Credit Report Fee Considered Finance Charge?

Question:

A bank charges a $20 credit report fee for consumer real estate loans, but the fee is actually less. Should the amount that is in excess of the actual cost be considered a finance charge for Reg Z purposes? I realize there is a huge RESPA issue in this practice as well.

Answer:

1. Yes. The amount in excess of the actual charge is a FC.
2. Charging more than the actual cost is a RESPA section 8 violation for fee splitting. Refer to HUD's RESPA Regulation Section 3500.14, and FIL 103-99 and FIL 21-99 from the FDIC.

First published on BankersOnline.com 8/1/11