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July 23
Opening Accounts for Marijuana Businesses: CIP, CDD, Risk and Monitoring
Deborah Crawford

July 29
W-9, W-8BEN and W-8 BENE: IRS issues new forms and new rules;
Deborah Crawford

July 31
ACH Security Framework Rule - Small Rule, Big Implications;
Rayleen Pirnie

August 6
Part I
Flood Insurance: Requirements and Best Practices
A Two-Part Companion Webinar Series;
David Dickinson and Jerod Moyer

August 12
A to Z of Reg E;
Andy Zavoina



Topic Options
#198449 - 06/09/04 10:01 AM Corrective Action - TIL Underdisclosed?
Lavender Offline
Gold Star

Registered: 06/02/03
Posts: 335
What are the restitution requirements for a TIL that has an underdisclosed APR for the permanent phase (two TILs provided) when:

1. The perm phase has not yet begun?
2. The perm phase has begun?
3. If restitution is required, is it only req'd to the amount which brings it within tolerance or the entire amount?

Thank you.

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Lending Compliance
#198450 - 06/09/04 10:05 AM Re: Corrective Action - TIL Underdisclosed?
David Dickinson Offline
10K Club

Registered: 11/28/00
Posts: 13799
Loc: Central City, NE
Use the OCC's APR Calculator to calculate the answer to all of your questions.
_________________________
David Dickinson
http://www.bankerscompliance.com

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#198451 - 06/09/04 10:15 AM Re: Corrective Action - TIL Underdisclosed?
Lavender Offline
Gold Star

Registered: 06/02/03
Posts: 335
We did...but when it asks the number of payments that have been made, the answer is 0 (for the perm phase, this is where the error is) and the program won't take 0.

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#198452 - 06/09/04 10:22 AM Re: Corrective Action - TIL Underdisclosed?
David Dickinson Offline
10K Club

Registered: 11/28/00
Posts: 13799
Loc: Central City, NE
Then enter "1" for a payment and look at the results.
_________________________
David Dickinson
http://www.bankerscompliance.com

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#198453 - 06/09/04 11:39 AM Re: Corrective Action - TIL Underdisclosed?
Lavender Offline
Gold Star

Registered: 06/02/03
Posts: 335
But wouldn't that falsely assume that the borrower had made a payment toward the perm loan?

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#198454 - 06/09/04 03:01 PM Re: Corrective Action - TIL Underdisclosed?
Lavender Offline
Gold Star

Registered: 06/02/03
Posts: 335
In addition to my other question, what is meant by OCC's APRWin's "proration factor"?

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#198455 - 06/09/04 03:23 PM Re: Corrective Action - TIL Underdisclosed?
Anonymous
Unregistered


Just out of curiosity....can't the perm phase just be redisclosed?

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#198456 - 06/09/04 03:25 PM Re: Corrective Action - TIL Underdisclosed?
Lavender Offline
Gold Star

Registered: 06/02/03
Posts: 335
That's what I am hoping, however, one could argue that the borrower has been adversely impacted as they went with us on this construction/perm loan based on both TIL disclosures???

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#198457 - 06/09/04 03:37 PM Re: Corrective Action - TIL Underdisclosed?
David Dickinson Offline
10K Club

Registered: 11/28/00
Posts: 13799
Loc: Central City, NE
Quote:

But wouldn't that falsely assume that the borrower had made a payment toward the perm loan?



If you enter "1" for payments, you will see how much reimbursement is required. You can apply logic and back out the one month that you really haven't had yet.
_________________________
David Dickinson
http://www.bankerscompliance.com

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#198458 - 06/09/04 03:54 PM Re: Corrective Action - TIL Underdisclosed?
Lavender Offline
Gold Star

Registered: 06/02/03
Posts: 335
Thank you...Just to clarify what you are saying... We cannot simply redisclose the permanent TIL and there will be restitution even though the loan has not converted to the perm phase and the perm TIL was the only part that was wrong.

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#198459 - 06/09/04 04:16 PM Re: Corrective Action - TIL Underdisclosed?
David Dickinson Offline
10K Club

Registered: 11/28/00
Posts: 13799
Loc: Central City, NE
I'm not sure I fully understand your situation. I was only trying to help with the OCC calculator. What I don't understand is that you have already given the TIL disclosure but you haven't closed the permanent loan yet?

