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#2160775 - 01/17/18 08:01 PM Quoting Mortage Rates to Consumers
swiggles Offline
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swiggles
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I am interested in gaining others' advice and guidance on a subject. We are a small community bank which heretofore, offered only fixed rate portfolio loans. We will now offer ARMs and "secondary market" loans.

For consumers inquiring about our mortgage rates, but not actually applying for a loan, what is the best way to determine and quote APR for each product/rate, which may change daily? Do you do a representative example for each product? Do you sit down with each interested party and go through a software program for the products the applicant is interested in?

For example, if someone calls in or comes in and says, "what are your mortgage rates?" How do you handle the request?
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Lending Compliance
#2160805 - 01/17/18 09:01 PM Re: Quoting Mortage Rates to Consumers swiggles
David Dickinson Offline
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David Dickinson
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Central City, NE
§1026.26 says In an oral response to a consumer’s inquiry about the cost of closed-end credit, only the annual percentage rate may be stated, except that a simple annual rate or a periodic rate may also 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.

I recommend having a rate sheet with sample loan amounts, fees, etc. That way you can say "based on a $100,000 loan, your APR would be x%.
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#2160821 - 01/17/18 11:16 PM Re: Quoting Mortage Rates to Consumers swiggles
swiggles Offline
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LOL...my boss dug up where I had asked the same question YEARS ago.....like ELEVEN years ago......at another bank.
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#2160822 - 01/17/18 11:28 PM Re: Quoting Mortage Rates to Consumers swiggles
Rocky P Online
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Florida
Would not be an issue most of the time as regs would have usually changed 3 times in 11 years. You were just checking to make sure it had not. :-)
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#2160824 - 01/17/18 11:40 PM Re: Quoting Mortage Rates to Consumers swiggles
Richard Insley Online
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Richard Insley
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Toano, VA
After studying countless ways to violate Sections 1026.24 and 26, I'm convinced that the best approach is to focus your energy on creating and maintaining a bullet-proof rate board on the bank's web site. Your procedure (and related training and monitoring) for responding to requests for rate quotes then becomes very simple--don't quote anything that isn't on the web page. Staff can read the information to inquirers, print it out and hand it to inquirers, or give them the URL so they can do it themselves. This single procedure works for oral, electronic, or written inquiries with oral, electronic, or written responses.

You can choose which products to include on the rate board. Nothing says you have to advertise them all, so include the ones that account for a high percentage of your originations. Low volume products can be listed as available along with an invitation for interested individuals to come to your office to discuss pricing. Hopefully, you're able to generate individualized quotes with your loan documentation software. These can be a much closer match to the inquirer's needs than the representative examples you will generate for the rate board.

ARM loans are tough to advertise correctly. Loan amounts and a few of the other product features can be estimated, but the indexes, margins, and offering rates are known for all the products you offer. Reg Z never permits you to ignore known information, so it's necessary to generate the stepped payment schedules needed to calculate the APR--even though fees and other Finance Charges have to be estimated.
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#2160857 - 01/18/18 02:18 PM Re: Quoting Mortage Rates to Consumers Rocky P
swiggles Offline
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Quote:
Would not be an issue most of the time as regs would have usually changed 3 times in 11 years. You were just checking to make sure it had not. :-)
Yes!....that's it..... wink
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#2160858 - 01/18/18 02:21 PM Re: Quoting Mortage Rates to Consumers swiggles
swiggles Offline
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And thanks, Richard!!!
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