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#2203330 - 01/17/19 08:55 PM CD - Rate change date wrong
Compli(cated) Offline
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Joined: Mar 2011
Posts: 185
Wisconsin
Audit has brought it to our attention, that for some construction loans, the date of the first rate change on the note does not match the date on the CD. The actual rate change would normally be set to happen on the date that is on the Note (while the date on the CD is later than that). The language on the Note says the rate "may" change as of XX date so it would be ok if it doesn't until later.

1. Is there anything that can be done with the CDs to still be able to change the rate as of the date on the Note?

2. Is there any way to officially "cure" the ones where the date has already changed? Refund the difference in interest paid - will that actually fix the violation?

Just wishful thinking here, I think I know the answers, I just don't like them...
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TRID - TILA/RESPA Integrated Disclosures Rule
#2203334 - 01/17/19 09:04 PM Re: CD - Rate change date wrong Compli(cated)
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,893
Galveston, TX
You don't give us enough detail as to what is in the note versus the CD to opine on this issue.
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#2203340 - 01/17/19 09:21 PM Re: CD - Rate change date wrong Compli(cated)
Compli(cated) Offline
100 Club
Joined: Mar 2011
Posts: 185
Wisconsin
Randy -

Note says: interest rate I will pay may change on the first day of June, 2018 and may change on that day every 12th month thereafter.

CD in the AIR Table says: First Change - Beginning of the 25th month; Subsequent Changes - Every 12th month after first change.

In this scenario, the 25th month would be June 2019.

Does this help anything?
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"I was gratified to be able to answer promptly. I said I don't know." - Mark Twain

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#2203342 - 01/17/19 09:31 PM Re: CD - Rate change date wrong Compli(cated)
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,893
Galveston, TX
You have a CD disclosure violation and depending on whether this loan was at a discounted rate - possibly a Finance Charge/APR violation also.
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#2203345 - 01/17/19 09:50 PM Re: CD - Rate change date wrong Compli(cated)
Compli(cated) Offline
100 Club
Joined: Mar 2011
Posts: 185
Wisconsin
Right. And nothing that can really be done to fix it, correct?
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"I was gratified to be able to answer promptly. I said I don't know." - Mark Twain

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#2203361 - 01/17/19 11:01 PM Re: CD - Rate change date wrong Compli(cated)
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,893
Galveston, TX
If it results in an under disclosed FC/APR, I would suggest you fix it to avoid civil liability.
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#2203367 - 01/18/19 03:20 AM Re: CD - Rate change date wrong Compli(cated)
Compli(cated) Offline
100 Club
Joined: Mar 2011
Posts: 185
Wisconsin
Thanks, Randy.
_________________________
Opinions are my own.
"I was gratified to be able to answer promptly. I said I don't know." - Mark Twain

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