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#29903 - 08/28/02 07:23 PM POC fees and TIL

Would someone please help me to understand why the APR in the Fed Box is much higher when the customer pay's no fees - the bank is absorbing "all" fees. We disclose the fees on the GFE and final TIL as POC. I'm posting this anonymously because I'm embarrassed to have to ask for a simplified answer. I'm looking for something easy to give our people in the branches who have to explaine this to the customer.

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Lending Compliance
#29904 - 08/28/02 09:01 PM Re: POC fees and TIL

It appears you are referring to a no closing cost loan where the bank pays all closing costs. You are correct in that the fees must be disclosed on the GFE and on the HUD as POC by the bank. However, these are not prepaid finance charges for the borrower as they are not paying these fees. Only prepaid FC paid by the borrower are included on the TIL. It sounds like your APR is overstated.

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#29905 - 08/29/02 04:22 PM Re: POC fees and TIL
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,416
Bloomington, IN
I agree, it sounds like you are including those fees in your PPFCs. Make sure the items are marked "POC Lender" in your documentation software and that should correct the problem.
The opinions expressed are mine and they are not to be taken as legal advice.

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#29906 - 09/09/02 01:48 PM Re: POC fees and TIL
Terry Offline
Gold Star
Joined: Sep 2001
Posts: 314
This is addressed in the commentary to Reg Z at 226.4(a), comment #2 labeled "Costs of doing business".
All statements are my own and not necessarily those of my employer.

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