I don't believe it is OK to just redisclose. If you have already given them and they are not accurate, you must obey any restitution requirements. However, if you haven't closed the perm loan yet, you haven't triggered the perm phase TIL disclosure and should be able to redisclose.

I know I may sound like I'm talking out of both sides of my mouth, but I'm missing how this can be (give disclosures even though you're not there yet).

I am NOT saying that you have any restitution requirements. The calculator is the only way to say that.
_________________________
David Dickinson
http://www.bankerscompliance.com

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#198460 - 06/09/04 04:23 PM Re: Corrective Action - TIL Underdisclosed?
Lavender Offline
Gold Star

Registered: 06/02/03
Posts: 335
The construction-perm loan closed and we provided both TILs. However, the loan has not converted to the perm phase, which is where the TIL violation is (only on the perm TIL as we provide two TILs at closing).

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#198461 - 06/09/04 04:25 PM Re: Corrective Action - TIL Underdisclosed?
David Dickinson Offline
10K Club

Registered: 11/28/00
Posts: 13799
Loc: Central City, NE
Is this a construction/perm all in 1 loan? 1 closing? Or is it two different loans?

If it is 1 loan, then you should have 1 TIL disclosure for the whole thing.

If it is 2 loans, why give the perm TIL before you get there?
_________________________
David Dickinson
http://www.bankerscompliance.com

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#198462 - 06/09/04 04:29 PM Re: Corrective Action - TIL Underdisclosed?
Lavender Offline
Gold Star

Registered: 06/02/03
Posts: 335
This is one loan with one closing and has two phases.

We have the option of providing two disclosures (per Appendix D) and sales has opted for this as they believe the TILs are more attractive (competitive) to the consumer this way.

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#198463 - 06/09/04 04:34 PM Re: Corrective Action - TIL Underdisclosed?
Deena Offline
Power Poster

Registered: 11/02/00
Posts: 2637
Loc: PA
Since the loan has already closed, you can not just redisclose - even though the permanent phase has not yet begun. You have to follow the reimbursement instructions on the OCC calculator (like you were doing originally).
_________________________
Opinions expressed are mine and not necessarily those of my employer.

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#198464 - 06/09/04 04:44 PM Re: Corrective Action - TIL Underdisclosed?
Lavender Offline
Gold Star

Registered: 06/02/03
Posts: 335
Thank you...

The OCC software shows a lump sum number as well as a payment option. Can anyone explain the difference and do we really have a choice?

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#198465 - 06/10/04 09:07 AM Re: Corrective Action - TIL Underdisclosed?
Anonymous
Unregistered


The FFIEC issued an Interagency Q&A for Reg Z Reimbursements that was revised in 1998. This is what it says about construction loans:

Q. How will disclosures containing information properly estimated under 12 CFR 226.5(c), 12 CFR 226.17(c), and Appendix D be treated for reimbursement determinations and computations?
A. If an APR or finance charge is in error for any reason other than a properly made estimate, the determination of whether the error constitutes a reimbursable overcharge will be made using the estimated information as disclosed. At the creditor's option, reimbursement will be based on either:
(1) The actual amount of loan advances, with consideration given to the amount and dates payments were actually made by the borrower; or
(2) The disclosed amounts of time intervals between advances and between payments.

The basis selected shall be applied, using the lump sum or lump sum-payment reduction method (at the creditor's discretion), to all loans of the same type subject to reimbursement.

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#198466 - 06/10/04 09:55 AM Re: Corrective Action - TIL Underdisclosed?
Deena Offline
Power Poster

Registered: 11/02/00
Posts: 2637
Loc: PA
Quote:

Thank you...

The OCC software shows a lump sum number as well as a payment option. Can anyone explain the difference and do we really have a choice?




My understanding is that you can either refund the total of the lump sum amount and continue to collect payments in their original amounts for the remainder of the loan term OR you can adjust the amount of the payments (which usually requires a system adjustment) so that, over the life of the loan, the consumer will pay the amount that was disclosed to them. I usually recommend making the lump sum reimbursement and being done with it, but that's your choice.
_________________________
Opinions expressed are mine and not necessarily those of my employer.

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