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TILA, undisclosed cost markup as finance charge where costs are paid
The markup on loan or closing costs (such as recording fees, credit
reports, etc.) is a finance charge. Frequently this markup is not
disclosed and it becomes undisclosed finance charge. If this
undisclosed finance charge adds up to $35 it could create a defense to
the foreclosure. 12 CFR 226.23(h)(2).
QUESTION: my homeowner did not pay any costs out-of-pocket. When he
refinanced, these were taken out of his loan principal. Is his
situation different from the general rule I described above. Arguably
all of his costs, including any undisclosed cost markup is already
included in finance charge. Is there no consequence for undisclosed
cost markup where the costs are paid from the loan principal?
Alik Segal
Alik.Segal@gmail.com
310-362-6157
Cal. CD, Los Angeles
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