Creditors who wish to use publications other than the Consumer Handbook on Adjustable Rate Mortgages, available on the Bureau's Web site, must make a good faith determination that their brochures are suitable substitutes to the Consumer Handbook. ii. 3. If the values for an index have not been available for 15 years, a creditor need only go back as far as the values are available in giving a history and payment example. The actual total amount of lender credits, whether specific or non-specific, provided by the creditor that is less than the estimated lender credits identified in 1026.37(g)(6)(ii) and disclosed pursuant to 1026.19(e) is an increased charge to the consumer for purposes of determining good faith under 1026.19(e)(3)(i). The lock was extended through 4 . Whether the creditor permits the consumer to shop consistent with 1026.19(e)(1)(vi)(A) is determined based on all the relevant facts and circumstances. 4. The creditor then provides the estimated disclosures required by 1026.19(e)(1)(i), which do not include an estimated charge for an appraisal. If a program is made available only to certain customers of an institution, a creditor need not provide disclosures for that program to other consumers who express a general interest in a creditor's ARM programs. The settlement agent may assume the responsibility to complete some or all of the disclosures required by 1026.19(f). 4. Also on Monday, June 8, the consumer requests a rate lock extension that would result in revised disclosures pursuant to 1026.19(e)(3)(iv)(C) but would not require a new waiting period pursuant to 1026.19(f)(2)(ii). Section 1026.19(b) applies to preferred-rate loans, where the rate will increase upon the occurrence of some event, such as an employee leaving the creditor's employ, whether or not the underlying rate is fixed or variable. Alternatively, the creditor complies with 1026.19(f)(2)(i) by providing the disclosures to the consumer by mail, including by electronic mail, on Thursday, June 11, because the consumer is considered to have received the corrected disclosures on Monday, June 15 (unless the creditor relies on evidence that the consumer received the corrected disclosures earlier). For example, if a creditor uses the weekly average yield on U.S. Treasury Securities adjusted to a constant maturity as its index, the disclosure might read, Your index is the weekly average yield on U.S. Treasury Securities adjusted to a constant maturity of one year published weekly in the Wall Street Journal. If no particular index is used, the creditor must briefly describe the formula used to calculate interest rate changes. For example, the creditor may require that a settlement agent chosen by the consumer must be appropriately licensed in the relevant jurisdiction. The creditor may provide the construction financing Closing Disclosure at least three business days before consummation of that transaction on July 1 and delay providing the permanent financing Closing Disclosure until three business days before consummation of that transaction on or about June 1 of the following year, in accordance with 1026.19(f)(1)(ii). Coverage. B. (See comment 19(b)-3 for guidance in determining whether or not the transaction involves an intermediary agent or broker.) This provision requires an explanation of how the creditor will determine the consumer's interest rate and payment. Instead, the creditor may follow the rules set out in comment 19(b)(2)(viii)(A)-5. 5. For example, if a consumer pays the creditor transfer taxes and recording fees at the real estate closing and the creditor subsequently uses those funds to pay the county that imposed these charges, then the transfer taxes and recording fees are not paid to the creditor for purposes of 1026.19(e). 1026.20 Disclosure requirements regarding post-consummation events. However, a consumer's silence is not indicative of intent because it cannot be documented to satisfy the requirements of 1026.25. 1. Requirements. A settlement agent may provide the disclosures required under 1026.19(f)(1)(i) instead of the creditor. On Thursday, June 11, the loan product required to be disclosed has changed to a Fixed Rate with a Negative Amortization feature. ), 5. If the creditor provides the corrected disclosures by mail, the consumer is considered to have received them three business days after they are placed in the mail, for purposes of determining when the three-business-day waiting period required under 1026.19(a)(2)(ii) begins. Historical example and initial and maximum interest rates and payments. The disclosure of lender credits, as identified in 1026.37(g)(6)(ii), is required by 1026.19(e)(1)(i). If rates go down prior to your loan closing and you want to take . If the creditor is scheduled to email the disclosures required under 