My bank has discovered a problem with TILA disclosures. It seems we left out a $250 fee and our APRs are wrong. We have to search a lot of files to find out how many customers this happened to. This is going to be a lot of work. Is there an easy way to do this?

"Easy" and "TILA" are mutually exclusive!

Is the $250 fee only applicable to certain types of loans (e.g., real estate)? Are the types of loans segregated on your data system by class codes, account types, property types, etc? Are loan files in question restricted to a certain time period?

You may have some success by identifying a common denominator(s)and having your data service center run a report listing the loan files that fall within the parameters you set.

I feel your pain. I am currently working on more than 2000 loan files (manually-file by file) correcting property and purpose codes so that our Call Report is accurate.

Best of luck!

When you say you "left out a $250 fee," I am assuming that you mean that you failed to include it as a Finance Charge. Therefore, Amount Financed is overstated, and APR and Finance Charge are understated.

When you say "our APRs are wrong," are they outside the .125% tolerance for APRs set by Reg Z? Does the $250 result in a reimbursable error for finance charge or APR? When was you last regulatory exam (of any type)?

There is no easy way to do a file search, but the answers to these questions will all go into the decision of what to do and far back to go. Decide whether you want/need to do a file search at all.

If the APR is within tolerance (and frequently on mortgage transactions they are) despite the error, then chances are good that the .25% APR tolerance for the Finance Charge reimbursement will mean no reimbursements for Finance Charges either. If you have no reimbursable loans, then ask yourself this question: what are you going to do? The likely answer is that you will provide a new, accurate disclosure and a new rescission notice. There are differing opinions about whether this will cure your rescission problem. Some people (myself among them) believe that once you have performed (disbursed the funds) then your rescission is flawed no matter what you do, and will run for three years from the loan date.

Even if you do not accept this argument, do you want to give the borrower another reminder of their right to cancel? Think of the consequences. You have to refund ALL moneys paid by the customer, including all principal and interest paid. Then you are required to release the lien. ONLY THEN can you ask the borrower for your money back. Many institutions have decided to simply let the three-year extended period run rather than face these risks. If that is your decision, then a file search is a waste of time.

If the error results in reimbursements, all bets are off. Cut the checks to forestall any civil liability under TILA. The regulators will require you to reimburse on loans made since the date the last exam of any type started. This includes S&S, IT, and Trust exams, not just compliance.

Good Luck.