Page 1 of 2 1 2
Thread Options
#396409 - 08/03/05 11:50 PM Flood fee & Reg Z finance charge
Compliance101 Offline
Gold Star
Compliance101
Joined: Oct 2004
Posts: 473
Tennessee
If the bank does not separate the flood determination fee and the life of loan fee, can the bank include the whole flood fee in the finance charge for Reg Z?
_________________________
"No one can make you feel inferior without your consent."
Eleanor Roosevelt

Return to Top
Lending Compliance
#396410 - 08/04/05 12:29 AM Re: Flood fee & Reg Z finance charge
Anonymous
Unregistered

Yes, in fact if you do not or cannot determine which portion is life of loan vs. initial determination you must disclose it as a finance charge. This is assumming you are talking about an RMT or real estate secured loan. If you have an odd ball loan such as a refi of a mobile home, with no land the whole fee is a finance charge anyway.

Return to Top
#396411 - 08/04/05 12:22 PM Re: Flood fee & Reg Z finance charge
upstateNY Offline
Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
Quote:

Yes, in fact if you do not or cannot determine which portion is life of loan vs. initial determination you must disclose it as a finance charge. This is assumming you are talking about an RMT or real estate secured loan. If you have an odd ball loan such as a refi of a mobile home, with no land the whole fee is a finance charge anyway.



Anon, why would you say that the life of loan fee is treated differently for a mobile home loan?

Return to Top
#396412 - 08/04/05 01:12 PM Re: Flood fee & Reg Z finance charge
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,235
Galveston, TX
A mobile home may not be considered real property and if it is a refi, the transaction is not a RMT. In that case, your exclusion from a finance charge at 226.4(c)(7) goes away.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#396413 - 08/04/05 03:53 PM Re: Flood fee & Reg Z finance charge
upstateNY Offline
Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
Quote:

A mobile home may not be considered real property and if it is a refi, the transaction is not a RMT. In that case, your exclusion from a finance charge at 226.4(c)(7) goes away.



Richard, so are you saying that for a mobile home loan only (no land), under 226.4(b) that the entire flood determination fee would be a "finance charge"? (However, excluded under 226.4(c)(7) for residential real estate?)

But, the life of loan portion of the fee would be a "pre-paid" finance charge in both mobile home only and residential real estate secured? Correct?

Return to Top
#396414 - 08/04/05 03:55 PM Re: Flood fee & Reg Z finance charge
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,235
Galveston, TX
You got it!
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#396415 - 08/04/05 06:01 PM Re: Flood fee & Reg Z finance charge
upstateNY Offline
Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
Quote:

You got it!



Thanks, its as clear as glass now, and pretty much was as soon as I read your initial response. Just had not been questioned on this before. Glad you could help.

Return to Top
#396416 - 08/04/05 07:09 PM Re: Flood fee & Reg Z finance charge
upstateNY Offline
Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
Quote:

You got it!



Thought I had it, but let's beat this to death.
SCENARIO - Mobile home loan, land only, amount of loan $3,000.00. We add to that and finance the: Ucc Direct Fee of $13.50 (paid to an outside vendor which files our liens for us, therefore is a FC), $20.00 to Public Officials for the UCC filing, $10.00 Standard Flood Determination fee, and $3.50, Life of Loan flood Fee.

$3,000.00
+ 13.50 UCC Direct Fee (is a FC)
+ $20.00 UCC Fee
+ $10.00 Standard Flood Fee (is a FC)
+ $3.50 Life of Loan Flood Fee (is a FC)
$ 3,047.00
- 13.50 UCC Direct Fee
- 10.00 Flood Fee
- $3.50 Life of Loan Flood Fee
$ 3,020.00 Amount Financed

Does this look correct to you?

And, for a real estate secured loan where the UCC Direct Fee and LOL Flood Fee are not financed into the loan amount, wouldn't we still need to treat the dollar amounts as prepaid by subtracting them from the amount financed and adding to the finance charge?

Oops, I'm looking at Reg Z Commentary, 226.18(b)(3)
Last edited by upstateNY; 08/04/05 07:10 PM.
Return to Top
#396417 - 08/04/05 07:16 PM Re: Flood fee & Reg Z finance charge
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,235
Galveston, TX
"Mobile home loan, land only" - which is it???? A MH loan or a loan on only the land? or both?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#396418 - 08/04/05 07:27 PM Re: Flood fee & Reg Z finance charge
upstateNY Offline
Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
Quote:

"Mobile home loan, land only" - which is it???? A MH loan or a loan on only the land? or both?



