Looking for guidance on a survey fee that is charged on a construction loan at the time of closing, but survey is not done until foundation is in place, weeks later. Is this considered a prepaid finance charge, and if so, can you point me to the proof of that?

Thanks

A survey fee you collect for up front would be a prepaid finance charge if the survey occurs after consummation. Real estate related charges are only excluded if the service occurs before closing (in connection with the initial decision to grant credit).

From the commentary to 1026.4(c)(7):
"3. Charges assessed during the loan term. Real estate or residential mortgage transaction charges excluded under §1026.4(c)(7) are those charges imposed solely in connection with the initial decision to grant credit. This would include, for example, a fee to search for tax liens on the property or to determine if flood insurance is required. The exclusion does not apply to fees for services to be performed periodically during the loan term, regardless of when the fee is collected. For example, a fee for one or more determinations during the loan term of the current tax-lien status or flood-insurance requirements is a finance charge, regardless of whether the fee is imposed at closing, or when the service is performed. If a creditor is uncertain about what portion of a fee to be paid at consummation or loan closing is related to the initial decision to grant credit, the entire fee may be treated as a finance charge."

Thanks Adam. Trying to make a convincing argument.

Any such fee that you collect after closing (sometimes such fees are deducted from progress disbursements) will also be a finance charge, but not a PPD finance charge.

Unless I'm missing something (increasingly likely each day), Section 1026.2(a)(23) disagrees.

Unless I'm mistaken [also likely as 'future fees' isn't my strong point...we collect at closing or book and collect at payoff], I think their inclusion of fees withheld from proceeds are just those withheld literally in conjunction with consummation/booking and not fees later taken out of a draw on a LOC.