Points & Fees Under § 32
12 CFR 226.32(b) defines points and fees as follows:
"(b) Definitions. For purposes of this subpart, the
following definitions apply:
(1) For purposes of paragraph (a)(1)(ii) of this section, points and fees means:
(i) All items required to be disclosed under § 226.4(a) and 226.4(b), except
interest or the time-price differential;
(ii) All compensation paid to mortgage brokers;
(iii) All items listed in § 226.4(c)(7) (other than amounts held for future
payment of taxes) unless the charge is reasonable, the creditor receives no
direct or indirect compensation in connection with the charge, and the charge is
not paid to an affiliate of the creditor; and
(iv) Premiums or other charges for credit life, accident, health, or
loss-of-income insurance, or debt-cancellation coverage (whether or not the
debt-cancellation coverage is insurance under applicable law) that provides for
cancellation of all or part of the consumer's liability in the event of the loss
of life, health, or income or in the case of accident, written in connection
with the credit transaction."
12 CFR 226.4(a), (b) & (c)(7) referred to above read as follows:
"(a) Definition. The finance charge is the cost of consumer credit as a
dollar amount. It includes any charge payable directly or indirectly by the
consumer and imposed directly or indirectly by the creditor as an incident to or
a condition of the extension of credit. It does not include any charge of a type
payable in a comparable cash transaction.
(1) Charges by third parties. The finance charge includes fees and amounts
charged by someone other than the creditor, unless otherwise excluded under this
section, if the creditor:
(i) requires the use of a third party as a condition of or an incident to the
extension of credit, even if the consumer can choose the third party; or
(ii) retains a portion of the third-party charge, to the extent of the portion
retained.
(2) Special rule; closing agent charges. Fees charged by a third party that
conducts the loan closing (such as a settlement agent, attorney, or escrow or
title company) are finance charges only if the creditor:
(i) Requires the particular services for which the consumer is charged;
(ii) Requires the imposition of the charge; or
(iii) Retains a portion of the third-party charge, to the extent of the portion
retained.
(3) Special rule; mortgage broker fees. Fees charged by a mortgage broker
(including fees paid by the consumer directly to the broker or to the creditor
for delivery to the broker) are finance charges even if the creditor does not
require the consumer to use a mortgage broker and even if the creditor does not
retain any portion of the charge."
"(b) Example of finance charge. The finance charge includes the following types
of charges, except for charges specifically excluded by paragraphs (c) through
(e) of this section:
(1) Interest, time price differential, and any amount payable under an add-on or
discount system of additional charges.
(2) Service, transaction, activity, and carrying charges, including any charge
imposed on a checking or other transaction account to the extent that the charge
exceeds the charge for a similar account without a credit feature.
(3) Points, loan fees, assumption fees, finder's fees, and similar charges.
(4) Appraisal, investigation, and credit report fees.
(5) Premiums or other charges for any guarantee or insurance protecting the
creditor against the consumer's default or other credit loss.
(6) Charges imposed on a creditor by another person for purchasing or accepting
a consumer's obligation, if the consumer is required to pay the charges in cash,
as an addition to the obligation, or as a deduction from the proceeds of the
obligation.
(7) Premiums or other charges for credit life, accident, health, or
loss-of-income insurance, written in connection with a credit transaction.
(8) Premiums or other charges for insurance against loss of or damage to
property, or against liability arising out of the ownership or use of property,
written in connection with a credit transaction.
(9) Discounts for the purpose of inducing payment by a means other than the use
of credit.
(10) Debt cancellation fees. Charges or premiums paid for debt cancellation
coverage written in connection with a credit transaction, whether or not the
debt cancellation coverage is insurance under applicable law.
"(c) Charges excluded from the finance charge. The following charges are not
finance charges:
....
(7) Real-estate related fees. The following fees in a transaction secured by
real property or in a residential mortgage transaction, if the fees are bona
fide and reasonable in amount:
(i) Fees for title examination, abstract of title, title insurance, property
survey, and similar purposes.
(ii) Fees for preparing loan-related documents, such as deeds, mortgages, and
reconveyance or settlement documents.
(iii) Notary and credit report fees.
(iv) Property appraisal fees or fees for inspections to assess the value or
condition of the property if the service is performed prior to closing,
including fees related to pest infestation or flood hazard determinations.
(v) Amounts required to be paid into escrow or trustee accounts if the amounts
would not otherwise be included in the finance charge."
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