal authority are you collecting these fees. Do you make them sign a specific agreement as such at the time of application? Do you not specifically itemize the fees at that time or notify them of the cost prior to them moving forward?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2258024 - 08/11/21 12:15 PM Re: HELOCs - fees and charges Many Hats
bcompliance Offline
Diamond Poster
Joined: Sep 2014
Posts: 1,224
I am trying to figure out what legal authority we're colleting them. We wanted to have them sign a "loan fee commitment" at application but I was not sure that was legal to do, so I told them to hold off on that until we can figure out what we can and can't do. We do itemize the fees and verbally state that they will have to pay them even if the loan doesn't close, my concern is the disclosure saying the fees are charged "at account opening". The discrepancy between what we tell them, the disclosure says, and then collecting fees when the loan doesn't close is what makes me think UDAAP. We are all trying to do this legally and avoid issues, but also don't want to eat the fees if we don't have to.
_________________________
CRCM, CAMS

Return to Top
#2258027 - 08/11/21 12:35 PM Re: HELOCs - fees and charges Many Hats
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 76,987
Galveston, TX
I agree about the disclosure, if that is not what you are doing. You need to engage legal counsel as the rest of this may be influenced by State law and you would need them anyway to draft an advanced fee agreement.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2258029 - 08/11/21 12:40 PM Re: HELOCs - fees and charges Many Hats
bcompliance Offline
Diamond Poster
Joined: Sep 2014
Posts: 1,224
I think this is my last question, but just want another opinion. If we change the disclosure to say we'll charge "upon each occurrence" are we still going to have an issue with UDAAP if we don't charge as we order the appraisal, title work, etc and only do that when the loan doesn't close or are charging them at closing? I 100% agree with getting legal counsel involved for the fee commitment, I'm not a lawyer and don't want to be one smile
_________________________
CRCM, CAMS

Return to Top
#2258037 - 08/11/21 02:04 PM Re: HELOCs - fees and charges Many Hats
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 76,987
Galveston, TX
I guess my real question is why is there even a "when charged" indication in your early disclosure. There is no such regulatory requirements to make that indication.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2258165 - 08/12/21 08:21 PM Re: HELOCs - fees and charges Many Hats
bcompliance Offline
Diamond Poster
Joined: Sep 2014
Posts: 1,224
well that's a great question. I was looking at the model forms and it lists when payable for the fees and charges, but the third party fees (where this is listed on our disclosure) does not have that now that you point it out. That's why I wanted another opinion! Thank you Randy. we will go back to our vendor that rhymes with taser and is the opposite of an amateur
_________________________
CRCM, CAMS

Return to Top
#2258171 - 08/12/21 08:53 PM Re: HELOCs - fees and charges Many Hats
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,207
Florida
vendor that rhymes with taser and is the opposite of an amateur

Very subtle hint. You’re good!
_________________________
Integrity. With it, nothing else matters. Without it, nothing else matters.

Return to Top

Moderator:  Andy_Z