(1)(a)"Loan finance charge" means a finance charge composed of the sum of:

(i)all charges payable directly or indirectly by the debtor and imposed directly or indirectly by the lender as an incident to the extension of credit, including any of the following types of charges, which are applicable: interest or any amount payable under a point, discount, or other system of charges, however denominated, premium or other charge for any guarantee or insurance protecting the lender against the debtor's default or other credit loss; and

(ii)charges incurred for investigating the collateral or credit worthiness of the debtor or for commissions or brokerage for obtaining the credit, irrespective of the person to whom the charges are paid or payable unless the lender had no notice of the charges when the loan was made.

(b)The term does not include charges as a result of default, additional charges under Section 3-202 of this title, delinquency charges under Section 3-203 of this title, deferral charges under Section 3-204 of this title, charges of a type payable in a comparable cash transaction, or sellers points. The finance charge shall not include fees and amounts imposed by third-party closing agents, including settlement agents, attorneys, and escrow and title companies, if the creditor does not require the imposition of the charges or the services provided and does not retain the charges. Examples of charges which are included in the finance charge include any of the following types of charges which are applicable:

(i)Interest, time price differential, and any amount payable under a point, discount, or other system of additional charges;

(ii)Service or carrying charge;

(iii)Loan fee, finder's fee, or similar charge;

(iv)Fee for an investigation or credit report;

(v)Premium or other charge for any guarantee or insurance protecting the creditor against the obligor's default or other credit loss; and

(vi)Borrower-paid mortgage broker fees, including fees paid directly to the broker or the lender, for delivery to the broker, whether such fees are paid in cash or financed.

(2) If a lender makes a loan to a debtor by purchasing or satisfying obligations of the debtor pursuant to a lender credit card or similar arrangement, and the purchase or satisfaction is made at less than the face amount of the obligation, the discount is not part of the loan finance charge.

Added by Laws 1969, c. 352, § 3-109, eff. July 1, 1969. Amended by Laws 1982, c. 335, § 35, operative June 1, 1982; Laws 2000, c. 217, § 5, eff. July 1, 2000; Laws 2002, c. 249, § 3, eff. Nov. 1, 2002.