We had a compliance audit and they discovered that our doc prep fee really included money that should have been classified as origination. Because of this the APR on the TIL was incorrect for loans that we had already closed. We have fixed the problem going forward but are trying to determine what we should do in regards to the loans that were already closed. Should we refund any money? We have considered refunding the amount that was classified incorrectly.

Must have been a hefty fee if a part of one fee throws the APR out of tolerance.


We had a compliance audit and they discovered that our doc prep fee really included money that should have been classified as origination.

Can you explain this more. First, you need to make sure they are correct.

They found 4 loans where the final TIL understated the finance charge due to not including settlement costs/closing fees as finance charges. It ranged from $150 to $750. I don't know that the difference was necessarily out of tolerance. I would have to look back and see. That was not specifically mentioned.

OK - you originally said doc prep fee - so I was just wondering and it threw me off a little.

You have two scenarios to consider:

One: The APR is out of tolerance and would result in a cure ordered by the regulators if found.

Two: Your finance charge is under-disclosed by more than $100 and that presents certain civil liability to the consumer.

You might want to get with your legal counsel to develop a cure strategy.

I apologize for the confusion. So if we are out of tolerance should we cure before regulators find it? We want to be proactive. How do we determine the cure? And on part 2 we would just reimburse the amount that was incorrectly disclosed? or just the amount over $100? Sorry for all of the questions. We have just never had this happen before.

The APR Win program has the reimbursement scenarios in it.
http://www.occ.gov/tools-forms/tools/compliance-bsa/aprwin-software.html

For amounts that low, I would recommend reimbursement and training.