Opinion ID: 663173
Heading Depth: 3
Heading Rank: 1

Heading: $22 Federal Express Charge

Text: 16 AIB incurred $22 in Federal Express charges during the transaction, treating this cost within the amount financed rather than within the finance charge. AIB incurred this charge to pay off Rodash's then-existing mortgage held by another creditor named Centrust and to return the original loan documents to Empire. Only those charges payable by the consumer directly or indirectly by the creditor as an incident to ... the extension of credit fall within the general definition of finance charge. 15 U.S.C.A. Sec. 1605(a); see also 12 C.F.R. Sec. 226.4(a). We hold that, under the Act's definition, the Federal Express fee is undoubtedly part of the finance charge. Finance charges include [s]ervice, transaction, activity, and carrying charges. 12 C.F.R. Sec. 226.4(b)(2). Here, the complete transaction included the appellees' providing a home equity loan. Part-and-parcel of the fulfillment of the transaction was AIB's paying off the consumer's previous mortgage by delivery of a check to Centrust. Thus, the Federal Express fee can be viewed as a transaction charge--without mailing the check to Centrust, the home equity transaction would not have been consummated. 17 In addition, the finance charge also includes [c]harges imposed on a creditor by another person for purchasing or accepting a consumer's obligation. 12 C.F.R. Sec. 226.4(b)(6). We view the Federal Express fee as just such a charge. The consumer was obligated to pay Centrust for an existing loan. The appellees accepted the consumer's obligation. In accepting the payment from the appellees, Centrust imposed the burden--in other words, the cost--of transporting the check to AIB, who had the option of selecting the method of transportation. Rodash then paid this cost to the appellees incident to receiving credit. Accordingly, we hold that the Federal Express fee constituted a finance charge that was improperly included in the amount financed because the Federal Express charge was imposed directly or indirectly by the creditor as an incident to the extension of credit. 8 18 Our conclusion is buttressed by public policy. The purpose of TILA is to make various credit terms available to consumers, so they can more easily compare such terms between banks and other financial institutions. Consequently, financial institutions may not bury any costs of credit as such indirection would hinder consumers in comparing credit terms and making the best informed decision on the use of credit. Cf. Mourning, 411 U.S. at 377, 93 S.Ct. at 1664 (Some may claim that it is a relatively easy matter to calculate the total payments to which petitioner was committed by her contract with respondent; but at the time of sale, such computations are often not encouraged ... or performed.). Consequently, the appellees violated TILA as a matter of law by failing to disclose as part of the finance charge the charge imposed upon Rodash for payment of the Federal Express delivery.