FAQs On ATR & QM Rules For Small Entities Part Three By Phillip C. Querin, QUERIN LAW, LLC Website:

Transcription

1 FAQs On ATR & QM Rules Fr Small Entities Part Three By Phillip C. Querin, QUERIN LAW, LLC Website: Intrductin. The FAQs belw cme directly frm the mst recent CFPB guidelines fr January Parts One and Tw can be fund here and here. As I g thrugh the rules I will supplement the FAQs. This infrmatin des nt apply t the Big Banks, e.g. B f A, Mrgan Stanley, JPMrgan, etc. Rather, it applies t small creditrs such as cmmunity banks. Unfrtunately, the regulatrs have sught t apply the ATR/QM rules even t Mm and Pp wh may sell an ccasinal rental unit r tw. 1 The CFPB gives small creditrs r small entities certain underwriting latitude in the applicatin f the ATR/QM rules. Generally, these are persns r entities with n mre than $2 billin in assets that make n mre than 500 mrtgage lans per year. Originally, the small entity exceptins were intended t apply nly t rural r underserved cunties, but until January 10, 2016, the exceptins will apply t all small creditrs, regardless f lcatin. Caveat: This material belw is infrmatinal nly and des nt cnstitute legal advice. Mrever, it is summary nly; fr mre infrmatin, the actual regulatins shuld be reviewed. 21. Which types f creditrs and lan prgrams are exempt frm the ATR requirements? Extensins f credit made by certain types f creditrs are exempt frm the ATR requirements: Extensins f credit made by creditrs designated by the U.S. Department f the Treasury as Cmmunity Develpment Financial Institutins and creditrs designated by HUD as either a Cmmunity Husing Develpment Organizatin r a Dwnpayment Assistance Prvider f Secndary Financing are exempt frm the ATR requirements, under certain cnditins. Extensins f credit made by creditrs designated as nnprfit rganizatins under sectin 501(c)(3) f the Internal Revenue Cde f 1986 that extend credit n mre than 200 times annually, prvide credit nly t lw-t-mderate incme cnsumers, and fllw their wn written prcedures t determine that cnsumers have a reasnable ability t repay their lans are als generally exempt frm the ATR requirements. Extensins f credit made pursuant t certain lan prgrams are exempt frm the ATR requirements. Extensins f credit made by husing finance agencies directly t cnsumers, as well as extensins f credit made by ther creditrs pursuant t a prgram administered by a husing finance agency, are exempt frm the ATR requirements. [This ATR exemptin applies t extensins f credit made pursuant t a prgram administered by a husing finance agency, regardless f the funding surce (e.g., Federal, State, r ther surces)]. Extensins f credit made pursuant t an Emergency Ecnmic Stabilizatin Act prgram, such as extensins f credit made pursuant t a State Hardest Hit Fund prgram, are als exempt frm the ATR requirements. 1 I maintain vehemently that n the state and federal levels, the CFPB rules shuld nt apply t the ccasinal sale f residential prperty wned by persns wh are nt in the business f making such lans, when they carry back the paper, e.g. n a cntract r nte and trust deed. The fact that Oregn s DFCS insists therwise is a sad and disturbing cmmentary n the uber-regulatry mindset f gvernmental bureaucrats wh wuld rather regulate than cgitate. Any sentient human being wh has a passing familiarity with the husing and credit crisis wuld knw that the ccasinal sale f residential prperty by Mm and Pp wh carry back the paper was never meant t be subject t the ATR/QM and mrtgage lan riginatr laws.