1026.19(f)(1)(i) to the consumer on Wednesday, June 3, and the consumer requests a change to the loan that would result in revised disclosures pursuant to 1026.19(e)(3)(iv)(C) on Tuesday, June 2, the creditor complies with the requirements of 1026.19(e)(4) by providing the disclosures required under 1026.19(f)(1)(i) reflecting the consumer-requested changes on Wednesday, June 3. For example, if the creditor and settlement agent agree that the creditor will deliver the disclosures required under 1026.19(f)(1)(i) to be received by the consumer three business days before consummation, pursuant to 1026.19(f)(1)(ii)(A), and that the settlement agent will deliver any corrected disclosures at or before consummation, including disclosures provided so that they are received by the consumer three business days before consummation under 1026.19(f)(2)(ii), and will permit the consumer to inspect the disclosures during the business day before consummation, the settlement agent must ensure that the consumer receives the disclosures required under 1026.19(f)(1)(i) at or before consummation and is able to inspect the disclosures during the business day before consummation, if the consumer so requests, in accordance with 1026.19(f)(2)(i). ii. Creditors that use electronic mail or a courier other than the postal service may also follow this approach. The creditor hand delivers the disclosures required by 1026.19(f)(1)(i) on Monday, June 1, and, on Tuesday, June 2, the consumer requests a change to the loan that would result in revised disclosures pursuant to 1026.19(e)(3)(iv)(C) but would not require a new waiting period pursuant to 1026.19(f)(2)(ii). The creditor is required to provide corrected disclosures containing the actual terms of the transaction at or before consummation under 1026.19(f)(2), subject to the exceptions provided for in that paragraph. If the creditor delivers the disclosures required under 1026.19(f)(1)(i) in person, consummation may occur any time on the third business day following delivery. Settlement agent. Limitations do not include legal limits in the nature of usury or rate ceilings under state or Federal statutes or regulations. The creditor must also disclose the rules relating to the conversion feature, such as the period during which the loan may be converted, that fees may be charged at conversion, and how the fixed rate will be determined. The creditor may determine within the three-business-day period that the application will not or cannot be approved on the terms requested, as, for example, when a consumer applies for a type or amount of credit that the creditor does not offer, or the consumer's application cannot be approved for some other reason. Requirements. If an index is internally defined, such as by a creditor's prime rate, the creditor should either briefly describe that index or state that interest rate changes are at the creditor's discretion. 1. 1. Provision of the special information booklet as a part of a larger document does not satisfy the requirements of 1026.19(g). The total amount of lender credits actually provided to the consumer is determined by aggregating the amount of the lender credits identified in 1026.38(h)(3) with the amounts paid by the creditor that are attributable to a specific loan cost or other cost, disclosed pursuant to 1026.38(f) and (g). A lock-in or rate lock on a mortgage loan means that your interest rate won't change between the offer and closing, as long as you close within the specified time frame and there are no changes to your application. On Thursday, June 11, the annual percentage rate will be 7.15%. Use of unrounded numbers. A creditor does not comply with the identification requirement in 1026.19(e)(1)(vi)(C) unless it provides sufficient information to allow the consumer to contact the provider, such as the name under which the provider does business and the provider's address and telephone number. The greater the percentage of total loan applications submitted by the broker in any given period of time, the less likely it is that the broker would be considered an intermediary agent or broker of the creditor during the next period. Adjustment notices. Application is defined in 1026.2(a)(3)(ii). The creditor refunds the consumer $30 immediately after recording. Demand feature. However, a geographic area would be appropriately defined if both subdivisions had a relatively normal distribution of appraisal costs, even if the distribution for each subdivision ranges from below $200 to above $1,000. If the creditor does not know the precise credit terms, the creditor must base the disclosures on the best information reasonably available and indicate that the disclosures are estimates under 1026.17(c)(2). For example, an average charge may not be used for a transfer tax if the transfer tax is calculated as a percentage of the loan amount or property value. For example, if a consumer requests a rate lock extension, then the revised disclosures on which a creditor relies for purposes of determining good faith under 1026.19(e)(3)(i) may reflect a new rate lock extension fee, but the fee may be no more than the rate lock extension fee charged by the creditor in its usual course of business, and the creditor may not rely on changes to other charges unrelated to the rate lock extension for purposes of determining good faith under 1026.19(e)(3)(i) and (ii). (See the model clauses in appendix H-4(C). 