Wouldn't an appraisal waiver fee be considered a prepaid finance charge? This fee would be charged to a customer in a secondary market transaction in cases where the customer's credit scores, LTV, etc. met certain thresholds that the investor would not require an appraisal. But to take advantage of this streamlined process, the customer would have to pay $50 to waive the appraisal. I believe the investor would get the $50.

Any thoughts?

Just curious - how can LTV be determined without an appraisal?

In a purchase transaction, the sales price. I am not sure of all the requirements of the investor, only that if the applicant meets the investor's guidleines then they have the option to pay $50 to waive the appraisal.

The simple answer to your question is “Yes.” By definition, a finance charge is the cost of consumer credit as a dollar amount. It includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit. It does not include any charge of a type payable in a comparable cash transaction. In this example, it makes no difference if an appraisal is warranted or not. The appraisal waiver fee is a condition imposed on the borrower not seen in a comparable cash transaction and therefore, a prepaid finance charge.

That is our thinking as well, but since this was a "new" type of fee, at least to us, I thought I'd ask to get a better comfort level with our decision and to see if other banks are treating it the same way.

Junk fees are almost always FCs.