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Good morning, On a HELOC, I’m researching how to assess the annual fee. Does it need to be added as separate deferred fee on the billing statement? Or can it be advanced to the line of credit annually? Are both options acceptable, or is it a matter of state law? My biggest concern with advancing the fee to the credit line is how it will affect the APR the month it hits the principal balance. Here’s some research I have found:
12 CFR Part 1026 (Regulation Z)
4(c) Charges Excluded From the Finance Charge Paragraph 4(c)(4)1. Participation fees – periodic basis. The participation fees described in § 1026.4(c)(4) do not necessarily have to be formal membership fees, nor are they limited to credit card plans. Except as provided in § 1026.4(c)(4) for covered separate credit features accessible by hybrid prepaid-credit cards as defined in § 1026.61, the provision applies to any credit plan in which payment of a fee is a condition of access to the plan itself, but it does not apply to fees imposed separately on individual closed-end transactions. The fee may be charged on a monthly, annual, or other periodic basis; a one-time, non-recurring fee imposed at the time an account is opened is not a fee that is charged on a periodic basis, and may not be treated as a participation fee.
Can you offer any guidance on this?
Thank you!
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