1. Creditors using form H-27 in appendix H properly are deemed to be in compliance with 1026.19(e)(1)(vi)(C). In certain transactions involving an intermediary agent or broker, a creditor may delay providing disclosures. For example, the creditor must at a minimum utilize generally accepted calculation tools, but need not invest in the most sophisticated computer program to make a particular type of calculation. Graduated-payment mortgages and step-rate transactions without a variable-rate feature are not considered variable-rate transactions. The three-business-day period provided in 1026.19(e)(1)(iv) applies to methods of electronic delivery, such as email. When a multiple-advance loan to finance the construction of a dwelling may be permanently financed by the same creditor, 1026.17(c)(6)(ii) and comment 17(c)(6)-2 permit creditors to treat the construction phase and the permanent phase as either one transaction, with one combined disclosure, or more than one transaction, with a separate disclosure for each transaction. However, the creditor may not utilize an estimate without exercising due diligence to obtain the actual term for the consumer's transaction. If on Monday, June 1, the consumer executes a waiver of the seven-business-day waiting period, the final disclosures required by 1026.19(f)(1)(i) could then be delivered three business days before consummation, as required by 1026.19(f)(1)(ii), on Tuesday, June 2, and the loan could be consummated on Friday, June 5. If you let your rate lock expire and pay the current market rate of 4.2%, your monthly payment increases to $978an extra $35 per month. Calculating the aggregate amount of estimated charges. The requirements of 1026.19(e)(1)(vi)(B) and (C) do not apply if the creditor does not permit the consumer to shop consistent with 1026.19(e)(1)(vi)(A). Although it's painful to pay the $1,700 rate extension fee, it would be more painful to not be there for your Aunt Sally. The disclosure form must state the initial and maximum interest rates and payments for a $10,000 loan originated at an initial interest rate (index value plus margin adjusted by the amount of any discount or premium) in effect as of an identified month and year for the loan program disclosure. The creditor should identify any index or other measure or formula used to determine the fixed rate and state any margin to be added. Creditors using this exception should comply with the timing requirements of those regulations rather than the timing requirements of Regulation Z in making the variable-rate disclosures. However, a type of loan would be appropriately defined if both products had a relatively normal distribution of recording fees, even if the distribution for each product ranges from below $80 to above $130. Each consumer who is primarily liable on the legal obligation must sign the written statement for the waiver to be effective. ii. Adjustments based on retrospective analysis required. Amortization Schedule. Actual term unknown. 3. However, if that rate lock extension fee was not on a loan estimate issued before the closing disclosure (as might be the case if the rate lock extension was executed just before the closing disclosure was issued), there could be a problem, since the closing disclosure will have been the initial estimate of that fee (in lieu of a revised LE . Requirements. Section 1026.19(f)(2)(iii) does not require the creditor to provide the consumer with corrected disclosures because the increase in property tax rates is not in connection with the settlement of the transaction. 4. The creditor is not required to make additional corrected disclosures or wait an additional three business days under 1026.19(a)(2). To comply with this requirement, the creditor must arrange for delivery accordingly. The cost will depend on the length of the lock period, and will vary by lender. For example, if a creditor delivers the early disclosures to the consumer in person or places them in the mail on Monday, June 1, consummation may occur on or after Tuesday, June 9, the seventh business day following delivery or mailing of the early disclosures. The initial rate lock and Loan Estimate reflect a lender credit of $2000.00 with 4.25% interest rate. A third party submits a consumer's application to a creditor and neither the creditor nor the third party imposes any fee, other than a bona fide and reasonable fee for obtaining a consumer's credit report, until the consumer receives the disclosures required under 1026.19(e)(1)(i) and indicates an intent to proceed with the transaction described by those disclosures. Rate locks typically only guarantee your rate if nothing changes about your . 