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#2126586 - 04/17/17 07:06 PM HELOC fees
gunches Offline
100 Club
Joined: Dec 2005
Posts: 210
We were told by an examiner when we first started doing HELOC's a number of years ago, that we couldn't advance the fees directly from the HELOC to our loan fee account. We would need to advance the fees to the borrower's checking account and have him write a check for those fees. I cannot remember the reason why though and I need to explain it to our new lenders. If I remember correctly, it had something to do with finance charge??? Can somebody help please - thank you!

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Lending Compliance
#2126590 - 04/17/17 07:16 PM Re: HELOC fees gunches
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,455
Bloomington, IN
Whether you advance the closing fees to the borrower's checking account or to your GL account the first advance is still financing start up fees and the initial periodic statement would have to make the required disclosure in 1026.7.

8. Start-up fees. Points, loan fees, and similar finance charges relating to the opening of the account that are paid prior to the issuance of the first periodic statement need not be disclosed on the periodic statement. If, however, these charges are financed as part of the plan, including charges that are paid out of the first advance, the charges must be disclosed as part of the finance charge on the first periodic statement. However, they need not be factored into the annual percentage rate. (See ยง 1026.14(c)(3).)
The opinions expressed are mine and they are not to be taken as legal advice.

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#2126591 - 04/17/17 07:17 PM Re: HELOC fees gunches
rlcarey Online
10K Club
Joined: Jul 2001
Posts: 77,548
Galveston, TX
It is not prohibited. You just have to disclose them on the first periodic statement correctly. See the commentary to 7(a)(6)(ii) Other Charges.
The opinions expressed here should not be construed to be those of my employer:

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#2128769 - 05/02/17 04:11 PM Re: HELOC fees gunches
Antilles Offline
100 Club
Joined: Jan 2007
Posts: 208
Southern US
Are there regulatory requirements if you switch from 1026.7(b)(6) to 1026.7(a)(6)?
"Success is going from failure to failure without a loss of enthusiasm." - Sir Winston Churchill

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