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#2189094 - 08/14/18 07:34 PM Understated Finance Charge
solbrillante Offline
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solbrillante
Joined: May 2011
Posts: 85
During review, we found a finance charge of $150 that was not categorized as a prepaid finance charge. This caused the APR to be understated, but within tolerance. So no APR violation. However, the finance charge was understated by $150; therefore, a finance charge violation. We have no TRID issues. Both the LE and CD are accurate.

If we reimburse the customer the $150 in a cash payment, do we also have to revise the CD and properly categorize the fee as a prepaid finance charge, so the APR and Amount Financed are correct in the CD?

We are way past the 30 days after closing. I reviewed compliance exam manuals as well as old guidance for reimbursement. Nothing is really clear on the re-disclosure. We are definitely going to reimburse the $150 to avoid any civil liability under section 130a TILA. But do we have to revise the CD with the proper prepaid finance charge?

I am getting multiple responses that I have to re-disclosed, and others are telling me that if I reimburse the $150, then my disclosures are now accurate. Any help would be greatly appreciated in clearing this up?

Thank you.

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#2189099 - 08/14/18 07:43 PM Re: Understated Finance Charge solbrillante
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,628
Bloomington, IN
if I reimburse the $150, then my disclosures are now accurate.

That is the correct advice. By reimbursing the $150 you are making the provided disclosures accurate therefore there would be no need to issue revised disclosures.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2189100 - 08/14/18 07:44 PM Re: Understated Finance Charge solbrillante
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 78,584
Galveston, TX
No - you reimburse the customer the $150 and thus you make the original APR and finance charge disclosures correct. There would be nothing new to disclose.
Last edited by rlcarey; 08/14/18 07:47 PM. Reason: what Dan said :)
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#2189102 - 08/14/18 07:52 PM Re: Understated Finance Charge solbrillante
solbrillante Offline
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solbrillante
Joined: May 2011
Posts: 85
Thank you to both! That was such a quick response. I really appreciate it.

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