2 Nte the fllwing pints: The exemptins abve apply t all lans made by these creditrs r pursuant t these lan prgrams, prvided the cnditins fr the exemptin are satisfied. An exempt lan remains exempt even if it is sld, assigned, r therwise transferred t a creditr that wuld nt qualify fr the exemptin. The ATR requirements d nt apply t these exempt lans. Thus, a lan that is eligible fr ne f these exemptins is nt eligible fr QM status, as the QM prvisins are nly applicable t lans subject t the ATR requirements. A cnsumer wh btained a lan that was exempt frm the ATR requirements wuld have n ability-t-repay claim under the ATR/QM rule. Althugh these lans are nt subject t the ATR requirements, they still are subject t the restrictins n prepayment penalties and may nt be structured as pen-end credit plans t evade thse restrictins. 22. What is a Qualified Mrtgage? It is ne that prvides the lender with a presumptin f cmpliance with the ATR requirements. This means that if a cnsumer files a claim against his/her lender saying that it failed t prperly vet his/her ability t repay the lan, if it qualified as a QM lan, it will be legally presumed t have cmplied with the ATR requirements. In ther wrds, the claimant has a much tugher case t prve. The QM requirements generally fcus n prhibiting certain risky features and practices, such as negative amrtizatin, interest-nly payments, and lan terms extending lnger than 30 years. 23. Are There Different Types f Qualified Mrtgages? There are fur (4) types f Qualified Mrtgages. The type f presumptin f cmpliance fr a QM depends n whether it is higher-priced. Tw types, the General and Temprary QM definitins, can be riginated by all creditrs. QMs under these definitins are cnsidered higher-priced if they have an Annual Percentage Rate f the lan ( APR ) that exceeds the Average Prime Offer Rate. Accrding t Freddie Mac: The APOR is published at least weekly by the Federal Reserve Bard and is derived frm pricing terms btained frm a survey f prime mrtgage lenders. ( APOR 2 ) [see tables here fr APOR] by 1.5 percentage pints r mre fr first-lien lans and 3.5 percentage pints r mre fr subrdinate-lien lans. Small Creditr and Balln-Payment QMs, can nly be riginated by small creditrs.[see discussin belw.] QMs under these definitins are cnsidered higher-priced if they have an APR that exceeds the APOR by 3.5 percentage pints r mre fr bth first-lien and subrdinate-lien lans. T calculate whether a lan s APR exceeds the APOR fr a cmparable lan by mre than the 1.5 r 3.5 percentage-pint spreads, g t: There are tw types f presumptins f cmpliance fr QMs: A QM that is nt higher priced receives a cnclusive presumptin f cmpliance with the ATR rules. This means that it is an abslute safe harbr lan, and the brrwer will be unable t attack the lender fr failure t cmply with the ATR rules A QM that is higher priced receives a rebuttable presumptin f cmpliance. This means that the lender is presumed t have cmplied, but the brrwer may, by a shwing f sufficient evidence, rebut that presumptin. This is called a rebuttable presumptin, and thugh nt abslute, still give substantial prtectin t the lender. 2 Accrding t Freddie Mac: The APOR is published at least weekly by the Federal Reserve Bard and is derived frm pricing terms btained frm a survey f prime mrtgage lenders.

3 Nte that if the lan is determined nt be a QM at all, there is n presumptin f cmpliance, and the lender is left t defend the brrwer s claim by trying t prve that it did make a gd faith effrt t determine the brrwer s ability t repay. In additin, fr all types f QMs, pints and fees generally may nt exceed 3 percent f the ttal lan amunt, but higher threshlds are prvided fr lans belw $100,000. [Pints and fees caps are discussed at FAQs #29 and #30, belw.] 24. Are There Restrictins Cmmn t All Fur QMS, Regardless f Size f the Lender? Yes, the fllwing features are prhibited: Negative amrtizatin; Interest-nly payments; Lan terms in excess f 30 years; and Limitatins n pints and fees: The threshld is generally 3 percent f the lan balance, but larger amunts are allwed fr lans under $100, What are the differences between the General QM and the Temprary QM definitins? General QM lans may nt have any f the fllwing prhibited features: Negative-amrtizatin; Interest-nly; Balln-payments; r Terms that exceed 30 years; They als may nt have pints and fees that exceed specified limits. In additin, in rder fr a lan t be a General QM lan, the fllwing must ccur: Lan underwriting must: Be based