Untangling the Web of Fee Disclosures
"Oh what a tangled web we weave"... Walter Scott was referring to the web woven by people who intend to deceive others. The CFPB has created a "tangled web" while crafting regulations intended to prevent deception. This webinar will help you untangle the intricacies of numerous fee disclosure requirements.
The proper disclosure of fees on consumer loan transactions has always been complicated, take for example the multi-page calculation of a finance charge in §1026.4. Fee disclosure has become more complicated over the past few years with the addition and revisions of rules for:
- High-Cost Mortgages;
- Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosures (TRID);
- Ability to Repay/Qualified Mortgage Rules; and
- Home Mortgage Disclosure Act/Regulation C.
This program explains:
- Which fees are included in or excluded from the:
- Finance charge, per §1026.4 - The finance charge is a critical component in the calculation of the APR. Regulation Z provides a list of fees that are included in the finance charge and a list of fees that may be excluded, if certain conditions are met. Violations often occur when a fee is excluded from the finance charge but all of the conditions for the exclusion have not been met.
- Annual Percentage Rate (APR), per §1026.22 - The APR is based on the finance charge. Violations frequently occur when the finance charge is not properly calculated.
- Total Points and Fees, per §1026.32 - Jack has declared this number as "the most important number in the world of compliance." It is used to determine coverage for Section 32 rules, it is disclosed in a Section 32 disclosure and on the HMDA LAR, and it is used to determine QM status under Section 43. A single miscalculation can result in multiple violations.
- Military Annual Percentage Rate (MAPR), per the Department of Defense’s §232 - Disclosure of the MAPR has been required since October 2007, but as a result of the limited scope of the rule most lenders have not needed to disclose the number. As a result of revisions to Part 232, effective October 3, 2016, the scope of the rule is dramatically expanded and most lenders will need to disclose the number. Although the calculation of the MAPR is similar to the calculation of an APR, differences generally result in a much higher number.
- The TRID Tolerance rules contained in §1026.19; and
- The proper disclosure of fees on the Loan Estimate and Closing Disclosure, per §1026.37 and .38.
Please note that the program materials include a list of examples of specific fees outlined in the regulation.
Violations of any of the requirements listed above may result in:
- Regulatory reimbursement;
- Consumer lawsuits;
- Regulatory cures;
- Higher liability from the failure to meet QM standards; and
- Civil monetary penalties.
This program provides the information needed to fully understand the rules and to avoid the liability inducing problems.