Which of the following is NOT typically included in the finance charge under Truth-in-Lending provisions?

Which of the following is NOT typically included in the finance charge under Truth-in-Lending provisions?

• A. Loan origination fees.
• B. Discount points.
• C. Attorney's fees.
• D. Mortgage insurance premiums.

Answer: (C)

The finance charge under the Truth-in-Lending Act (TILA) is defined as the cost of credit expressed as a dollar amount. It includes fees that are associated with obtaining a loan. Typically, this encompasses costs such as loan origination fees and discount points, which are paid to lower the interest rate on a mortgage. However, attorney's fees are generally not included in the finance charge calculation. This is because TILA focuses on the costs associated directly with the loan itself. While attorney's fees can be related to closing a transaction, they do not directly pertain to the terms of the loan or the cost of borrowing money. Unlike origination fees, which are specifically linked to the loan process, or mortgage insurance premiums, which protect the lender in case of default, attorney's fees are considered more of a transactional cost rather than a cost of borrowing. Thus, they are excluded from the finance charge under TILA provisions. By distinguishing between what constitutes a finance charge and what does not, the regulation aims to provide borrowers with a clear understanding of their loan costs.

The finance charge under the Truth-in-Lending Act (TILA) is defined as the cost of credit expressed as a dollar amount. It includes fees that are associated with obtaining a loan. Typically, this encompasses costs such as loan origination fees and discount points, which are paid to lower the interest rate on a mortgage.

However, attorney's fees are generally not included in the finance charge calculation. This is because TILA focuses on the costs associated directly with the loan itself. While attorney's fees can be related to closing a transaction, they do not directly pertain to the terms of the loan or the cost of borrowing money. Unlike origination fees, which are specifically linked to the loan process, or mortgage insurance premiums, which protect the lender in case of default, attorney's fees are considered more of a transactional cost rather than a cost of borrowing. Thus, they are excluded from the finance charge under TILA provisions.

By distinguishing between what constitutes a finance charge and what does not, the regulation aims to provide borrowers with a clear understanding of their loan costs.