Oh crap, mobile home, no land. I must have proof-read this half a dozen times too.

Return to Top
#396419 - 08/04/05 07:38 PM Re: Flood fee & Reg Z finance charge
Clint,,,,, Offline
Gold Star
Clint,,,,,
Joined: Apr 2003
Posts: 382
Way Out West
upstate,

I'll show my ignorance and ask what is the "$13.50 UCC Direct Fee" used for?
Last edited by Clint,,,,,; 08/04/05 07:39 PM.
_________________________
"Are you going to pull those pistols or whistle Dixie?"

Return to Top
#396420 - 08/04/05 07:45 PM Re: Flood fee & Reg Z finance charge
upstateNY Offline
Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
Quote:

upstate,

I'll show my ignorance and ask what is the "$13.50 UCC Direct Fee" used for?



As I indicated, it is a fee paid to an outside vendor which electronically does our UCC filing for us. And don't feel ignorant. I'm feeling like I'm spending time spinning my wheels for these damn fees that typically won't mean a hill of beans in the long run (except to a REG Z fanatic or examiner). BUT, I strive for perfection as much as possible.

Return to Top
#396421 - 08/04/05 08:00 PM Re: Flood fee & Reg Z finance charge
Clint,,,,, Offline
Gold Star
Clint,,,,,
Joined: Apr 2003
Posts: 382
Way Out West
Thank you for the explanation. Now back to your original scenario.

Here's the way I have been taught---Since the $10.00 Flood Fee is being paid by the consumer due to a regulatory requirement,,,it is NOT a prepaid finance charge.

However, the Life of Loan fee is a fee that is being imposed on the consumer by the Bank (for it's own protection) and therefore would be a Prepaid Finance Charge.

With that in mind, and assuming I am correct, then your amount financed should be $3,030.00.
_________________________
"Are you going to pull those pistols or whistle Dixie?"

Return to Top
#396422 - 08/04/05 08:19 PM Re: Flood fee & Reg Z finance charge
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,762
Bloomington, IN
I agree with $3,030.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#396423 - 08/04/05 08:31 PM Re: Flood fee & Reg Z finance charge
upstateNY Offline
Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
Quote:

I agree with $3,030.



Why aren't you also subtracting out the standard flood fee of $10.00? We are financing it and it is a finance charge for a loan without real estate.

Return to Top
#396424 - 08/04/05 08:35 PM Re: Flood fee & Reg Z finance charge
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,762
Bloomington, IN
Because dumba$$ me didn't read the posts and only looked at the figures.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#396425 - 08/04/05 09:00 PM Re: Flood fee & Reg Z finance charge
Clint,,,,, Offline
Gold Star
Clint,,,,,
Joined: Apr 2003
Posts: 382
Way Out West
Upstate,

Your initial question did not state whether this was a purchase or non-purchase of the mobile home. If this is a purchase then it meets the definition of a residential mortgage transaction, which would make the flood determination fee NOT be a prepaid finance charge.

Otherwise, as you stated, it is a prepaid.

Tricky,,,Right???
_________________________
"Are you going to pull those pistols or whistle Dixie?"

Return to Top
#396426 - 08/04/05 09:08 PM Re: Flood fee & Reg Z finance charge
Anonymous
Unregistered

Not to throw a monkey in the wrench works but how does the following play into the refi mobile home loan situation. Is the definition of what is Real Property/Real Estate defined by state law or under Reg Z someplace???

Are mobile homes real estate?
Answer by Sam Ott, BOL Guru
BIO AND CONTACT INFO

QUESTION: Do you consider mobile homes real estate? Without land I would think they would be considered more like a car loan.

ANSWER: Under Revised Article 9, a mobile home is not considered "real estate" until it becomes a fixture. Fixtures are defined as goods that have become so related to particular real property that an interest in them arises under real property law. What is required to become a fixture depends on State law and case law. In some jurisdictions, the wheels of the mobile home must be removed and the mobile home attached to a concrete or brick foundation, in others, the connecting of the utilities is sufficient to to make the mobile home subject to real estate law.

