Posted By: Anonymous
Flood Certificate fee and Tax Service fee - 12/31/02 05:15 PM
Are these considered to be prepaid finance charges for the purpose of APR calculations?
Flood Certificate fee and Tax Service fee
Posted By: Dan Persfull
Re: Flood Certificate fee and Tax Service fee - 12/31/02 05:31 PM
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.
The Tax Service Fee is a finance charge.
Posted By: Anonymous
Re: Flood Certificate fee and Tax Service fee - 12/31/02 06:00 PM
New in compliance so please expend on the LOL acronym.
Posted By: Kathleen O. Blanchard
Re: Flood Certificate fee and Tax Service fee - 12/31/02 06:11 PM
Life of Loan.
Posted By: Dan Persfull
Re: Flood Certificate fee and Tax Service fee - 12/31/02 06:16 PM
Anon, sorry. Some of us "old timers" takes the acronyms for granted.
Thanks for expanding on the LOL Kathleen.
Thanks for expanding on the LOL Kathleen.
Posted By: Anonymous
Re: Flood Certificate fee and Tax Service fee - 12/31/02 06:21 PM
thanks to both of you!!! Wish you a happy and conpliant New Year!!!!
Posted By: complyguy
Re: Flood Certificate fee and Tax Service fee - 12/31/02 06:22 PM
LOL = Life of Loan, except in Friday Frivolity post, where it means Laugh Out Loud. 
Posted By: David Dickinson
Re: Flood Certificate fee and Tax Service fee - 12/31/02 07:34 PM
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.
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.