[JGo9]

On our construction loans, we typically collect/schedule four inspections during the course of construction. The inspections are often times done by appraisers, but in some instances, they are completed by a bank employee. Would the inspection fees be considered a prepaid finance charge?

Thanks,

[rcooper]

Answer by Kowsley and Rcooper:
If you are collecting them at or before consummation they would be PPFCs. If you collect them out of draws we suggest you disclose them in Block A (if they are being paid to you) or Block B (if being paid to appraiser) and not consider them as a PPFC.

In the proposed amendment to the disclosure rules issued on August 1, 2016 (p. 54339) the CFPB is proposing if they are collected out of the draws after consummation, they shouldn’t be on the disclosures at all because they are not being charged until after closing. They are proposing they are to go on an addendum to the LE and CD but shouldn’t impact any numbers on the disclosures. We’ll see…

[Author]

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