I am getting conflicting information on whether an annual fee for an overdraft line of credit is part of the MAPR when the annual fee is assessed to the attached checking account rather than to the line. Can anyone shed some light on this one?

Do you charge the same annual OD Protection fee even if the borrower does not have a OD LOC attached to the account?

Adding to this:

What about transaction fees that get charged to the DDA when the ODLOC is accessed?

This transaction fee (let's say $5) gets charged to a DDA automatically if funds are pulled from a ODLOC account to cover a transaction.

This $5 fee is also assessed to a DDA when funds are pulled from a SAV account to cover a transaction.

Because of this, I think the $5 fee is a fee associated with the DDA and should not be considered in the MAPR calculation on the ODLOC.

thoughts?

The fee is for the LOC but our system can't assess it to the line so it is assessed to the checking account. If the checking account doesn't have sufficient funds the line would advance in specified increments to cover the deficit.

I'm trying to get a clear understanding on the MAPR for ODP lines of credit. Am I correct in assuming that since the MAPR % does not have to be "disclosed" on the loan agreement (taken from posts on another thread), that it also does not have to be "disclosed" on the initial ODP line of credit disclosure or the periodic statement? We checked w/ our core processor regarding the periodic statements and were told the following: "Our Compliance has directed us to not print the MAPR on the statement. It would be confusing to print an APR and then a higher MAPR because of fees that aren't included in the APR. If you do charge any fees that would put the MAPR above the threshold, we wouldn't produce the statement on the statement date." In re-reading the reg, it says a lender must calculate the MAPR for account opening as well as for each periodic statement--but it doesn't say it has to be "disclosed". Correct assumption?

Correct. It must be calculate but it does not have to be disclosed.

But you will also want to have ways to monitor the MAPR and ensure that if it does exceed, or come close to, 36% you have a way to correct that.

"The fee is for the LOC but our system can't assess it to the line so it is assessed to the checking account. If the checking account doesn't have sufficient funds the line would advance in specified increments to cover the deficit."

I'd also like to hear what others think about Beth175's question. I'm thinking it would have to be included in the monthly calculation, but I'm not sure how the system would handle it.

I have never set up a polling question on BOL, but maybe that would be a good way to get feedback on this. See if banks are going to considered their annual and transaction fees as tied to the OD LOC or as a fee associated with the DDA account.

Thanks CULady!

The fee is for the LOC but our system can't assess it to the line so it is assessed to the checking account. If the checking account doesn't have sufficient funds the line would advance in specified increments to cover the deficit."

This is how our system does it to. We disclose the fee but it is charged to the DDA account. Does this fee get included in the MAPR calculation? We are just considering waving the fee for covered loans as in most cases will cause the MAPR to be over 36% for these overdraft lines of credit.

We have opted to waive the annual fee on the OD LOC if we happen to have a covered borrower as the MAPR would likely be over 36% unless there was a zero balance for the cycle. We figured it was less expensive to waive the fee on a few loans than to mess with determining the MAPR and waiving or reducing the fee.

Foreign to me but this is a cost of credit, yes? Where you collect it from makes no difference if this is a fee for the line. Before making a conclusion I'd want to refresh myself on open-end finance charges.