n a fully-amrtizing schedule using the maximum rate permitted during the first five (5) years after the date f the first peridic payment; Cnsider and verify the cnsumer s incme r assets, current debt bligatins, alimny and child-supprt bligatins; Determine that the brrwer s ttal mnthly debt-t-incme rati ( DTI ) is n mre than 43 percent, using the definitins and ther requirements prvided in appendix Q, 3 which is derived frm the Federal Husing Administratin manual. The Temprary QM definitin gives QM status t lans that are riginated during a transitinal perid 4 if they are eligible fr purchase r guarantee by Fannie Mae r Freddie Mac ( GSEs ) r fr insurance r guarantee by certain federal agencies. 5 Lans that receive QM status under this temprary prvisin will retain that status after the temprary prvisin expires, but new lans will nt receive QM status after that date under the temprary prvisin. S, after expiratin f the temprary prvisin, lans must meet the requirements fr ne f the ther categries f Qualified Mrtgages t be QMs. Lans falling under the Temprary QM definitin must meet the same requirements as General QM lans regarding prhibitins n risky features [negative-amrtizatin, interest- 3 Nte: The CFPB amended Appendix Q. Fr details, see link here. 4 The date that the GSEs exit federal cnservatrship/receivership r n January 10, 2021, whichever first ccurs. 5 The temprary prvisin fr lans eligible fr insurance r guarantee by specified federal agencies is a transitin measure designed t give the agencies time t exercise separate authrity under the Ddd-Frank Act t determine which f their lans will receive QM status. This temprary prvisin will expire n the date that the relevant agency s wn QM rules take effect r n January 10, 2021, whichever ccurs first.

4 nly, and balln-payment features, a maximum lan term f 30 years, and pints-and-fees restrictins.] They must als meet at least ne f these additinal requirements: Eligible fr purchase r guarantee by the Federal Natinal Mrtgage Assciatin (Fannie Mae) r the Federal Hme Lan Mrtgage Crpratin (Freddie Mac) while perating under federal cnservatrship r receivership Eligible fr Federal Husing Administratin (FHA) insurance Eligible t be guaranteed by the U.S. Department f Veterans Affairs (VA) Eligible t be guaranteed by the U.S. Department f Agriculture (USDA) Eligible t be insured by the Rural Husing Service Eligibility fr purchase r guarantee by a GSE r insurance r guarantee by an agency can be established based a series f methds described in the rules; T meet the Temprary QM definitin, lans must be underwritten using the required guidelines f the entities abve, including any relevant DTI guidelines. They d nt have t meet the 43 percent debt-t-incme rati threshld that applies t General QM lans. The creditr des nt have t satisfy GSE r agency standards which are whlly unrelated t the credit risk r underwriting f the lan r any standards which apply after the cnsummatin f the lan. 26. Fr purpses f Small Creditr QMs, wh qualifies as a Small Creditr? Small creditrs are defined as fllws: Having assets belw $2 billin [t be adjusted annually fr inflatin by the CFPB at the end f the last calendar year]. The lender and its affiliates 6 tgether may nt have riginated mre than 500 first-lien, clsedend residential mrtgages that are subject t the ATR requirements in the preceding calendar year. In additin there are the fllwing miscellaneus rules: T determine if yu meet the asset size requirement, cunt nly yur assets. D nt cunt yur affiliate s assets. T determine if yu meet the number f riginatins requirement, cunt all first-lien, clsedend mrtgages made by yu and made by yur affiliates that are subject t the ATR requirements. D nt cunt subrdinate-lien mrtgages. Als d nt cunt mrtgages that are nt subject t the ATR/QM rule, such as HELOCs, time-share plans, reverse mrtgages, r temprary r bridge lans with terms f 12 mnths r less. 27. Type 1 and 2 Lans fr Small Creditrs: What are the limitatins n them? Type 1: Small Creditr QMs may nt have any f the fllwing features: Negative-amrtizatin; Interest-nly; Balln-payment features; r Repayment terms that exceed 30 years. 6 An affiliate is any cmpany that cntrls, is cntrlled by, r is under cmmn cntrl with, the lender. This generally means that affiliates are a parent cmpany, subsidiaries, r sister cmpanies. Fr example, if the rganizatin is a bank wned by a bank hlding cmpany that als wns anther bank, bth the bank hlding cmpany and the ther bank are the bank s affiliates.

