How is everyone planning to provide the oral disclosure?

In reading the requirements, I don't see how a toll free line will work since a payment schedule must be disclosed and will be different for each borrower.

Would we be compliant to provide both oral and written disclosure at closing?

We are doing the toll free number where they will hear a recording of the MAPR statement. Then it will prompt them to press 1 to hear their payment schedule. When they press 1 they will be transferred to a representative that will go over the payment schedule with them.

You are fine if you provide the written and oral disclosures at closing. §232.6(a) "... a creditor shall provide to the covered borrower the following information before or at the time the borrower becomes obligated on the transaction or establishes an account for the consumer credit ..."

So, the toll free number IS optional right? If you give the written disclosure at consummation and read it to them, there's no need for a toll free number...is that correct?

Also.....the part about disclosing the MAPR to them is a bit confusing....my reading of it has been that, technically, you don't ever have to say something like "and your MAPR on this loan is 21.85%". You can just read the generic model statement and that covers you....correct?

Yes, it is optional.
Yes, you can read them at consummation.
The requirement is to give them the MAPR statement, not the numeric MAPR amount.

I, personally, think that reading the MAPR statement aloud will be really awkward. And I can only imagine how many LOs will "forget" about it or flat out not do it... I feel better with the toll free option.

I'm just not sure i'm gonna be able to sell us creating a toll free number specifically for this one, (for us) seldom used instance, when an oral reading technically suffices.

Thanks CULady.

I would think if you had a toll free number (one you already have) with a specific extension, that would work as well. Then you could have that extension either be a recorded message or go to a person that could read the statement and go over the payment schedule.

I think with the toll free number it is easier to "prove" compliance than if you are having the LOs read it.

Agreed. If we were heavy on loans to active duty service members, i'd probably lean that way. But if we make one loan a year to an active duty service member, that will be a lot for us.

But how many loans do you make to dependents? If you are in a town with college students, it may be more than you think.

Not many of those either. I understand using the toll free number; but the regulation says that an oral disclosure is ok too. As far as proving we read it.....they wrote the regulation.......i mean....how did they intend for us to prove we read an oral disclosure? I don't know the answer to that; but we'll read it when it's applicable.

Is it not sufficient to call the borrower prior to arranging the closing, read the disclosure, and document it in the file?

It doesn't matter when you do it, so that would be an option. But definitely documenting it and putting it into procedures would probably be a "best practice." It might not "prove" compliance, but it would be better than nothing I think.

How would we orally disclose the payment schedule (since it is loan specific) early on in the process? Couldn't we read the details of the payment at the closing before signatures are put to paper?

Do it at consummation then.

If we choose to have the banker call the borrowers and read the disclosure to them, must the banker speak with all of the covered borrowers? I'm assuming so, but I want to be sure. If the banker calls and talks with the servicemember, would the servicemember then have to pass the phone to the dependent (assuming both are on the loan) so that the banker can read it to the dependent? Thanks!

We decided to add a customer attestation section on the bottom of the written disclosure that states that they acknowledge that the disclosure was received and provided to them orally prior to becoming obligated on the debt. Anyone see any issues with that?

So if we read at consummation and add the attestation we should be covered, right?

To my understanding, yes. That is what we are planning on doing as well.

I have been reading on various forums that some understand the Rule as requiring oral disclosure of the payment schedule unique to the covered borrower's loan, in addition to the generic MAPR disclosure. According to the ABA, legal staff met with the DoD on August 2, 2016, and learned the DoD has drafted an interpretive rule responding to various questions trade groups have on the Rule. One of the issues involves "Oral disclosures of payment obligations", and the interpretive rule makes clear that the disclosure about the "payment obligation" WILL permit a generic description rather than one specific to the individual covered borrower's loan. According to the ABA, the interpretive rule may take weeks or months even before final publication in the Federal Register; however, the DoD has recommended to banking regulators that they be "flexible" when examining institutions for implementation.

I don't know about others, but until I can read that in writing from the DOD, I will still be insisting on including the payment schedule in the oral disclosures.

Just because someone tells the regulators to be "flexible" doesn't mean that they will be able to completely ignore a very clear instruction of the current rule.

Well apparently it is not all that clear, in that the DoD had to promulgate an interpretive rule specifically addressing that issue, in which they reportedly make it clear that the Rule does not require it. But on the other hand, if lenders are properly reviewing loan documents with borrowers at loan closing, they should be discussing that information with them as SOP before they sign.

The DoD is not used to writing regulations for bankers. When they write a military reg they can interpret and apply it any way they want. Here, that is not the case and the inexperience with working with the private industry is showing in bold print. I am disappointed that that they've crafted a set of requirements that will do harm to some military borrowers and they've failed to correct them with timely guidance. In the bigger picture the regs will do more good than harm but haven't they learned you don't have to cut off a limb to save a finger.

Let's hope the GAO hurries up with the guidance document. (I believe that's where it is now.) And let's hope they don't release it on Oct 1 and tout the fact that they beat the deadline.

Good point, although, it seems like there is more than just a limb being cut off recently-say half the body for a hang nail.

So we are going to take the current interpretations to develop procedures/training - in good faith - documenting why we're doing it that way,. Then will adjust when/if the guidance comes out. It's either that or stop lending for certain products--which isn't an option.

I need some clarification....

The rule states, " in order to satisfy the requirement to orally provide certain disclosures, a creditor may provide the information in person or provide a toll-free telephone number...."

If I am mailing loan documents to a covered borrower (who is also an established customer) & do not have a toll-free number established for them to call, can I call them & read the disclosures to them? Or do I have to deny the loan because they are not in front of me to receive the oral disclosures in person?

I think reading them over the phone would be fine. Just be sure to either put that in procedures or make a note on the file in case you are asked about it later.

So has anyone started to come up with a template for the oral disclosure? A "generic description" of the payment obligation?

"Your payment schedule shows the amount of principal and interest you are required to pay each month in order to pay off the loan by the end of its term. If you make your payment late, you may also have late charges added to the payment amount."

[We don't have ARMs or credit cards]

Thoughts anyone?