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#2049584 - 11/13/15 05:05 PM Is the Interest Rate a trigger term?
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So sorry if this is a stupid question - but here goes...

Is the interest rate considered a finance charge and thereby considered a triggering term for advertising under 1026.24(d)(iv)? Or would it just be if the actual amount of the interest resulting from the interest rate if disclosed (who would ever do this) would be a finance charge?

So if an auto loan advertisement disclosed only - Interest Rates as Low as 2.80% / 3.215% APR - this statement would not trigger any additional disclosures, correct?
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#2049617 - 11/13/15 07:04 PM Re: Is the Interest Rate a trigger term? Likes to Comply
CULady Offline
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Correct. For closed end loans 1026.24 (d) lists trigger terms as down payment, number of payments/period of repayment, amount of payment, amount of finance charge. Rates are not a finance charge. Official interpretation for 24(d)(1)(4)(ii) says: ii." ... Statements of the annual percentage rate or statements that there is no particular charge for credit (such as “no closing costs”) are not triggering terms under this paragraph."

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#2052733 - 12/07/15 02:01 PM Re: Is the Interest Rate a trigger term? Likes to Comply
fretzer Offline
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Pennsylvania
If a bank blog wants to state the following example would additional terms be required to be disclosed?

" If you qualify for a $1,500 a month payment in today's market using FHA financing at 4% for a 30-year fixed loan, this would translate to roughly $190,000 in purchase price. This example assumes taxes of $4,800 and insurance or $900/year."

Thanks!

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#2052741 - 12/07/15 02:37 PM Re: Is the Interest Rate a trigger term? Likes to Comply
#12 Offline
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Yes. The number of payments or period of repayment is a triggering term. "30 year fixed loan." See 1026.24(d)
Last edited by #12; 12/07/15 02:38 PM. Reason: add cite
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#2052743 - 12/07/15 02:41 PM Re: Is the Interest Rate a trigger term? Likes to Comply
rlcarey Offline
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Galveston, TX
Without knowing the context in which the information is presented, it may not be an automatic trigger.
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#2052763 - 12/07/15 03:12 PM Re: Is the Interest Rate a trigger term? Likes to Comply
fretzer Offline
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It is for a blog post. It's not advertising rates, just providing a hypothetical. I'm just questioning whether or not it would require more information. Thanks for the help!!

Here's the full article:

A question a lot of us in the mortgage industry hear is, should I buy a home now or wait until I have more cash saved? Most of us would probably agree that having more money down is generally a good thing; however, the current availability of low down payment loans coupled with the historically low rates we are experiencing might be enough to encourage folks to buy now.
Let’s consider the value of low rates in terms of purchasing power. If you are comfortable with and qualify for a payment of $1,500 a month, in today’s market using FHA financing at 4% for a 30-year fixed loan that would translate to roughly $190,000 in purchase price depending, of course, upon the real estate taxes and homeowners insurance for the property. For this example I assumed taxes of $4,800 and insurance of $900/year.
While rates are currently low, during the last 50 years, the average interest rate for 30-year fixed loans was approximately 8.5%. So, the current buyer needs to keep in mind that rates will begin to increase at some point in time – probably sooner rather than later. A mere 1% increase in rates (still way below average, but probably realistic) would increase the monthly payment for that same house by $106 per month. Here’s another way of looking at it: sticking to the $1,500/month payment and accounting for a 1% increase in rates would result in a nearly $20,000 DECREASE in buying power!
This hypothetical example illustrates that the cost of waiting to buy could be significant. With several low down payment loan options available, such as FHA, USDA, VA and Fannie Mae’s MyCommunityMortgage, now might be the time to buy.
While the mortgage process can seem cumbersome and complex, a seasoned mortgage professional can help find the home loan product that is right for you. To get a conversation started, contact us at..."

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#2052772 - 12/07/15 03:31 PM Re: Is the Interest Rate a trigger term? Likes to Comply
rlcarey Offline
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Galveston, TX
It doesn't sound like an advertisement to me.
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#2052776 - 12/07/15 03:37 PM Re: Is the Interest Rate a trigger term? Likes to Comply
fretzer Offline
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Pennsylvania
Thanks!! Since it's not an advertisement no NMLS# would be required either, correct?

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#2052780 - 12/07/15 03:46 PM Re: Is the Interest Rate a trigger term? Likes to Comply
rlcarey Offline
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rlcarey
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Galveston, TX
There is no requirement that a Bank include a NMLS number in an advertisement.
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#2052786 - 12/07/15 03:50 PM Re: Is the Interest Rate a trigger term? rlcarey
fretzer Offline
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Posts: 76
Pennsylvania
Thanks again and Merry Christmas!!

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