Should GAP, MBI, and Debt Protection be included in the APR at origination? The FI that I worked at previously did not include these items in the APR. The new FI I work does include them. Any guidance would be appreciated.

Pardon my ignorance. What is MBI?

MBI is Mechanical Breakdown Insurance.

Well, we don't really have enough information - voluntary, involuntary, and how you disclose it all plays into the equation.

You need to refer to 1026.4(d) to make that determination:

https://www.bankersonline.com/regulations/12-1026-004

As Randy's cite indicates, your actual question is "are these items Finance Charges?" Each item must be judged separately and all that are FCs must be reflected in the APR. The only remaining question would be "how?"

When a borrower's contractual obligation to pay a FC is satisfied at or before consummation, then that makes the fee a Prepaid Finance Charge and it hits the APR up front. In other cases, the fee would be a garden-variety FC and would be included in the APR as part of the payment schedule.

Thanks for the feedback.

If the GAP, BMI, and Debt Protection are voluntary and the member has signed documents either opt in/out, would it be included in the APR?

Without review of your actual disclosures, who is to say:

Official Interpretation

4(d) Insurance and Debt Cancellation and Debt Suspension Coverage

1. General. Section 1026.4(d) permits insurance premiums and charges and debt cancellation and debt suspension charges to be excluded from the finance charge. The required disclosures must be made in writing, except as provided in §1026.4(d)(4). The rules on location of insurance and debt cancellation and debt suspension disclosures for closed-end transactions are in §1026.17(a). For purposes of §1026.4(d), all references to insurance also include debt cancellation and debt suspension coverage unless the context indicates otherwise.

Randy,Thanks for the information. Does it matter if the fee for GAP, MBI, or Debt protection is included in the amount financed or if it is paid separately at closing?