5 They als may nt have pints and fees that exceed the specified QM limits. [See FAQs #29 and #30, belw.] A Small Creditr QM lan has the fllwing additinal limitatins: Underwriting must be based n a fully-amrtizing schedule using the maximum rate permitted during the first five years after the date f the first peridic payment; The lan must nt be subject t a frward cmmitment [i.e. an agreement made at r prir t cnsummatin f a lan t sell the lan after cnsummatin, ther than t a creditr that itself is eligible t make Small Creditr QMs]. The lender must cnsider and verify the cnsumer s incme r assets, and debts, alimny, and child supprt. The lender must cnsider the cnsumer s debt-t-incme rati ( DTI ) r residual incme, althugh the rule sets n specific threshld fr DTI r residual incme. Nte that Small Creditr QMs generally lse their QM status if they are sld r therwise transfer less than three years after cnsummatin. Hwever, a Small Creditr QM keeps its QM status if it meets ne f these criteria: It is sld mre than three years after cnsummatin; It is sld t anther creditr that meets the criteria regarding number f riginatins and asset size, at any time. It is sld pursuant t a supervisry actin r agreement, at any time. It is transferred as part f a merger r acquisitin f r by the creditr, at any time. Type 2: Small Creditr Balln QMs [Generally, it appears that the primary distinctin between Small Creditr QMs and Small Creditr Balln QMs, is that the latter may make lans with a 5- year call. Other than that, they appear much the same] The CFPB is prviding a tw-year transitin perid during which all small creditrs can make Balln-Payment QMs, regardless f where the small creditr perates. After that tw-year perid expires, nly small creditrs that perate predminantly in rural r underserved areas will be able t make Balln-Payment QMs. On r befre January 10, 2016 [tw years after the effective date f the ATR/QM rules], all small creditrs, regardless f lcatin, can riginate Balln-Payment QMs. Balln-Payment QMs that are riginated during this tw-year perid [Jan. 10, 2014 Jan. 10, 2016] will retain their QM status after January 10, 2016, assuming the requirements t hld the lan in prtfli are met. After January 10, 2016, lenders may riginate Balln-Payment QMs nly if they meet the asset size and number f riginatins criteria as well as the requirement that they perate predminantly in rural r underserved areas. 7 Balln-Payment QMs may nt have any f the fllwing features: 7 The CFPB prvides the fllwing Implementatin Tip : After January 10, 2016, in rder t make Balln-Payment QMs, mre than half f yur rganizatin s first-lien cvered transactins during any f the three preceding calendar years must have been secured by prperties in rural areas (equivalent t the USDA s Ecnmic Research Service Urban Influence Cdes 4, 6, 7, 8, 9, 10, 11, r 12) r underserved areas (cunties where n mre than tw creditrs extend five r mre first-lien cvered transactins in a calendar year). The Bureau will publish an annual list f rural r underserved cunties. This is nt the same definitin f rural used fr Hme Mrtgage Disclsure Act (HMDA) reprting r used by ther agencies. Fr example, yu may nt be cnsidered rural under this definitin even thugh yu are cnsidered rural under HMDA and are nt a HMDA reprter.

