Answer:
RESPA doesn't require you to split any fees, only that you itemize all fees. Therefore, you should show the entire fee on one line of the Settlement Statement. The Staff Commentary to Regulation Z [Commentary to Section 226.4(c)(7) #3 - page 6892] 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."
You don't need to show the split on the TIL disclosure, but if you know how much of the fee is for the life of loan this should be included in the prepaid finance charge calculation, while the other portion should not be in the finance charge calculation.
First published on BankersOnline.com 1/29/07
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