If the mobile home is not a fixture, it would be most likely be considered a manufactured home under RA9. Small mobile homes less than 8 feet in width or 40 feet in length or less than 320 square feet in area are not by definition manufactured homes.

First published on BankersOnline.com 12/3/01

Return to Top
#396427 - 08/04/05 09:19 PM Re: Flood fee & Reg Z finance charge
Clint,,,,, Offline
Gold Star
Clint,,,,,
Joined: Apr 2003
Posts: 382
Way Out West
Section 226.2 of Reg. Z defines a Residential Mortgage Transaction as:

(24) Residential mortgage transaction means a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained in the consumerís principal dwelling to finance the acquisition or initial construction of that dwelling.

And then goes on to define a "dwelling" as:

(19) Dwelling means a residential structure that contains 1 to 4 units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.
_________________________
"Are you going to pull those pistols or whistle Dixie?"

Return to Top
#396428 - 08/04/05 09:24 PM Re: Flood fee & Reg Z finance charge
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,762
Bloomington, IN
The exemptions in 226.4(c)(7) apply to loans secured by real property - without land - you don't have real property. Unless of course it falls under a state law definition, but I have never seen a state law define a MH as real property unless permanently "affixed" to land.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#396429 - 08/04/05 09:31 PM Re: Flood fee & Reg Z finance charge
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,235
Galveston, TX
Wow - I leave for an hour and you guys beat this to death.

I agree with the final conclusions - on a MH loan only - it hinges on the purpose - RMT = exclude the FHD fee from the finance charge - and - Not an RMT = include the FHD fee in the finance charge.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#396430 - 08/04/05 09:52 PM Re: Flood fee & Reg Z finance charge
Anonymous
Unregistered

So if State Law defines real property as "That which is affixed to land;" And the Mobile Home in question is attached to a permanent foundation (pier and post) Then would it be eligible for the Reg Z 226.4(c)(7)finance charge exclusions? Or has real property/real estate been defined somewhere in Reg Z? Let's beat this to death, I have money riding on the answer.

Return to Top
#396431 - 08/04/05 10:00 PM Re: Flood fee & Reg Z finance charge
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,235
Galveston, TX
Reg Z leaves it to State law. Normally you can have a mobile home permanently affixed, but unless it has been officially converted to real property under State law it would not qualify for the exclusion. Conversion to real property usually involve the relinquishing of the "title" which is the typical way the ownership of a mobile home is documented.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#396432 - 08/30/05 04:06 PM Re: Flood fee & Reg Z finance charge
upstateNY Offline
Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
Here we go again. Not enough room on our installment loan contracts to do what I detailed below. (Somebody shoot me.)


Quote:

SCENARIO - Mobile home loan, no land, amount of loan $3,000.00. We add to that and finance the: Ucc Direct Fee of $13.50 (paid to an outside vendor which files our liens for us, therefore is a FC), $20.00 to Public Officials for the UCC filing, $10.00 Standard Flood Determination fee, and $3.50, Life of Loan flood Fee.

$3,000.00
+ 13.50 UCC Direct Fee (is a FC)
+ $20.00 UCC Fee
+ $10.00 Standard Flood Fee (is a FC)
+ $3.50 Life of Loan Flood Fee (is a FC)
$ 3,047.00
- 13.50 UCC Direct Fee
- 10.00 Flood Fee
- $3.50 Life of Loan Flood Fee
$ 3,020.00 Amount Financed

Does this look correct to you?






Can we lump the entire flood certification fee together and label the entire $13.50 as a finance charge? And then, can we subtract out the entire $27.00 and label it all as "prepaid fees" without detailing the individual amounts?
Modify the example to:
$3,000.00
+ 13.50 UCC Direct Fee (FC)
+ 20.00 UCC Fee (not a FC)
+ 13.50 Flood Fee (entire amount is FC)
$3,047.00 Total
- 27.00 Prepaid Finance Charge
$3,020.00 Amount Financed

Return to Top
#396433 - 08/30/05 04:27 PM Re: Flood fee & Reg Z finance charge
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,762
Bloomington, IN
Your condensed version looks fine to me.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
Page 1 of 2 1 2

Moderator:  Andy_Z