Section 1026.41(e)(3) of the final TILA Servicing rule allows servicers to provide a coupon book, in lieu of providing the periodic statement, for fixed-rate loans. Section 1026.41(e)(3)(ii)(A) requires that within the coupon book, the Account Information content from the periodic statement must appear. That includes (among other things) the “date after which the interest rate may next change”. Since the coupon book exception is only available for fixed-rate loans, when would this be applicable?

I am assuming that it is there to address loans that are technically fixed-rate loans, but which have multiple rates like those identified as exempt from the new ARM requirements (E.g. Shared-equity/shared-appreciation mortgages, Price-level adjusted or other indexed mortgages that have a fixed rate of interest, but provide for periodic adjustments to payments and the loan balance to reflect changes in an index measuring price or inflation; Graduated-payment mortgages or step-rate transactions; Renewable balloon-payment instruments; and (possibly?) Preferred-Rate Loans), but I’m not sure from the rule. Any ideas??

The coupon book would provide information that would be included on a periodic bill for a fixed-rate loan. A fixed-rate loan for this purpose is defined as one that is not an ARM and is not a step-rate loan. The list of account information items in 41(d) for statemented loans includes elements that would not apply to a fixed-rate loan, such as the "date after which the interest rate may next change." Since it doesn't apply to a fixed-rate loan, it would not appear in the coupon book.

If you are exempt under the small servicer for periodic statement, are you still required to provide the high level coupon booklet? Sorry, just can't seem to get this straight in my head....

No, since the coupon book is an alternative available to be provided in lieu of the periodic statement for fixed rate loans, you would not be required to provide it if you qualified as a small servicer.

If you qualify as a small servicer under 1026.41(e)(4), you are not subject to any part of section 1026.41, so you would not have to meet the "high level coupon book" requirements, either.

Thank you both...that's what I thought, great to have you really smart folks to reach out to during these banking days on steriods!

Second guessing myself.....we are a large servicer but only have a handful of ARM loans. We are providing the upgraded coupon book on our fixed rate loans but we HAVE to give ARM loans a monthly statement, right?

Yes

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