6 Negative- amrtizatin; Interest-nly; And they must cmply with the pints-and-fees limits fr Qualified Mrtgages [See, FAQs #29 and #30, belw]. In additin: The lan must have a fixed interest rate and peridic payments [ther than the balln payment] that wuld fully amrtize the lan ver 30 years r less. The lan must have a term f five years r lnger; The lan must nt be subject t a frward cmmitment [an agreement made at r prir t cnsummatin f a lan t sell the lan after cnsummatin, ther than t a creditr that itself is eligible t make Balln-Payment QMs]. Underwriting: The Small Creditr must determine that the cnsumer will be able t make the scheduled peridic payments [including mrtgage-related bligatins, such as insurance, taxes and HOA assessments] ther than the balln payment. Unlike the calculatin f balln lan mnthly payments fr determining ATR, the Balln-Payment QM calculatin excludes the balln payment even if the lan is a higher-priced lan. The lender must cnsider and verify: The cnsumer s incme r assets, and debts, alimny, and child supprt; The cnsumer s debt-t-incme rati (DTI) r residual incme, althugh the rule sets n specific threshld fr DTI r residual incme. Like Small Creditr QMs, Balln-Payment QMs generally lse their QM status if they are sld r transferred less than three years after cnsummatin. Hwever, a Balln-Payment QM keeps its QM status if it meets ne f these criteria: It is sld mre than three years after cnsummatin; It is sld t anther creditr that meets the criteria regarding perating in rural r underserved areas, number f riginatins, and asset size, at any time; It is sld pursuant t a supervisry actin r agreement, at any time; r It is transferred as part f a merger r acquisitin f r by the creditr, at any time. 28. Are there any special requirements fr calculating the DTI rati n QM lans? The General QM definitin requires that a brrwer s ttal debt-t-incme rati nt exceed 43 percent. Keep in mind that different DTI rules apply t lans cmplying under the ATR standard and t the ther QM definitins: T satisfy the general ATR standard, Small Creditrs must cnsider DTI r residual incme. T riginate a QM under the temprary definitin [eligible fr sale t r guarantee by a GSE r insured r guaranteed by a specified federal agency], yu must meet the relevant entity s applicable DTI and ther requirements. T riginate a Small Creditr r Balln-Payment QM, yu must cnsider DTI r residual incme, but yu d nt have t meet a specific threshld requirement. 29. What are the QM pints-and-fees caps? Fr a lan t be a QM, the pints and fees may nt exceed certain pints-and-fees caps. The pints- and-fees caps are higher fr smaller lans. The dllar amunts listed abve will be adjusted annually fr inflatin and published each year. A lan f $100,000 r mre: 3 percent f the ttal lan amunt A lan between $60,000 but less than $100,000: $3,000

7 A lan between $20,000 but less than $60,000: 5 percent f the ttal lan amunt A lan between $12,500, but less than $20,000: $1,000 A lan less than $12,500: 8 percent f the ttal lan amunt T determine whether a lan is within the QM pints-and-fees caps, fllw these steps: First, determine which f the caps applies t the lan amunt n the face f the nte. Secnd, calculate the maximum pints and fees fr that lan amunt: Fr a lan amunt that has a fixed-dllar cap [e.g. $3,000 cap fr lan amunts f $60,000 but less than $100,000], that fixed-dllar cap is the maximum allwable pints and fees. Fr a lan amunt that has a percentage cap [e.g. 5 percent f the ttal lan amunt fr lan amunts greater than r equal t $20,000 but less than $60,000] determine the ttal lan amunt fr yur transactin. The ttal lan amunt equals the amunt financed (See 12CFR ) minus any pints and fees that are rlled int the lan amunt. Multiply the ttal lan amunt by the percentage cap t determine the maximum allwable pints and fees. Third, calculate the ttal pints and fees fr yur transactin. If the ttal pints and fees fr yur transactin exceed the maximum allwable pints and fees, then the lan cannt be a QM. 30. Hw are the QM pints and fees caps calculated? Yu use the same apprach used fr calculating pints and fees fr clsed-end lans under the Hme Ownership and Equity Prtectin Act (HOEPA) threshlds in the CFPB s High-Cst Mrtgage and Hmewnership Cunseling Amendments t the Truth in Lending Act (Regulatin Z) and Hmewnership Cunseling Amendments t the Real Estate Settlement Prcedures Act (Regulatin X) rulemakings. Thse rules are available nline at: Unless specified therwise, include amunts that are knwn at r befre cnsummatin f the lan, even if the cnsumer pays them after cnsummatin by rlling them int the lan amunt. In additin, unless specified therwise, clsing csts advanced by the lender and recuped frm the brrwer ver time thrugh the interest rate are nt cunted in pints and fees. T calculate pints and fees, add tgether the amunts paid in cnnectin with the transactin fr the six (6) categries f charges listed belw: 1. Finance charge: In general, include all items included in the finance charge. Hwever, yu may exclude the fllwing types and amunts f charges, even if they nrmally wuld be included in the finance charge: Interest r the time-price differential; Mrtgage insurance premiums ( MIPs ); Federal r state gvernment-spnsred MIPs: Fr example, exclude up-frnt and annual FHA premiums, VA funding fees, and USDA guarantee fees. Private mrtgage insurance ( PMI ) premiums: Exclude mnthly r annual PMI premiums. Yu may als exclude up-frnt PMI premiums if the premium is refundable n a prrated basis and a refund is autmatically issued upn lan satisfactin. Hwever, even if the premium is excludable, yu must include any prtin that exceeds the upfrnt MIP fr FHA lans. Thse amunts are published in HUD Mrtgagee Letters, which yu can access n HUD s website.

