TILA Appendix A: High-Cost Mortgage (§ 226.32) Worksheet

Borrower’s Name

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Loan Number

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COVERAGE
	Yes	No
Is the loan secured by the consumer’s principal dwelling? [§226.2(a)(19), §226.32(a)(1)]	[]	[]
If the answer is No, STOP HERE
Is the loan for the following purpose?
1. Residential Mortgage Transaction – [§226.2(a)(24)]	[]	[]
2. Reverse Mortgage Transaction – [§226.33]	[]	[]
3. Open-End Credit Plan – Subpart B [note prohibition againstplans to evade §226.32 – [§226.34(b)]	[]	[]

If the answer is Yes to , 2, or 3, STOP HERE. If No, continue to Test 1.

TEST 1 – CALCULATION OF APR
A. Disclosed APR
B. Treasury Security Yield of Comparable Maturity Obtain the Treasury Constant Maturities Yield from the FRB’s Statistical Release, H-15 – Selected Interest Rates (the “Business” links will display daily yields). Use the yield that has the most comparable maturity to the loan term and is from the 15^th day of the month that immediately precedes the month of the application. If the 15^th is not a business day, use the yield for the business day immediately preceding the 15^th. If the loan term is exactly halfway between two published security maturities, use the lower of the two yields.) NOTE: Creditors may use the FRB’s Selected Interest Rates or the actual auction results. See Staff Commentary to Regulation Z for further details. [§226.32(a)(1)(i)] http://www.federalreserve.gov/releases/H15/data.htm
C. Treasury Security Yield of Comparable Maturity (Box B) Plus: 8 percentage points for first-lien loan; or 10 percentage points for subordinate-lien loan
	Yes	No
D. Is Box A greater than Box C?	[]	[]

If Yes, the transaction is a High-Cost Mortgage. If No, continue to Test 2, Points and Fees.

HIGH-COST MORTGAGE (§226.32) WORKSHEET

TEST 2 – CALCULATION OF POINTS AND FEES

STEP
1: Identify all Charges Paid by the Consumer at or before Loan Closing

A. Finance Charges – §226.4(a) and (b) (Interest, including per-diem interest, and
time price differential are excluded from these amounts.)

	Fee	Subtotals
Loan Points
Mortgage Broker Fee
Loan Service Fees
Required Closing Agent/Third-Party Fees
Required Credit Insurance
Private Mortgage Insurance
Life of Loan Charges (flood, taxes, etc.)
Any Other Fees Considered Finance Charges
Subtotal

B. Certain Non-Finance Charges Under §226.4(c)(7) – Include fees paid by consumers only if the amount of the fee is unreasonable or if the creditor receives direct or indirect compensation from the charge or the charge is paid to an affiliate of the bank. (See the example in §226.32(b)(1)(ii) of the commentary for further explanation.)


Title Examination
Title Insurance
Property Survey
Document Preparation Charge
Credit Report
Appraisal
Fee for “Initial” Flood Hazard Determination
Pest Inspection
Any Other Fees Not Considered Finance Charges
Subtotal
C. Premiums or Other Charges for Optional Credit Life, Accident, Health, or Loss-of-Income Insurance, or Debt-Cancellation Coverage
D. Total Points & Fees: Add Subtotals for A, B, C

STEP
2: Determine the Total Loan Amount for
Cost Calculation [226.32(a)(1)(ii)]

A. Determine the Amount Financed [§226.18(b)] Principal Loan Amount
Plus: Other Amounts Financed by the Lender (not already included in the principal and not part of the finance charge)
Less: Prepaid Finance Charges [§226.2(a)(23)]
Equals: Amount Financed
B. Deduct costs included in the points and fees under §226.32(b)(1)(iii) and (iv) (Step 1, Box B and Box C) that are financed by the creditor
C. Total Loan Amount (Step 2, Box A minus Box B)

STEP 3: Perform High-Fee Cost Calculation
A. Eight Percent of the Total Loan Amount Step 2, Box C)
B. Annual Adjustment Amount – [§226.32(a)(1)(ii)] 2010: $579 (use the dollar amount corresponding to the year of the loan’s origination
C. Total Points & Fees (Step 1, Box D)
	Yes	No
In Step 3, does Box C exceed the greater of Box A or Box B?	[]	[]

If Yes, the transaction is a High-Cost Mortgage. If No, the transaction is not a High-Cost
Mortgage under Test 2, Points and Fees.

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