Skip to content
BOL Conferences
Thread Options Tools
#18565 - 05/23/02 04:28 PM Oral Disclosure of APR
Kahola Offline
Platinum Poster
Kahola
Joined: May 2001
Posts: 712
Scottsdale, AZ. 85255
We have gazillion (slight exaggeration) of mortgage loan programs (fixed rate, ARM, c/perm, no-doc etc) and all have different interest rates. Do we have to have a sample APR for each mortgage loan program?

Pat Field

Return to Top
General Discussion
#18566 - 05/23/02 05:04 PM Re: Oral Disclosure of APR
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,748
On the Net
Basically, yes. This is what credit shopping is all about.

§226.26 Use of annual percentage rate in oral disclosures.
(b) Closed-end credit. In an oral response to a consumer’s inquiry about the cost of closed-end credit, only the annual percentage rate shall be stated, except that a simple annual rate or periodic rate also may be stated if it is applied to an unpaid balance. If the annual percentage rate cannot be determined in advance, the annual percentage rate for a sample transaction shall be stated, and other cost information for the consumer’s specific transaction may be given.

Section 226.26--Use of annual percentage rate in oral disclosures [OFFICIAL STAFF COMMENTARY]
1. Application of rules. The restrictions of §226.26 apply only if the creditor chooses to respond orally to the consumer’s request for credit cost information. Nothing in the regulation requires the creditor to supply rate information orally. If the creditor volunteers information (including rate information) through oral solicitations directed generally to prospective customers, as through a telephone solicitation, those communications may be advertisements subject to the rules in §§226.16 and 226.24.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#18567 - 05/24/02 04:49 PM Re: Oral Disclosure of APR
Harvey Offline
100 Club
Harvey
Joined: Feb 2001
Posts: 146
Like other real estate lenders, we periodically shop our local competitors to see what their rates and pricing are. My RE lenders are getting irritated with me because I make them follow 226.26 when quoting rates, but our competitors are not. We are finding more and more of them are just quoting the rate, not the APR. So for the uneducated RE borrower, our rate sounds higher. Is anyone else experiencing this issue?

Return to Top
#18568 - 05/24/02 05:22 PM Re: Oral Disclosure of APR
RFitzpatrick Offline
Gold Star
RFitzpatrick
Joined: Apr 2002
Posts: 424
Pacific NW
I think that most lenders review the competition all the time. Our focus is to educate the "uneducated RE borrower" what to look for and ask about APR and fees. Usually, or at least often, they will come back and appreciate us being up front from the start.
_________________________
Liability for taking my advice is limited to the amount you paid for it.

Return to Top
#18569 - 05/24/02 05:33 PM Re: Oral Disclosure of APR
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,748
On the Net
When speaking to a customer, the APR should be provided. If the other guy isn't doing that, I'd nudge them in the right direction. If they are gaining a competitive advantage through willful blindness, I'd give them a shove.

Look beyond the advertising requirements though, when speaking with other lenders, and look at the definition of "advertisement". See what fits, and what doesn't.

§226.2 Definitions and rules of construction.
ii. The term does not include:

A. 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.

B. Informational material, for example, interest rate and loan term memos, distributed only to business entities.


When addressing customers, you may also provide full disclosure and do the lemons to lemonade trick. "Mrs. Customer, the APR on this request would be X.XX%. That is based on an interest rate of X.XX%, points and fees of... Hopefully this answers all the questions you have now. There is nothing hidden here. I'm sure the other lenders have provided you with the same information."
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top