In an audit, we have found a new loan that is land only consumer purpose. The loan officer completed the loan as a business purpose loan therefore no TIL disclosures were given. Would we at this point, send the customer a TIL statement that corresponds to the note? We know that does not correct the problem of the loan being wrong originally.

Thanks.

Sending a TIL now (after the fact) is not an option. The note's interest rate is now the APR.

Review the TILA, Section 130(b) and you may find the following document of some help.

http://www.fdic.gov/regulations/laws/rules/5000-300.html

Thank for the answer and the link, Dan. I knew it would be reimbursable. I just had not figured out how to calculate it yet.

Be sure you read the linked document carefully. You may not have to reimburse.

Ok, I think I am reading this correctly. I do have a rate in my loan. If I use the Comptroller's APR Calculator and use the loan rate as my APR, it calculates a reimbursable violation. The APR adjustment is larger than the Finance Charge adjustment so I will use the APR adjustment for my reimbursement. Does this sound correct? Thanks.

As I said read the document closely. You most likely have gotten lucky and will not need to reimburse.

Violations Involving the Non-Disclosure of the APR or Finance Charge

1. In cases where an APR was required to be disclosed but was not, the disclosed APR shall be considered to be the contract rate, if disclosed on the note or the Truth in Lending disclosure statement.

2. In cases where an APR was required to be disclosed but was not, and no contract rate was disclosed, consumers will not be required to pay an amount greater than the actual APR reduced by one-quarter of one percentage point, in the case of first lien mortgage transactions, and by one percentage point in all other transactions.

3. In cases where a finance charge was not disclosed, no adjustment will be ordered.

Read that, but apparently not close enough. So the fact that the loan rate is less than what the APR would have been doesn't require any reimbursement or require any thing else to be done since we did disclose the loan rate on the note?