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#2110895 - 12/15/16 01:44 AM Product Description / Odd-Year Balloon
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I'm a little fuzzy on describing the Product on the Loan Estimate if the loan is a fixed-rate balloon note the matures in 5 years and two months. Would it be "Year 5 Balloon Payment, Fixed Rate" or is there a decimal after the 5?

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#2110898 - 12/15/16 03:21 AM Re: Product Description / Odd-Year Balloon Compliance Poster
rlcarey Online
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37(a)(8) Loan term.

1. Partial years.

i. Terms to maturity of 24 months or more. Section 1026.37(a)(8) requires disclosure of the term to maturity in years, or months, or both, as applicable. Where the term exceeds 24 months and equals a whole number of years, a creditor complies with § 1026.37(a)(8) by disclosing the number of years, followed by the designation “years.” Where the term exceeds 24 months but does not equal a whole number of years, a creditor complies with § 1026.37(a)(8) by disclosing the term to maturity as the number of years followed by the designation “yr.” and the remaining number of months, followed by the designation “mo.” For example, if the term to maturity of the transaction is 185 months, the correct disclosure would be “15 yr. 5 mo.”
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#2110927 - 12/15/16 02:57 PM Re: Product Description / Odd-Year Balloon Compliance Poster
John Burnett Offline
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The product description for a balloon loan only indicates the year in which the first balloon payment occurs. In the case of your loan with a balloon payment at the maturity of a 62-month loan term, the product description would be "Year 6 Balloon Payment, Fixed Rate."
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#2110937 - 12/15/16 03:17 PM Re: Product Description / Odd-Year Balloon Compliance Poster
rlcarey Online
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John, you of course are correct. I was a little "off course" in my response.
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#2111110 - 12/16/16 03:10 AM Re: Product Description / Odd-Year Balloon rlcarey
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Thank you both for your input.

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#2268260 - 03/28/22 01:30 PM Re: Product Description / Odd-Year Balloon John Burnett
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Originally Posted by John Burnett
The product description for a balloon loan only indicates the year in which the first balloon payment occurs. In the case of your loan with a balloon payment at the maturity of a 62-month loan term, the product description would be "Year 6 Balloon Payment, Fixed Rate."

Where is this specifically stated? I have a feeling you are correct, perhaps based on some previous research, but the OI makes it seem like this would potentially be Year 5.17 Balloon Payment, Fixed Rate.

i. Terms of 24 months or more. For product types and features that have introductory periods or adjustment periods that do not equate to a number of whole years, if the period is a number of months that is 24 or greater and does not equate to a whole number of years, § 1026.37(a)(10) requires disclosure of the whole number of years followed by a decimal point with the remaining months rounded to two places. For example, if the loan product is an adjustable rate with an introductory period of 30 months that adjusts every year thereafter, the creditor would be required to disclose “2.5/1 Adjustable Rate.” If the introductory period were 31 months, the required disclosure would be 2.58/1 Adjustable Rate.”

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#2268261 - 03/28/22 01:31 PM Re: Product Description / Odd-Year Balloon Compliance Poster
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Is it because the balloon is not considered under the definition of an introductory period or adjustment period?

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#2268266 - 03/28/22 01:50 PM Re: Product Description / Odd-Year Balloon Compliance Poster
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1026.37(a)(10) - Comment 2:

iv. Balloon payment. If a loan product includes a “balloon payment,” as that term is defined in § 1026.37(b)(5), the disclosure of the balloon payment feature, including the year the payment is due, precedes the disclosure of the loan product.
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#2268281 - 03/28/22 05:00 PM Re: Product Description / Odd-Year Balloon rlcarey
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Originally Posted by rlcarey
1026.37(a)(10) - Comment 2:

iv. Balloon payment. If a loan product includes a “balloon payment,” as that term is defined in § 1026.37(b)(5), the disclosure of the balloon payment feature, including the year the payment is due, precedes the disclosure of the loan product.

Yes, but then you refer to comment 3(i) which I posted above. Said part of the interpretation says it covers the information in (a)(10), which is where this is located. And, it describes how you express years when odd months are in play and the time is greater than 24 months. I would guess the exclusion of that from the balloon is because it wouldn't be an "introductory" or "adjustment" period.

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#2268284 - 03/28/22 05:39 PM Re: Product Description / Odd-Year Balloon Compliance Poster
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Did you miss my post in which I said: "John, you of course are correct. I was a little "off course" in my response."?

But yes.
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#2268300 - 03/28/22 08:05 PM Re: Product Description / Odd-Year Balloon rlcarey
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Originally Posted by rlcarey
Did you miss my post in which I said: "John, you of course are correct. I was a little "off course" in my response."?

But yes.

Yes, I did see that. Your response however didn't utilize the reference for (a)(10), but rather for (a)(8). So, with the correct reference for (a)(10), it could be a different result.

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#2268323 - 03/29/22 11:05 AM Re: Product Description / Odd-Year Balloon Compliance Poster
rlcarey Online
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I can tell you that the regulators are focusing on (a)(10) - Comment 2 (Iv) and not Comment 3, as they came to the same conclusion that you alluded to in that a balloon payment is not an introductory period or adjustment period.
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#2268331 - 03/29/22 02:08 PM Re: Product Description / Odd-Year Balloon rlcarey
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Thank you for the insight.

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