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Life of Loan Flood A Prepaid Finance Charge?

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On an open end RE loan, i.e., HELOCs, is the life of loan flood a prepaid finance charge?

The Official Interpretations of Section 1026.4(c)(7) state that fees for services to be performed periodically during the loan term are not excluded from the Finance Charge, regardless of when the fees are collected. The concept of a "prepaid" Finance Charge is unique to closed-end credit and has no meaning in the context of open-end credit.

First published on 01/27/2014

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