8 A charge paid by a third party may be included in pints and fees, but is nt included in pints and fees under (b)(1)(i) if the exclusins t pints and fees in (b)(1)(i)(A) thrugh (F) apply. Fr example, seller s pints are nt included in pints and fees under as they are nt included in the finance charge. But they still may be included in pints and fees under (b)(1)(ii) thrugh (vi) fr example, if they cver lan riginatr cmpensatin, credit life insurance premiums, r a prepayment penalty. See, tters/mrtgagee/. Bna fide third-party charges nt retained by the creditr, lan riginatr, r an affiliate f either ( (b)(1)(i)(D)). In general, yu may exclude these types f charges even if they wuld be included in the finance charge. Fr example, yu may exclude a bna fide charge impsed by a third-party settlement agent, such as an attrney, s lng as neither the creditr nr the lan riginatr, r their affiliates, retain a prtin f the charge. Hwever, yu must still include any third-party charges that are specifically required t be included under ther prvisins f the pints-and-fees calculatin. [E.g., certain PMI premiums, certain real estate-related charges, and premiums fr certain credit insurance and debt cancellatin r suspensin cverage). Nte that up-frnt fees yu charge cnsumers t recver the csts f lan-level price adjustments impsed by secndary market purchasers f lans, including the GSEs, are nt cnsidered bna fide third-party charges and must be included in pints and fees. Bna fide discunt pints; Exclude up t 2 bna fide discunt pints if the interest rate befre the discunt des nt exceed the APOR fr a cmparable transactin by mre than 1 percentage pint; r Exclude up t 1 bna fide discunt pint if the interest rate befre the discunt des nt exceed the APOR fr a cmparable transactin by mre than 2 percentage pints; Nte that a discunt pint is bna fide if it reduces a brrwer s interest rate by an amunt that reflects established industry practices, such as secndary mrtgage market nrms. An example is the pricing in the t-be-annunced market fr mrtgage-backed securities. 2. Lan riginatr cmpensatin ( (b)(1)(ii)): Include cmpensatin paid directly r indirectly by a cnsumer r creditr t a lan riginatr ther than cmpensatin paid by a mrtgage brker, creditr, r retailer f manufactured hmes t an emplyee. Include cmpensatin that is attributable t the transactin, t the extent that such cmpensatin is knwn as f the date the interest rate fr the transactin is set. 8 In general, include the fllwing: Cmpensatin paid directly by a cnsumer t a mrtgage brker: Include the amunt the cnsumer pays directly t the mrtgage brker. If this payment is already included in pints and fees because it is included in the finance charge under (b)(1)(i), it des nt have t be included again as lan riginatr cmpensatin under 8 Implementatin Tip: In the cntext f determining what lan riginatin cmpensatin must be included in pints and fees, the term mrtgage brker refers t bth brkerage firms and individual brkers. Cmpensatin paid by a mrtgage brker t an emplyee is nt included in pints and fees.