3. Accordingly, the settlement agent is required to exercise due diligence to obtain information if it is providing the Closing Disclosure pursuant to 1026.19(f)(1)(v). We will extend your rate lock at no cost to you. Substitute. Assume consummation is scheduled for Thursday, the consumer received the disclosures required under 1026.19(f)(1)(i) on Monday, and a walk-through inspection occurs on Wednesday morning. Title-Closing Fee Pest inspection Title-Settlement fee Survey (Required/ Shopable) Termite . The creditor hand delivers the disclosures required by 1026.19(f)(1)(i) on Friday, June 5, and the APR becomes inaccurate on Monday, June 8, such that the creditor is required to delay consummation and provide corrected disclosures, including any other changed terms, so that the consumer receives them at least three business days before consummation under 1026.19(f)(2)(ii). 1. For example, if the list provided pursuant to 1026.19(e)(1)(vi)(C) identifies providers of pest inspections and surveys, but the consumer may select a provider, other than those identified on the list, for only the survey, then the list must specifically inform the consumer that the consumer is permitted to select a provider, other than a provider identified on the list, for only the survey. 203K Consultant Fee. See comments 38-4 and 38(h)(3)-2 for additional guidance on disclosing refunds. If the seller pays for the extension fee (which seems fair given the information you have provided), you would need a revised closing disclosure at the closing, showing the fee in the paid by seller column but would not have to meet the three-business-day date. For example, the disclosure might state, If any of your payments is not sufficient to cover the interest due, the difference will be added to your loan amount. Loans that provide for more than one way to trigger negative amortization are separate variable-rate programs requiring separate disclosures. For example, assume a creditor defines a six-month time period from January 1 to June 30 and the creditor uses the average charge starting July 1. 3. Section 1026.19(e)(1)(vi)(C) requires the creditor to include on the written list a statement that the consumer may choose a provider that is not included on that list. The creditor learns on Monday, November 4 that the transfer taxes owed to the State differ from those previously disclosed pursuant to 1026.19(f)(1)(i), resulting in an increase in the amount actually paid by the consumer. In order to comply with 1026.25, creditors must retain records demonstrating compliance with the requirements of 1026.19(e). The creditor must also disclose the rules relating to termination of the preferred rate, such as that fees may be charged when the rate is changed and how the new rate will be determined. Six pieces of information presumed collected, but not required. Term of the loan. Differences between the amounts of estimated charges for property taxes or services not required by the creditor disclosed under 1026.19(e)(1)(i) and the amounts of such charges paid by or imposed on the consumer do not constitute a lack of good faith, so long as the original estimated charge, or lack of an estimated charge for a particular service, was based on the best information reasonably available to the creditor at the time the disclosure was provided. If, after the revised disclosures in this example are provided but before consummation, the prepayment penalty is removed such that the description of the prepayment penalty again becomes inaccurate, and no other changes to the transaction occur, the creditor is required to provide corrected disclosures so that the consumer receives them at or before consummation under 1026.19(f)(2)(i), but the creditor is not required to delay consummation because 1026.19(f)(2)(ii)(C) applies only when a prepayment penalty is added. 