When calculating finance charges in compliance with TILA, which of the following is NOT included?

In the context of the Truth in Lending Act (TILA), finance charges are any fees that are associated with obtaining a loan, designed to provide consumers with a clear understanding of the true cost of credit. When determining what constitutes a finance charge, certain fees are included, while others may be excluded.

The correct choice, which specifies that appraisal fees are not included in the calculation of finance charges, is based on TILA guidelines. Appraisal fees are generally considered necessary expenses that are incurred by the lender for evaluating the property’s value, but they are not part of the cost of credit that TILA aims to disclose to the borrower. Instead, they are viewed more as a necessary cost of the property transaction itself rather than a financing cost conceptualized within TILA's framework.

On the other hand, settlement fees, broker fees, and private mortgage insurance premiums are typically included in finance charges. Settlement fees and broker fees directly relate to the costs associated with the loan process itself, while private mortgage insurance (PMI) is often necessary for borrowers who make a down payment of less than 20%, thereby protecting the lender in case of default. All these elements directly relate to the cost of obtaining financing and thus are factored into the calculation of finance charges