Good evening,

During a review of our consumer loan portfolio we found a few loans that were disclosed incorrectly initially. Specifically, these are consumer loans collateralized by CDs that are essentially open-ended. The finance charge was disclosed incorrectly for each of these loans. In addition, these are interest only loans, however principal can be paid any time. So although the payments and all other details are correct on the initial disclosure, the data would have changed by now based on payments that have been made.

My question is whether or not we should redisclose these loans with the correct finance charge. Could you also provide the regulatory reference?

Thank you

If these are open-end loans, then what finance charge are you talking about. Did you disclose the loan under subpart B and are you sending monthly periodic statements?

I'm confused. You said that the error involves the disclosed "finance charge," so apparently this question relates to Regulation Z. What do you mean by "open-ended"...and is this a description of the loans, the CDs, or both? If you mean that the "loans" meet the definition of "open-end credit" found in Section 1026.2(a)(20), then there is one disclosure scheme, but if the "loans" are actually "closed-end credit" (anything other than "open-end credit"), then there's an entirely different disclosure scheme. Before we can help you decide how to correct an error (violation?), we first have to agree on what should have been disclosed. Also, you'll have to be more specific about what "disclosed incorrectly" means. Overstatements aren't usually a big deal, but understatements are subject to additional statutory and supervisory agency standards.