Overview. Charges not subject to the cap include optional charges, optional insurance, charges that are interest, charges absorbed by the Bank, escrow funds, subsequent event fees and property insurance premiums. For example: (i) Flood Insurance, (ii) Hazard Insurance, (iii) HOA Maintenance Fees, (iv) Late Charges, (v) Post Default Attorney Fees, and (vi) Property Tax.
Interest. Charges that are interest are excluded from the cap. Any bona fide discount points used to buy down the interest rate are part of the interest on the loan. Discount points are bona fide if the discount points truly correspond to a reduced interest rate. They should be used in calculating and disclosing the interest rate. If bona fide, they are not a fee. The exclusion covers per diem interest.
Third Party Appraisal. A fee for an appraisal performed by a third party appraiser is not a fee subject to the 2% limit. The appraisal must be performed by a person who is not an employee of the Bank. The exclusion does not include an appraisal management service fee. The exclusion does not include a fee for an evaluation rather than an appraisal.
Certain Surveys. A fee for property survey performed by a state registered or licensed surveyor is not subject to the 2% limit. The property survey must be performed by a person who is licensed or registered under the Texas Occupations Code.
Certain Title Insurance. A state base premium for a mortgagee policy of title insurance with endorsements established in accordance with state law is not a fee subject to the 2% limit. The excludable premium is limited to the applicable basic premium rate for title insurance published by TDI, plus authorized premiums for applicable endorsements. If additional premiums for endorsements are charged, the endorsements must be applicable to the mortgagee policy for the equity loan. TDI rules govern the applicability of endorsements and the authorized amount of the premium. See “Title Insurance” later in this Chapter and in Chapter 4.
Certain Title Examination Reports. A fee for a title examination report is not a fee subject to the 2% limit if its cost is less than the state base premium for a mortgagee of title insurance without endorsements established in accordance with state law. The excludable fee must be less than the basic premium rate for title insurance published by TDI, not including any additional premiums for endorsements. The fee for a title examination report may not be excluded from the 2% limit it he equity loan is covered by a mortgagee policy of title insurance.
Title Examination. The fee for title examination is excluded but must comply with applicable law. If the equity loan is a secondary mortgage loan, then the fee is limited to a reasonable fee for title examination and preparation of an abstract of title by an employee of the lender, or a title company or property search company authorized to do business in Texas. [See Tex. Fin. Code §342.308(a)(1)]