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#1663239 - 02/10/12 02:44 PM Prepaid Finance Charges - Non RE Secured
Many Hats Offline
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Joined: May 2008
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Orlando, FL
Is a $100 doc prep fee for an auto loan considered a PPFC?

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#1663244 - 02/10/12 02:47 PM Re: Prepaid Finance Charges - Non RE Secured Many Hats
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 77,243
Galveston, TX
Yes. the exclusion of doc prep fees only applies to real estate secured lending. 1026.4(c)(7)(ii)
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#1663300 - 02/10/12 03:41 PM Re: Prepaid Finance Charges - Non RE Secured Many Hats
Many Hats Offline
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Joined: May 2008
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Orlando, FL
I see in the reg where it speaks to RE secured loans, but where can I find that for non RE secured loans, the doc prep fee IS a finance charge?

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#1663304 - 02/10/12 03:32 PM Re: Prepaid Finance Charges - Non RE Secured Many Hats
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Because it is not listed as an exclusion from the finance charge, while the charge on RE secured loans is excluded.
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#1663330 - 02/10/12 04:00 PM Re: Prepaid Finance Charges - Non RE Secured Many Hats
swiggles Offline
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swiggles
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Read the definition of "finance charge" at 226.4. It basically includes EVERYTHING.....unless excluded elsewhere. As Kathleen pointed out, there are no exclusions except for certain fees for real estate secured loans, fees that would be charged in a comparable cash transaction and "certain security interest charges" if itemized and disclosed.
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#1663386 - 02/10/12 04:39 PM Re: Prepaid Finance Charges - Non RE Secured Many Hats
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
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Bloomington, IN
You also may want to check FL law. Charging a doc prep fee to preapare legal documents could under state law require a licensed attorney. Therefore if you do not have a staff attorney preparing the documents you could face charges of practicing law without a license.

A few years ago several states started buckeling down on this. Our "doc prep" fee is now an origination fee.
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#1663394 - 02/10/12 04:57 PM Re: Prepaid Finance Charges - Non RE Secured Many Hats
swiggles Offline
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swiggles
Joined: Aug 2001
Posts: 7,333
We have the same problem Dan. Our doc prep fee is a "Loan Fee" permissible under Texas law. The whole idea of having to do that is silly, though. Get real. I mean...really.....we're paying someone's legal staff indirectly (who developed docs for the software we use). The software is NOT CHEAP and we need to be able to pass a portion of the cost of that on to the borrower.
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