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#938748 - 04/09/08 05:09 PM Settlement charge = finance charge
Tryin-2-Comply Offline
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Joined: Apr 2003
Posts: 202
Hills of TN
- In my former life - i was taught that a settlement fee charged by a third party is considered a finance charge. After many long hours and coming to the conclusion that my former teacher is wrong ---- i wanted to ask others for their interrepretation as well.

If a settlement charge is part of a real estate transaction and because the fee is also charged to cash customers in similar situations - then the fee is not considered a finance charge. Is this accurate or would it only be accurate if the fee is consistenly charged or if the same closing agent is used.

if the bank charged a settlement fee for refinances - then it would be a finance charge?

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#938791 - 04/09/08 05:51 PM Re: Settlement charge = finance charge Tryin-2-Comply
CRC Offline
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Joined: Apr 2008
Posts: 73
Wiscsonsin
Take a look at Reg. Z, 226.4 and the Commentary. Certain settlement fees (for example, fees for real estate appraisals and title insurance) are exempt from being included in finance charge with respect to mortgage and real estate secured transactions. The exemption applies regardless of whether they are paid to third parties or the lender.
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Merely my opinion...

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#938808 - 04/09/08 06:05 PM Re: Settlement charge = finance charge CRC
Tryin-2-Comply Offline
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Joined: Apr 2003
Posts: 202
Hills of TN
thanks.

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#938830 - 04/09/08 06:30 PM Re: Settlement charge = finance charge Tryin-2-Comply
Tryin-2-Comply Offline
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Joined: Apr 2003
Posts: 202
Hills of TN
New question - if the bank requires the service (of the closing agent) - then i'm under the opinion it is a finance charge.

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#938892 - 04/09/08 07:04 PM Re: Settlement charge = finance charge Tryin-2-Comply
Dollye7 Offline
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Dollye7
Joined: Jun 2006
Posts: 255
Southwest USA
When you said "settlement fee," in the first post - I understood you to mean the fee charged by an agency or attorney to close the loan, which we always consider a prepaid finance charge. We require the services of the agency or attorney and it is not specifically exempted.

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#938938 - 04/09/08 07:39 PM Re: Settlement charge = finance charge Dollye7
Tryin-2-Comply Offline
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Joined: Apr 2003
Posts: 202
Hills of TN
I apologize - i did not include all the info in my original post and am learning that the specifics can cause an answer to go either way.

We require the service of a closing attorney for all purchase transactions - and we count that as a prepaid finance charge.

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