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#1991898 - 01/28/15 08:04 PM HELOC Program Disclosure - Fixed Rate
RVFlyboy Offline
Power Poster
RVFlyboy
Joined: Oct 2000
Posts: 5,980
Soaring over Georgia
We have a fixed rate HELOC product. In the program disclosure, Reg Z requires that we include a rate that we have used for this program in the preceding 12 months. Reg Z model disclosures do not contain any model language for making this disclosure. Our disclosure provided by our forms vendor reads as follows:
FIXED RATE FEATURE: This product is subject to a fixed annual percentage rate. An ANNUAL PERCENTAGE RATE of 5.250% has recently been imposed under this product. The annual percentage rate includes only interest and no other costs.

We now have an auditor suggesting that our disclosure verbiage be changed to include the date that this rate was imposed to make it easy to identify that it is within the prior 12 months. I think this is overkill and unnecessary. Thoughts?
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Jim Bedsole, CRCM, CBA, CFSA, CAFP
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#1991980 - 01/28/15 09:26 PM Re: HELOC Program Disclosure - Fixed Rate RVFlyboy
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,844
Bloomington, IN
We now have an auditor suggesting . . . that's all it is, a suggestion. It is not required by the regulation so you are free to accept or reject the suggestion. I personally would reject it.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1994180 - 02/06/15 05:28 PM Re: HELOC Program Disclosure - Fixed Rate RVFlyboy
Jan94 Offline
Platinum Poster
Joined: Mar 2001
Posts: 828
USA
Good afternoon -- I am in need of a second opinion. We are also working on a fixed rate HELOC. I have raised a question about disclosing the index on a fixed rate HELOC when that index is based off of prime (WSJ) plus a margin. Both credit and legal have indicated that if the rate is fixed and not variable, it shouldn't matter about the index and would not be required to be disclosed as it is for a variable rate.

1026.40(d)(6) Annual percentage rate. For fixed-rate plans, a recent annual percentage rate imposed under the plan and a statement that the rate does not include costs other than interest. A recent annual percentage rate is a rate that has been in effect under the plan within the twelve months preceding the date the disclosures are provided to the consumer.

(d)(12) provides the requirements when the rate is variable and that we would disclose the index information.

I do see the section that talks about conversion to a fixed rate and I understand that, but in this scenario it will be fixed from the beginning through the entire term. So even if prime were to change, this fixed rate would not.

Am I overthinking this? I'm ok if someone tells me so, just wanted to be sure I asked before this became final.

Thank you!

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#1994226 - 02/06/15 06:48 PM Re: HELOC Program Disclosure - Fixed Rate RVFlyboy
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,844
Bloomington, IN
There is no index or margin for a fixed rate loan to disclose. I'm not sure what your concern is.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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