I've read the regulation, commentary and many previous posts regarding finance charges-but I'm not finding this addressed and need some help thinking this through.

We charge a .25% NON-REFUNDABLE float down fee at the time of application, which allows the applicant after a lock to do a one time float down to a lower current rate.

Since the fee is not refundable, and it would be offered in a similar cash transaction, I'm leaning towards it not being a finance charge, but since it seems similar to a discount point, could it could be a finance charge?


opinions expressed are my own and not those of my employer

How would a rate decrease provision be allowed in a cash comparable transaction?

See if this helps. This is XL.

The OCC also has this on PDF page 98, book page 95 in a TiLA manual.

Sorry! I must still be in vacation mode. Why on earth would they need to float a rate if they are paying cash?!

Thanks for the chart, this seems more like a discount point, allowing the borrower to buy down or float down at a later time. So I think it's a finance charge.

I would agree.

In reply to:

---

How would a rate decrease provision be allowed in a cash comparable transaction?

---

My thought exactly. I see no way this could be a fee associated with a comparable cash transaction, as a cash transactio would not have "rate" to buy down.

Melissa, IMO this fee is a finance charge, it is a fee your institution is charging in relation to the loan.