On the TruthInLending Disclosure that is signed at closing on a mortgage, is there a tolerance amount that is acceptable in case of any computing errors? If any errors are found, should a new TIL be signed?
I understand that Amount Financed in TIL disclosures equals the note amount less prepaid finance charges. Is Amount Financed a meaningful number, or is it just a disclosure with no meaning other than for comparison of loans with different lenders? For example, is the amount financed the amount we actually accrue interest against, or is that the note amount which includes prepaid fees?
An OCC examiner recently cited our bank for not disclosing a coupon book company as a required provider of settlement services on the Good Faith Estimate form (which has the required provider information at the bottom of the form). I was under the impression that a financial institution should disclose only those service provider companies that were required in the origination, processing, or funding of the loan. The coupon book is required for the servicing of the loan, which, in essence, is not a settlement service. The coupon book fee that our bank charges is disclosed as a prepaid finance charge under TILA. It is a fee that our bank charges to offset the cost of the production of the coupon book for installment loans. This fee could very well be incorporated into our loan fee with an increase for the cost of the coupon book, but we choose to charge the customer separately for a loan fee and a coupon book fee. The coupon book fee is $10.00, and we disclose the fee on the Good Faith Estimate and the HUD1 or HUD1A, since all costs to the borrower must be disclosed. Should we be itemizing the coupon book company as a required provider?
Can we require that a borrower obtain credit life or disability insurance as a condition of a loan subject to TILA? If we can, I assume we must include the premium in the finance charge and adjust our TILA disclosure so that it does not state "Credit insurance is not required."
The Comptroller of the Currency has put forward a revolutionary idea: consumer disclosures that are easy to prepare and understandable to consumers. What a novel concept.
We all know what happens when the APR or finance charge is under-disclosed: restitution. What happens when the APR or finance charge is over-disclosed? Basically, nothing.
Someone asked me a question regarding changes to the Fair Lending Act and TruthInLending Act that will be effective 10/4/02. I was not aware of any changes. What, if any, are they?
Unfair and Deceptive Practices -- a new regulatory hot buttonby Mary Beth Guard, BOL Guru
By Howard A. Lax, Esq.
Lipson, Neilson, Cole, Seltzer & Garin, P.C.