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#1888590 - 01/21/14 05:18 PM APR Finance charges to include
lrocha Offline
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Ok, I have a question for whoever can answer. We have an affiliate for Title with our Company. Do I need to include all the Title charges and departmentals as a Finance charge? And if we only include the portion that the Title company retains how would be do that in oour system since we will not know the amount until the loan actually closes. In our system in order to calculate the APR we would need to check to include it as a finance charge or not. I would not know the amount that they Title company retains until we close the loan so our actual estimate will be on the entire amount of the Title charge.

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HOEPA and Homeowner Counseling Rule
#1888705 - 01/21/14 07:20 PM Re: APR Finance charges to include lrocha
Reads Regs Offline
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Back in October, the CFPB provided some informal guidance to the MBA and ABA about their rules. One of the items addressed related to fees paid to affiliates. They said to count the portion that was actually retained by the affiliate.
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#1889073 - 01/22/14 06:15 PM Re: APR Finance charges to include lrocha
Deena Offline
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You include the portion retained by the bank or its affiliate in the points and fees calculation, but that does not make it a finance charge. Title charges are still excluded from the finance charge under 1026.4(c)(7).
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#1889386 - 01/23/14 02:55 PM Re: APR Finance charges to include Deena
lrocha Offline
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Right but in our points and fees calculation we need to make it a finance charge in our system in order to calculate correctly. Or am I missing something?

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#1889391 - 01/23/14 03:02 PM Re: APR Finance charges to include lrocha
dblack Offline
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I have no clue how your system works, but if it requires you to do that you'll probably be having APR/Finance charge tolerance issues.

The charge can be included in the P&F calculation and not a FC. If your system requires you to mark it as a FC to include it in the P&F test, you are either going to have TIL errors or missed fees in the P&F test.
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#1889400 - 01/23/14 03:13 PM Re: APR Finance charges to include lrocha
rlcarey Online
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That was my question: What does the points and fees test have to do with whether are not the fee is also a finance charge?
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#1889420 - 01/23/14 03:39 PM Re: APR Finance charges to include dblack
lrocha Offline
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so your saying its not calculated as a finance charge? Then how does it test for the Points and fees if we dont include it as a Finance charge? The new reg states if we have an affiliate we need to include that portion they recieve as a finance charge

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#1889424 - 01/23/14 03:42 PM Re: APR Finance charges to include lrocha
dblack Offline
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The definition of a finance charge did not change with the new rules. What is included in points and fees did.

The calculation for APR/Finance charges is totally separate from the P&F test.
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#1889427 - 01/23/14 03:45 PM Re: APR Finance charges to include lrocha
rlcarey Online
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I think you need to visit with your vendor as I would think that your should be able to code fees to either be a finance charge or not and separately code them for the points and fees testing. They are two very different things as others have pointed out.
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#1889443 - 01/23/14 03:59 PM Re: APR Finance charges to include dblack
lrocha Offline
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Sorry maybe i was not explaining myself. I get the HOEPA part and points and fees where it has not changed the rule but I am testing for Section 43 HPCT and we are failing because we have included in this part the Title company who is an affiliate in the finance charge to calculate the Points and fees in this test. This is the section we need to add as a finance charge because they are an affiliate.

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#1889466 - 01/23/14 04:13 PM Re: APR Finance charges to include lrocha
dblack Offline
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We are all saying that if you have to mark a fee as a FC to get it counted in the P&F test on your system, you've got system problems.

The affiliate title fee is not a finance charge, but the portion retained by the affiliate or bank is included in P&F test.

Your APR is likely overstated if you are marking all of the fees from your P&F test as finance charges.
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#1907877 - 03/22/14 06:27 PM Re: APR Finance charges to include dblack
river girl Offline
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I just want to make sure I am understanding the points and fees test vs the APR test.

Take credit report fee and appraisal fee - both paid to 3rd parties.

For APR calculation, both of these fees are excluded.

For P&F test, both of these fees are included.

Am I on the right path?

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#1907944 - 03/24/14 03:07 PM Re: APR Finance charges to include river girl
river girl Offline
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bump

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#1908633 - 03/26/14 12:54 PM Re: APR Finance charges to include lrocha
RR Joker Offline
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I hope not, because I don't have either marked when it's 3rd party. (My in-house evals are included).
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#1908771 - 03/26/14 04:38 PM Re: APR Finance charges to include lrocha
Always questions Offline
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Jumping off your last remark.

Do you consider in-house eval as a prepaid finance charge or a finance charge or neither

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#1908802 - 03/26/14 05:34 PM Re: APR Finance charges to include lrocha
RR Joker Offline
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The Swamp
PPFC
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#1908812 - 03/26/14 05:46 PM Re: APR Finance charges to include lrocha
Always questions Offline
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So it is included in the P & F test, in the amount financed calc, and doesn't have to be subtracted out again from the amount financed to get to TLA because it's a PPFC. Correct?

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#1908825 - 03/26/14 05:59 PM Re: APR Finance charges to include lrocha
RR Joker Offline
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RR Joker
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The Swamp
Right.
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#1909087 - 03/27/14 02:34 PM Re: APR Finance charges to include lrocha
rlcarey Online
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Galveston, TX
Why is an in-house evaluation a PPFC????

4(c)(7) Real-Estate Related Fees

1. Real estate or residential mortgage transaction charges. The list of charges in 1026.4(c)(7) applies both to residential mortgage transactions (which may include, for example, the purchase of a mobile home) and to other transactions secured by real estate. The fees are excluded from the finance charge even if the services for which the fees are imposed are performed by the creditor's employees rather than by a third party.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1909122 - 03/27/14 03:10 PM Re: APR Finance charges to include lrocha
RR Joker Offline
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RR Joker
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The Swamp
Yes, I stand corrected....not a FC, is an 'origination charge' is a 'points and fees' charge. crazy
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#1909123 - 03/27/14 03:11 PM Re: APR Finance charges to include lrocha
Always questions Offline
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Posts: 64
Thanks!

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#1909135 - 03/27/14 03:16 PM Re: APR Finance charges to include lrocha
Always questions Offline
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Posts: 64
okay, more questions.

Do you separate it from the origination charge or include?

As a separate line item that rolls up into 801 then you would have to subtract the fee from the amount financed to get to the Total Loan Amount, if it was financed. correct?

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#1909144 - 03/27/14 03:23 PM Re: APR Finance charges to include lrocha
RR Joker Offline
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The Swamp
Since the origination charge would be a FC and the in-house is not, it's separated for APR calculation, but it would need to be subtracted to get the TLA since it's not a FC.

I believe you are correct, Always. This matches up with a prior thread where it was broken down nicely (I think dblack did the breakdown)
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#1909148 - 03/27/14 03:27 PM Re: APR Finance charges to include lrocha
Always questions Offline
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Gotcha, thanks

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#1909234 - 03/27/14 04:32 PM Re: APR Finance charges to include lrocha
Always questions Offline
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Posts: 64
Care to share where you put the in-house eval on the GFE and HUD? line items?

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