9 (b)(1)(ii). Cmpensatin paid by a creditr t a mrtgage brker: Include the amunt the creditr pays t the brker fr the transactin. Include this amunt even if the creditr included riginatin r ther charges paid by the cnsumer t the creditr as pints and fees under (b)(1)(i) as a finance charge r if the creditr des nt receive an upfrnt payment frm the cnsumer t cver the brker s fee but rather recups the fee frm the cnsumer thrugh the interest rate ver time. Cmpensatin paid by a cnsumer r creditr t a manufactured hme retailer: Include the amunt paid by a cnsumer r creditr t a manufactured hme retailer that qualifies as a lan riginatr under (a)(1) fr lan riginatin activities. Cmpensatin paid by the manufactured hme retailer t its emplyees des nt have t be included (b)(1)(ii)(D) and cmment 32 (b)(1)(ii)-5. Cmpensatin included in the sales price f a manufactured hme: Include lan riginatr cmpensatin that the creditr has knwledge that lan riginatr cmpensatin is included in the sales price f a manufactured hme. The creditr is nt required t investigate the sales price f a manufactured hme t determine if the sales price includes lan riginatr cmpensatin. Cmment 32(b)(1)(ii)-5. Real estate-related fees ( (b)(1)(iii)) The fllwing categries f charges are excluded frm pints and fees nly if: The charge is reasnable; The creditr receives n direct r indirect cmpensatin in cnnectin with the charge; and The charge is nt paid t an affiliate f the creditr. If ne r mre f thse three cnditins is nt satisfied, lender must include these charges in pints and fees even if they wuld be excluded frm the finance charge: Fees fr title examinatin, abstract f title, title insurance, prperty survey, and similar purpses; Fees fr preparing lan-related dcuments, such as deeds, mrtgages, and recnveyance r settlement dcuments; Ntary and credit-reprt fees; Prperty appraisal fees r inspectin fees t assess the value r cnditin f the prperty if the service is perfrmed prir t cnsummatin, including fees related t pest-infestatin r fld-hazard determinatins; Amunts paid int escrw r trustee accunts that are nt therwise included in the finance charge (except amunts held fr future payment f taxes). 3. Premiums fr credit insurance; credit prperty insurance; ther life, accident, health r lss-f-incme insurance where the creditr is beneficiary; r debt cancellatin r suspensin cverage payments ( (b)(1)(iv)) Include premiums fr these types f insurance that are payable at r befre cnsummatin even if such premiums are rlled int the lan amunt, if permitted by law. Yu d nt need t include these charges if they are paid after cnsummatin [E.g., mnthly premiums]. Nte that credit prperty insurance means insurance that prtects the creditr s interest in the prperty. It des nt include hmewner s insurance that prtects the cnsumer. Yu d nt need t include premiums fr life, accident, health, r lss-f-incme insurance if the cnsumer (r anther persn designated by the cnsumer) is the sle

10 beneficiary f the insurance. 4. Maximum prepayment penalty ( (b)(1)(v)) Include the maximum prepayment penalty that a cnsumer culd be charged fr prepaying the lan. Prepayment penalty paid in a refinance ( (b)(1)(vi)) If yu are refinancing a lan that yu r yur affiliate currently hlds r is currently servicing, then include any penalties yu charge cnsumers fr prepaying their previus lans. 5. Charges paid by third parties. (Cmment 32(b)(1)-2)) Include charges paid by third parties that fall within the definitin f pints and fees in (b)(1)(i) thrugh (vi), including charges included in the finance charge. Charges paid by third parties that fall within the exclusins t pints and fees in (b)(1)(i)(A) thrugh (F) d nt have t be included in pints and fees. Seller s pints are excluded frm the finance charge (See (c)(5)) and therefre can be excluded frm pints and fees, but charges paid by the seller shuld be included if they are fr items listed as pints and fees in (b)(1)(ii) thrugh (vi). 6. Creditr-paid charges. (Cmment 32(b)(1)-2) Charges paid by the creditr, ther than lan riginatr cmpensatin paid by the creditr that is required t be included in pints and fees under (b)(1)(ii), can be excluded frm pints and fees. [T be cntinued] 2014 QUERIN LAW, LLC