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#51303 - 12/31/02 05:15 PM Flood Certificate fee and Tax Service fee
Anonymous
Unregistered

Are these considered to be prepaid finance charges for the purpose of APR calculations?

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Lending Compliance
#51304 - 12/31/02 05:31 PM Re: Flood Certificate fee and Tax Service fee
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 47,017
Bloomington, IN
For the FZD only the portion for LOL monitoing is considered a finance charge. If you are not able to break out the portion for LOL, then you should inlcude the whole fee as a finance charge, providing you use LOL monitoring.

The Tax Service Fee is a finance charge.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#51305 - 12/31/02 06:00 PM Re: Flood Certificate fee and Tax Service fee
Anonymous
Unregistered

New in compliance so please expend on the LOL acronym.

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#51306 - 12/31/02 06:11 PM Re: Flood Certificate fee and Tax Service fee
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,292
Life of Loan.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#51307 - 12/31/02 06:16 PM Re: Flood Certificate fee and Tax Service fee
Dan Persfull Online
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,017
Bloomington, IN
Anon, sorry. Some of us "old timers" takes the acronyms for granted.

Thanks for expanding on the LOL Kathleen.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#51308 - 12/31/02 06:21 PM Re: Flood Certificate fee and Tax Service fee
Anonymous
Unregistered

thanks to both of you!!! Wish you a happy and conpliant New Year!!!!

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#51309 - 12/31/02 06:22 PM Re: Flood Certificate fee and Tax Service fee
complyguy Offline
Gold Star
complyguy
Joined: May 2001
Posts: 494
PA
LOL = Life of Loan, except in Friday Frivolity post, where it means Laugh Out Loud.

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#51310 - 12/31/02 07:34 PM Re: Flood Certificate fee and Tax Service fee
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
In the Spirit of teaching you to fish (rather than giving you a fish), I offer the following:

The Staff Commentary to the Truth in Lending Act [Section 226.4(c)(7) #3] states "real estate or residential mortgage transaction charges excluded under Section 226.4(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."

Therefore, if the bank uses an external flood insurance company to monitor a property for the life of the loan, this fee must be disclosed as a prepaid finance charge.
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David Dickinson
http://www.bankerscompliance.com

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