Is the following BOL article always true?

Question: Regarding Paid Outside Closing fees (POC) on a HUD settlement statement, if the fee is listed as POC on the HUD settlement can it be included in prepaid finance charges? I came across a HUD with POC listed after a credit report fee and flood certification fee, but the fee is included in prepaid finance charges.

Answer: Yes, a fee that qualifies as a finance charge is treated as such regardless of how it is paid.

First published on BankersOnline.com 6/26/06

Yes.

Ditto. It is still out of pocket for the customer.

To add a wrinkle, if the POC is a fee paid by the bank and not the customer, it would not be a PFC since it was not an out of pocket for the borrower. We do or rather use to do "free bank fee" refi's for existing customers if certain conditions were met (rate decrease of a certain amount within a certain period of time)

Correct. The POC as a finance charge applies to those paid by the customer. The HUD documents should reflect paid by whom. For "no closing cost" loans, those types of charges would be POC by bank.

I think that was an answer provided by me. It would be more accurate to restate it as such:

Answer: Yes, a fee that qualifies as a finance charge is treated as such regardless of how it is paid by the borrower.

I was just assuming the questioner was referring to POCs by the borrower, and that it would be assumed if the fee was not paid by the borrower then it does not qualify as a finance charge.

Think of prepaid finance charges as finance charges due before or at the closing table. That may make it easier to understand.