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Consumer Financial Protection Bureau

CFPB Extends Comment Period for Proposed Finance Charge Changes

September 6, 2012

The Consumer Financial Protection Bureau (CFPB) extended the deadline to comment on a proposed rule that would change the definition of a finance charge.

Originally due Sept. 7, comments must now be sent to the CFPB by Nov. 6. The CFPB has proposed to include title fees, the lender’s title insurance premium and closing agent fees to be included in the finance charge, which is used to calculate the Annual Percentage Rate (APR). The owner’s title insurance premium would still be excluded.

The CFPB said it wants the APR to be a more accurate reflection of the overall cost of credit. However, higher APRs and finance charges could impact the Home Ownership Equity Protection Act proposed rule since the shift to an all-in APR would affect the number of mortgage loans that law covers. The CFPB's notice includes formal extensions for both the TILA/RESPA proposal and the HOEPA proposal.

The extension aligns the finance charge comment period with the deadline for comments on the rest of the TILA/RESPA proposed rule. HOEPA proposal comments, with the exception of the finance charge proposed change, are still due to the CFPB by Sept. 7.

ALTA expects to send comments to the Bureau arguing that most title and settlement fees are not a “cost of credit.” ALTA believes title fees should continue to be excluded from the finance charge because they are paid in a comparable cash transaction. ALTA will work with its membership and Title Action Network members to help them provide the Bureau with helpful comments. If you would like to learn more about this issue, contact Steve Gottheim, ALTA’s legislative and regulatory counsel.

In a letter to the CFPB, the Office of Advocacy criticized the Bureau’s proposal. The letter said CFPB’s notice was inadequate to give small businesses enough time to comment and that the proposal could have a serious impact on small financial institutions and settlement agents. The Office of Advocacy said further economic study of the impact of this proposal was necessary.

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