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#1995990 - 02/13/15 05:36 PM Final TIL Violation
WHEDA Offline
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WHEDA
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Wisconsin
In a QC audit, I found that the Final TIL, dated 1/30/2015, for a second mortgage (down payment assistance loan) stated a monthly payment of $14.45. The correct payment, which is stated in the Note, is $26.55. This is only a 10 year loan so the lower payment would not fully amortize it. This error also caused the Finance Charge and Total of Payments to be grossly overstated. Since the borrower signed a Note showing the correct payment, is it necessary to issue a revised TIL? If yes, does the increased payment and reduced FC and Total of Payments give the borrower any basis to rescind, or otherwise negate, the loan?

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#1996055 - 02/13/15 07:16 PM Re: Final TIL Violation WHEDA
Dan Persfull Offline
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How is the total of payments and the finance charge overstated if the TIL is based on a payment of $14.45 and the legal agreement calls for a payment of $26.55?

The TIL has to reflect the legal obligation. It appears you have an understated total of payments, the finance charge and most likely the APR.

the borrower any basis to rescind

Since this was a downpayment assistance loan I have to assume this was a Residential Mortgage Transaction and the ROR is not applicable.
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#1996163 - 02/13/15 10:10 PM Re: Final TIL Violation WHEDA
WHEDA Offline
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Thanks Dan. Since posting I have determined that the lender neglected to change the term in the system from 30 years to 10 years prior to generating the TIL. Now I'm looking through Reg Z in an attempt to find a waiver of corrective action when an error such as this is made.

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#1996178 - 02/13/15 10:35 PM Re: Final TIL Violation WHEDA
Dan Persfull Offline
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https://www.fdic.gov/regulations/laws/rules/6000-300.html

130.(c), however I'm not sure you have a "bona fide" error. The person reviewing the pre-closing documents should have caught this obvious error.
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#1996195 - 02/13/15 11:44 PM Re: Final TIL Violation WHEDA
Richard Insley Offline
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The original post says the disclosed payments are understated but the FC and TOP are "grossly overstated." Were the FC and TOP based on the correct payment amounts?
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#1996197 - 02/13/15 11:48 PM Re: Final TIL Violation WHEDA
Kathleen O. Blanchard Offline

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No. The amortization was off by 20 years!
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#1996219 - 02/14/15 01:12 PM Re: Final TIL Violation WHEDA
Richard Insley Offline
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Richard Insley
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Toano, VA
So....
if the lender disclosed:
- a payment schedule of 360 @ $14.45 instead of 120 @ $26.55
- a TOP of $5,202 instead of $3,186
- a FC of approximately $2,848 instead of $832
- a PFC of at least 1% of the loan amount
then:
- the payment schedule is not disclosed accurately (violation of Section 1026.18(g) or 1026.18(s))
- the TOP is overstated (violation of Section 1026.18(h))
- the FC is overstated (violation of Section 1026.18(d))
and, when based on the correct payment schedule:
- the APR is understated by more than 0.125% (reimbursable violation of Section 1026.18(e))

See Section 130(b) of the TILA for the "cure" procedure. I agree with Dan--a screw-up of this type can't be excused as a "bona fide" error.
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#1996264 - 02/16/15 08:02 PM Re: Final TIL Violation Richard Insley
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Thank you all for your comments.

This is really a bazaar situation. The lender disclosed an APR of 6.125%, which equals the Note rate, Fin Chg of 2,822.88, Amt Financed of 2,378.00, the Note amount (the only fee associated with the loan is a $30 recording fee for the Mortgage), and ToP of $5,200.88. They also disclosed a P&I Pymt and Total Est Mthly Pymt of 14.45. I agree with their APR of 6.125% and Amt Financed of $2,378, but FC should be 807.95 and ToP of 3,185.95. APRWIN shows an APR of 6.2379%, FC of 807.93 and ToP of 3,185.93 using 119 pymts of 26.55 and 1 of 26.48. Not sure why APR of 6.2379% but within .125% tolerance.

This mess is way above my pay grade. ; )

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#1996267 - 02/16/15 08:25 PM Re: Final TIL Violation WHEDA
Dan Persfull Offline
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Bloomington, IN
The above runs together and is hard for me to separate.

What is dislcosed on the final TIL?

Transaction date?
First payment date?
APR disclosed?
Finance charge disclosed?
Amount financed?
Number of payment and amounts (payment schedule)?


What is disclosed in the note?

Number and amount of payments?
Interest rate?
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#1996269 - 02/16/15 08:56 PM Re: Final TIL Violation Dan Persfull
WHEDA Offline
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I apologize for my text being difficult to follow. Like I stated, this is bazaar. See info below:

What is disclosed on the final TIL?

Transaction date? 9/30/2014
First payment date? 10/30/2014
APR disclosed? 6.125%
Finance charge disclosed? $2,822.88
Amount financed? $2,378.00
Number of payment and amounts (payment schedule)? I don't have the amortization schedule, however, the P&I disclosed was $14.45, which corresponds to a 30 yr term.


What is disclosed in the note?

Note date? 9/30/2014
Number and amount of payments? 1st pymt due 11/30/2014 (but should be 10/30/2014). Final pymt due 10/30/2024 (but should be 9/30/2024). Amount of $26.80 on Note amt of $2,400 (correct amt is $2,387).
Interest rate? 6.125% (One of the few items that is stated correctly.)
Last edited by WHEDA; 02/16/15 08:57 PM.
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#1996270 - 02/16/15 09:09 PM Re: Final TIL Violation WHEDA
Richard Insley Offline
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Richard Insley
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Toano, VA
Originally Posted By: WHEDA
Not sure why APR of 6.2379% but within .125% tolerance.
Because the APR is based on a blend of the interest and the PFC. The shorter the term, the more impact the PFC has on the APR.
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