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#2264245 - 01/03/22 10:53 PM Finance Charges
KeepSmiling Offline
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Joined: Jun 2008
Posts: 85
We are going to contract with a company to send us consumer loans. We will underwrite and close the loans. The company is charging a doc prep fee that they will retain. Since we are not retaining this fee, it is not a FC, correct? The company wants to reimburse us for our out of pocket expenses from that doc prep fee. We would not charge the borrower for the out of pocket costs. Do you see any issues with that?

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Lending Compliance
#2264246 - 01/03/22 11:19 PM Re: Finance Charges KeepSmiling
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Why is it not a finance charge?

1026.4(b)(6) Charges imposed on a creditor by another person for purchasing or accepting a consumer's obligation, if the consumer is required to pay the charges in cash, as an addition to the obligation, or as a deduction from the proceeds of the obligation.
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#2264248 - 01/04/22 12:50 PM Re: Finance Charges KeepSmiling
Richard Insley Offline
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Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
Originally Posted by KeepSmiling
doc prep fee that they will retain...reimburse us for our out of pocket expenses from that doc prep fee.
It would be interesting to see how this company retains a fee...but hands it to your bank. This is one of those times when it will be much cheaper to get it right the first time. Since this proposed practice would, by design, fail to disclose a FC, it would be a reimbursable pattern of violations of Reg. Z.
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#2264251 - 01/04/22 03:10 PM Re: Finance Charges KeepSmiling
KeepSmiling Offline
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Joined: Jun 2008
Posts: 85
Ahhh, got it. Thank you!

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