I am testing a current loan we have in process to see if the points and fees are under the thresholds for both a QM and the new HOEPA rules. I had a couple of questions:
1. Am I right that total loan amount is the principal amount minus any prepaid finance charges? Or the “amount financed”, but not included any fees we have financed as part of the loan?
2. Are the initial escrow deposit and the annual cost for homeowners insurance included in points and fees? I am getting confused as I am reading through….I think since they are reasonable and we don’t retain any portion of them they can be excluded?
1. The total loan amount is the amount financed less certain charges that are both included in the points and fees and financed by your bank. Those charges include:
– 1026.32(b)(1)(iii)- items listed in 1026.4(c)(7) unless e charge is reasonable and neith your bank or any affiliate receives the fee;
– 1026.32(b)(1)(iv)- credit life and related insurance; and
– 1026.32(b)(1)(v)- prepayment penalty.
2. The initial escrow deposit is excluded if the charge is reasonable and not paid to your bank or an affiliate. The homeowners insurance is excluded as long as you disclose that the insurance may be obtained from an agent the consumer chooses.