I am trying to get the finance charge vs prepaid finance charges through my head - I need some help. I have already printed off the fiance charge chart. Examiners found a secondary market (freddie mac) loan that had a freddie mac fee (cash out fee/high LTV) on the TIL that should have been a prepaid finance charge and was not done correctly on the TIL. I am trying to understand the difference between finance charge and the prepaid ones.
With the freddie mac loans we have the underwriting fee, tax related fee, life of flood fee, odd days interest, 2 pmi payments(if applicable)origination fee(if applic) and the points (if applic) as prepaid charges.
It says that prepaid finance charge means any finance charge paid separately in cash or by check before or at consummation of a transaction, or withheld from the proceeds of the credit at any time.
Those listed above would fall in the withheld from the proceeds of the credit because the first two don't apply on the secondary market loans-the fees are in the settlement statement.
I guess I just do not understand the difference of prepaid finance charges vs finance charges- I cannot get it into my head.
Also, freddie mac will be charging a fee now for mobile home loans to the borrower so I am thinking that that fee would be classified as a prepaid. Thanks for your help. I need it.