MDIA vs. Section 226.25

Posted By: Richard Insley

MDIA vs. Section 226.25 - 02/17/11 01:53 PM

Although MDIA amendments now require a tabular format for the disclosed mortgage payment schedule and that table can not contain the numbers of payments, mortgage lenders are not excused from calculating and retaining full payment schedules as they have always done. You no longer need the full payment schedule to satisfy Section 226.18(g), but you do need the full payment schedule in order to calculate or verify the Total of Payments, Finance Charge, and APR. There's no way around it.

Not only do you need the full payment schedule, but so will your regulators, investors, litigants, and anyone else who must confirm the accuracy of these three items. If you are unable to produce full payment schedules in one form or another, you will very likely be cited for violations of Section 226.25, Record Retention. Given the regulators' no/low tolerance for APR and FC understatements, retroactive enforcement orders relating to Section 226.25 violations would not surprise me.
Posted By: raitchjay

Re: MDIA vs. Section 226.25 - 02/17/11 02:30 PM

Dumb question alert: does the amortization schedule work?
Posted By: RR Joker

Re: MDIA vs. Section 226.25 - 02/17/11 02:37 PM


ETA: We keep the "loan quote" off of our platform system which gives us the info we need in order to recalculate APR's. This is made a part of our file now.

Also, in the required disclosure section of Reg Z, the payment schedule is required. It surprises me that FRB has more or less left out a component of their own requirements!

I assume having the number of payments and payment on the note suffices for this, at least on regularly amortizing loans?
Posted By: Richard Insley

Re: MDIA vs. Section 226.25 - 02/17/11 05:55 PM

Notes, am schedules, and other existing records will suffice PROVIDED they allow you to account for the entire payment schedule. That includes mortgage insurance renewal premiums (including steps down and automatic termination), graduated and bought-down payments, steps up or down due to teaser or premium VR features, and any other feature that causes changes to any of the payments.

A good rule of thumb is that you still need all the payment schedule detail you used to put on the TIL form, only now you don't have to put it in the TIL for MDIA-covered loans.