4. Initial and maximum interest rates and payments. Bona fide charges. For example, if a creditor delivers the early disclosures to the consumer in person or places them in the mail on Monday, June 1, consummation may occur on or after Tuesday, June 9, the seventh business day following delivery or mailing of the early disclosures, because, for the purposes of 1026.19(e)(1)(iii)(B), Saturday is a business day, pursuant to 1026.2(a)(6). Oral communication over the phone, written communication via email, or signing a pre-printed form are also sufficiently indicative of intent if such actions occur after receipt of the disclosures required by 1026.19(e)(1)(i). Under 1026.19(f)(2)(iii), if during the 30-day period following consummation, an event in connection with the settlement of the transaction occurs that causes the disclosures to become inaccurate, and such inaccuracy results in a change to an amount actually paid by the consumer from that amount disclosed under 1026.19(f)(1)(i), the creditor shall deliver or place in the mail corrected disclosures not later than 30 days after receiving information sufficient to establish that such event has occurred. See comment 17(a)(1)-2 for a discussion of the rules for segregating disclosures. See comment 19(f)(1)(i)-2.i. Average-charge pricing is the exception to the rule in 1026.19(f)(3)(i) that consumers shall not pay more than the exact amount charged by a settlement service provider for the performance of that service. If, however, a representative value may be given for a loan feature or the feature need not be disclosed under 1026.19(b)(2), variable-rate loans that differ as to such features do not constitute separate loan programs. For example, the disclosure form might state, Information on other adjustable rate mortgage programs is available upon request.. Under 1026.19(f)(2)(i), the creditor is required to provide corrected disclosures reflecting any changed terms to the consumer so that the consumer receives the corrected disclosures at or before consummation. 3. In addition, 1026.19(e)(1)(ii)(A) provides that the creditor must ensure that disclosures provided by mortgage brokers comply with all requirements of 1026.19(e), and that disclosures provided by mortgage brokers that do comply with all such requirements satisfy the creditor's obligation under 1026.19(e). For example, if a creditor provides the disclosures required by 1026.19(e)(1)(i) prior to receiving the property address from the consumer, the creditor cannot subsequently claim that the receipt of the property address is a changed circumstance pursuant to 1026.19(e)(3)(iv)(A) or (B). For example, the disclosure might state, Ask us for our current interest rate and margin.. 1026.38 Content of disclosures for certain mortgage transactions (Closing Disclosure). Of course, a creditor may always base the disclosures on the actual terms or amortizations offered. For example, the disclosures for a variable-rate program in which the interest rate and payment (but not loan term) can change might read, Your interest rate and payment can change yearly. In transactions where the term of the loan may change due to rate fluctuations, the creditor must state that fact. 5. Any color, size and quality of paper, type of print, and method of reproduction may be used so long as the booklet is clearly legible. 2. The creditor must make corrected disclosures such that the consumer receives them on or before Monday, June 8. For example, if the creditor provided an estimate of title insurance on the disclosures required under 1026.19(e)(1)(i), but the title insurer goes out of business during underwriting, then this unexpected event specific to the transaction is a changed circumstance. Changed circumstance. If the creditor establishes a period greater than 10 business days after the disclosures were originally provided (or subsequently extends it to such a longer period) before the estimated closing costs expire, notwithstanding the 10-business-day period discussed in comment 19(e)(3)(iv)(E)-1, that longer time period becomes the relevant time period for purposes of 1026.19(e)(3)(iv)(E). For transactions secured by a consumer's interest in a timeshare plan described in 11 U.S.C. Unless disclosures for all of its variable-rate programs are provided initially, the creditor must inform the consumer that other closed-end variable-rate programs exist, and that disclosure forms are available for these additional loan programs. For example, if the creditor provides a document showing the estimated monthly payment for a mortgage loan, and the estimate was based on the estimated loan amount and the consumer's estimated credit score, then the creditor must include the statement on the document. Requirement. A creditor must revise the disclosures required under this section once a year as soon as reasonably possible after the new index value becomes available. ii. In some variable-rate transactions, creditors may set an initial interest rate that is not determined by the index or formula used to make later interest rate adjustments. The creditor may, alternatively, rely on evidence that the consumer received the disclosures earlier than three business days.

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