Are these PPFCs?

Posted By: Many Hats

Are these PPFCs? - 10/03/14 01:57 PM

We charge a "foundation survey" and "final survey" fee on our construction-perm loans. We have always been showing them as a PPFC because these are costs that are paid during the construction phase. We collect them at closing to hold in a Construction Escrow Funds account and disburse as we receive the invoices.

But, the typical survey fee is not considered a PPFC.

Should these be PPFCs or not?
Posted By: Dan Persfull

Re: Are these PPFCs? - 10/03/14 02:31 PM

See the Commentary to 1026.4(c)(7) (3).
Posted By: Many Hats

Re: Are these PPFCs? - 10/03/14 04:41 PM

Okay, so this is what it says (snip below). Based on the statement "The exclusion does not apply to fees for services
to be performed periodically during the loan term, regardless of when the fee is collected", it seems that the fees I mentioned above WOULD BE considered PPFCs since the services are being performed during the loan term, so they are not excluded. Am I reading this right?


3. Charges assessed during the loan term.
Real estate or residential mortgage transaction
charges excluded under 1026.4(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.
Posted By: Dan Persfull

Re: Are these PPFCs? - 10/03/14 04:45 PM

it seems that the fees I mentioned above WOULD BE considered PPFCs since the services are being performed during the loan term, so they are not excluded. Am I reading this right?

Yes.