Need help with citation for disclosure requirements of a secured (but not by consumer's home) variable-rate loan with term of one year or less.

Believe disclosure is limited to any limit on increase, circumstances rate may change, effect of increase & example of increased payment.

Thanks --

You are correct. Those requirements are found in Section 226.18(f)(1).

HELP! Elvis (AKA Examiner) is in the building. Urgent response needed!

Scenario: Interim construction loan with varible rate feature - secured by homestead - term less than 1 yr - 10 monthly interest payments; 1 final principal/interest payment.

Examiner is questioning why TIL disclosure does not include:

"An example of of the payment terms that would result from an increase." per 226.18(f)(1)(iv)

and

"A reference to the variations in the other payments in the series." per 226.18(g)(2)(ii)

Loan Ops Manager and Supervisor both say they have NEVER seen that with these loans. Using LaserPro software.

Is there some exception or caveat the examiner has possibly overlooked???

To the best of my knowledge there is no exemption.

ARTA gives the referenced disclosures on the TIL.

Dan,

would it make any difference if, rather than a loan, it were a construction line?

If it was truely an open-end credit, you wouldn't have a closed-end TIL to begin with......

You would have a HELOC.

Thanks, Randy.

It's definitely a non-HELOC, closed-end loan/line, whereby the borrower draws out amounts as needed for construction purposes.

OK - You got me thinking. This is what you need:

Commentary:

Paragraph 18(f)(1)(iv).

2. Hypothetical example not required. The creditor need not provide a hypothetical example in the following transactions with a variable-rate feature:

• Multiple-advance construction loans disclosed pursuant to appendix D, Part I.


Appendix D--Multiple Advance Construction Loans

Part I--Construction Period Disclosed Separately

A. If interest is payable only on the amount actually advanced for the time it is outstanding:

3. Repayment schedule--The number and amounts of any interest payments may be omitted in disclosing the payment schedule under Sec. 226.18(g). The fact that interest payments are required and the timing of such payments shall be disclosed.

I very seldom see LaserPro be wrong. Give this to your examiner

You are just too good! Whatever they're paying you, it isn't enough. You can tell them I say, "You deserve a raise!"

Thanks, again.

Well, I do, do this sort of thing for a living. I try to keep my clients happy (and out of trouble) and they usually do pay my bill