We advertise rates on our website. However, to access them, the consumer must go through our mortgage rate calculator. Our marketing department is trying to argue that this is "direct personal contact" under Reg. Z and is, thus, not an advertisement. I'm not buying it. In all likelihood I'm going to have the calculator taken down until we can disclose an entire payment stream for our adjustable rate mortgages.

The other issue we have is that we have a mortgage rate sheet that our lenders pass out for inquires. This seems more like a "direct personal contact", but we have always treated it as an advertisement. I will probably pull the plug on this as well.

I sure wish I could come up with the Federal Register when "direct personal contact" was added to the Commentary. I'd love to read the discussion. Can anyone point me in the right direction?

PQ - If you are advertising rates for variable rate loans you have to include the rate at adjustment (based on today's index and margin) and all the payment streams (basically, it is going to look like the payment section of the TIL). Oh yes, it is ugly...very ugly.

"Direct personal contacts, such as follow-up letters, cost estimates for individual consumers, or oral or written communication relating to the negotiation of a specific transaction."

A website calculator does not rise to the level of negotiating a specific transaction nor is a rate sheet that you pass out for inquiries.

I don't think you need anymore of a definition than found above in the commentary to make that determination.

If you only include the composite APR on discounted variable rate products, you don't have to disclose info about the discount period, (pmt stream, duration of the initial term, correct?

If we have a borrower who is self-employed, and the loan is a HPML, do we have to verify the information on the tax returns by getting the tax transcripts, or can we just use the tax returns?

I would love it if this was true. However, doesn't the commentary to 226.24(c) and 226.24 (f) rule it out?

(4) i. A creditor or seller may promote the availability of the initial rate reduction in such transactions by advertising the reduced simple annual rate, provided the advertisement shows with equal prominence and in close proximity the limited term to which the reduced rate applies and the annual percentage rate that will apply after the term of the initial rate reduction expires. See § 226.24(f).

Feel free to correct me if I'm misunderstanding (I've misunderstood a lot lately) .

We've decided that if they were done by a paid preparer, that was fine. If they were self-prepared, we'd obtain a IRS copy via form 4506.

That's where I went with it, but I'm not getting much support. I think it makes sense to verify the amounts to prove that the tax returns that we have is the same as what was submitted to the IRS.

LT, we just had a buy back in the last 60 days because borrower provided tax returns that didn't match what was actually filed. A couple secondary market lenders are requiring 4560T on ALL files so that's where we went too. We get it from our cbr and it costs less than $20 on a joint return.

I finally got around to updating my advertising checklists with the new requirements effective tomorrow - better late than never

If anyone is interested in using them, I'm happy to share, but I'm new to BOL and don't know how to get things posted. Can someone show me the ropes?

YEAH! Email it to Michele Petry mpetry@bankersonline.com and she can help you with it.

So what do you do if you calculate their DTI ratio when figuring their "ability to pay" and it is higher than the acceptable ratio based on our underwriting standards?

I can't find anything on it...

I believe there was a post earlier here that said you must deny the loan.

My question: Are you using the ETIL APR or the FINAL TIL APR to calculate if a loan is HPML? I'm thinking both. Anyone?

Ok, laugh but I can't find this answer....a term shorter than 7 years...so is that 73 months? 6 years + 1 month? or 84 months? or 85 months?

We are using 85 months as the balloon date to circumvent any question.

As far as exceeding your DTI...it mentions "using generally accepted qualification standards" or something close...and as you are probably aware, even the secondary market standards vary.

We will not autodecline at our DTI limit...but will build in mitigating factors such as adequate residuals, cash assets, etc as possible remedies.

Does the down payment fall in the category of verification of assets relied upon for the repayment of the loan?

Good question, we just talked about this today but didn't really finalize our thoughts.

We've added an 85 month balloon note, too. Adjustable rate with one rate change in 42 months--2 percent cap--external index. Does anyone see any issues with doing this?

The calculator on FFIEC website asks for Lock In Date. We only change our rates maybe twice a year. We currently do not have the customer sign any kind of "lock" agreement. Does this mean we have to use the date we close the loan?

What this section is saying is (my paraphrase) "even if you refinance the loan (with a new loan), you don't have to give new TIL disclosures." This, of course is applying only to single pay loans with not other changes.

IMO - The key in to be consistant. Just as what date has been used previously as the "lock date" for the HMDA Rate Spread Calculator.

We use the date on our "Loan Approval Sheet" - This is what shows the loan terms, including the rate; collat; etc. and is signed (by the lender or committee) and dated. For us that is when the bank is commiting to do the loan at X% Rate.

I think using the note date could be reasonable - there is a prior post by Dan Persfull indicating that they don't lock any rate and it could change during processing if their "Stated Rate" for that product changes, so for his institution the note date makes sense.

Exactly my point. I don't believe the previous question on this was referring to a single pay...I believe it was referring to a 5-yr balloon...perhaps I misinterpreted it...I just didn't want someone thinking they could "renew" a 3-5 etc amortizing balloon loan under the exceptions to refinancings.

OK - let me try again RR. If you read all of §226.20, it states a refinancing is when you replace a loan with a new loan. The 5 exceptions state even if you do replace a loan with a new loan, they still don't trigger new disclosures.

The key on checking the rate spread is that you have to use the Final APR, correct? So if you check the rate spread today and you are under 1.5%, but the APR changes 1/8 a week later, you go check it again and the Average Prime Offer rate has changed and it could become a HPML. Am I on the right track with this?

That was my question earlier, Stephanie. imo, the final APR is THE APR that the Reg is talking about using to determine the HPML. So yes, if it changes from the one shown on the ETIL, you have to recalculate to make sure the loan isn't HPML. If I'm wrong, I'm sure a guru will chime in.

I agree TR!