Identifying Finance Charges

Question: Does identifying a charge as paid outside closing change its status as a finance charge?

Answer: No. The short answer is that Truth in Lending and RESPA don't talk to each other. The way you disclose a fee on the HUD-1 does not have any effect whatsoever on the status of the fee as a finance charge for purposes of Regulation Z. You should make an independent determination of finance charges for purposes of Regulation Z. It would be nice if we could come up with a rule or procedure that made these two regulations more consistent, but to date, that is only a dream.

Copyright © 2001 Compliance Action. Originally appeared in Compliance Action, Vol. 6, No. 7, 7/01