Overview
The Truth in Lending Act (TILA), 15 U.S.C. 1601 (opens new window), et seq., and its implementing regulation, Regulation Z (12 CFR 1026 (opens new window)), were initially designed to protect consumers primarily through disclosures. Over time, however, TILA and Regulation Z have been expanded to impose a wide variety of requirements and restrictions on consumer credit products.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act (opens new window)) transferred rulemaking authority under TILA from the Federal Reserve Board to the Consumer Financial Protection Bureau (CFPB), effective July 1, 2011.
TILA is intended to protect consumers and ensure competition among financial institutions through the meaningful disclosure of credit terms, allowing consumers to compare standardized credit terms more readily and knowledgeably. Before TILA was enacted, consumers were faced with a bewildering array of credit terms and rates. It was difficult to compare loans because they were rarely presented in the same format. Now, all financial institutions must use the same credit terminology and expressions of rates. In addition to providing a uniform system for disclosures, TILA:
- Protects consumers against inaccurate and unfair credit billing and credit card practices;
- Provides consumers with rescission rights;
- Provides for rate caps on certain dwelling-secured loans;
- Imposes limitations on home equity lines of credit and certain closed-end home mortgages;
- Provides minimum standards for most dwelling-secured loans; and
- Prohibits unfair or deceptive mortgage lending practices.
TILA and Regulation Z do not, however, tell financial institutions how much interest they may charge or whether they must grant a consumer a loan.
The examination procedures will use “TILA” interchangeably for Truth-in-Lending Act and Regulation Z, since Regulation Z is the implementing regulation. Unless otherwise specified, all of the regulation references are to Regulation Z (12 CFR 1026 (opens new window)).
Regulation Z (Truth-In-Lending) can be found here: (opens new window)
Associated Risks
Compliance risk can occur when the credit union fails to implement the necessary controls to comply with TILA.
Transaction risk can occur when the credit union does not have adequate internal controls in place and as a result suffers a loss.
Reputation risk can occur when the credit union incurs fines and penalties or decreased member confidence as a result of failure to comply with TILA.
Strategic risk can occur when the board of directors fails to perform necessary due diligence in reviewing policies and procedures, and existing and prospective products and services for compliance.
Examination Objectives
- To determine if the credit union has policies and procedures to ensure it complies with TILA.
- To appraise the quality of the credit union’s compliance management system for TILA.
- To determine the credit union’s compliance with TILA.
- To initiate corrective action when policies or internal controls are deficient, or when violations of law or regulation are identified.
- To determine if the credit union will be required to make adjustments to consumer accounts under the restitution provisions of TILA.
Examination Procedures1
A. General Procedures
- Obtain information relevant to the area of examination from the credit union‘s compliance management system program (historical examination findings, complaint information, and significant findings from compliance review and audit).
- Through discussions with management and review of the following documents, determine whether the credit union’s internal controls are adequate to ensure compliance in the area under review. Identify procedures the institution uses daily to detect errors/violations promptly. Also, review the procedures the institution uses to ensure compliance when changes occur (e.g., changes in interest rates, service charges, computation methods, and software programs).
- Organizational charts
- Process flowcharts
- Policies and procedures
- Loan documentation and disclosures
- Checklists/worksheets and review documents
- Computer programs
- Review audit or other compliance review work-papers and determine:
- The procedures used address all regulatory provisions (see Transactional Testing section).
- Steps are taken to follow-up on previously identified deficiencies.
- The procedures used include samples that cover all product types and decision centers.
- The work performed is accurate (through a review of some transactions).
- Significant deficiencies, and the root cause of the deficiencies, are included in reports to management/board.
- Corrective actions are timely and appropriate.
- The institution reviews the area at an appropriate interval.
- Review the credit union’s record retention practices to determine whether the required documentation or evidence of compliance is retained for at least:
- Two years after the disclosures were required to be made or other action was required to be taken, other than for the advertising requirements, requirement for mortgages subject to §§ 1026.19(e), (f) (opens new window), and certain requirements for mortgages which are described below. (§ 1026.25(a) (opens new window))
- Three years after the later of the date of consummation, the date disclosures are required to be made, or the date action is required to be taken, for evidence of compliance with §§ 1026.19(e)-(f) (opens new window) (regarding closed-end loans that are secured by real property or a cooperative unit and subject to those sections) other than as set forth in 4c below. (§ 1026.25(c)(1)(i) (opens new window))
- Five years after consummation for completed Closing Disclosure forms, and all documents related to these disclosures, as required by §§ 1026.19(f)(1)(i) or (f)(4)(i) (opens new window). If the loan is sold, transferred, or otherwise disposed of during that time, the credit union must provide a copy of the Closing Disclosure to the owner or servicer as part of the loan file transfer. The new owner or servicer must retain the disclosure for the remainder of the five year period. (§ 1026.25(c)(1)(ii) (opens new window))
- Three years after the date of receipt of payment to show compliance with loan originator compensation requirements. (§ 1026.25(c)(2) (opens new window))
- Three years after consummation to show compliance with ability-to-repay minimum standards (§§ 1026.43(c)-(f) (opens new window)) and prepayment penalty restrictions (§ 1026.43(g) (opens new window)) for loans secured by a dwelling. (§ 1026.25(c)(3) (opens new window))
B.Disclosure Forms
Determine if the credit union has changed any TILA disclosure forms or if there are forms that have not been previously reviewed for accuracy. If so verify the accuracy of each disclosure by reviewing the following:
- Credit card application/solicitation disclosures (§ 1026.60(b)-(e)) (opens new window)
- HELOC disclosures (§§ 1026.40(d), (e)) (opens new window)
- Initial disclosures (§ 1026.6) (opens new window) and, if applicable, additional HELOC disclosures (§ 1026.40 (opens new window))
- Periodic statement disclosures (§ 1026.7) (opens new window)
- Statement of billing rights and change in terms notice (§§ 1026.9(a),(b),(c), (g)) (opens new window)
- Note and/or contract forms (including those furnished to dealers)
- Notice of Right to Rescind/Cancel (§§ 1026.15(b), (opens new window) 1026.23(b)(1 (opens new window)), 1026.47(c)(4)) (opens new window)
- Loan Estimate (§§ 1026.19(e), (opens new window) 1026.37) (opens new window)
- Closing Disclosure (§§ 1026.19(f (opens new window)), 1026.38) (opens new window)
- Special information booklet (§ 1026.19(g)) (opens new window)
- Other closed-end credit transaction disclosures not subject to §§ 1026.19(e) or (f) (opens new window) (§§ 1026.17(a), (opens new window) 1026.18) (opens new window)
- ARM disclosures (§1026.19(b)) (opens new window)
- High-cost mortgage disclosures (§ 1026.32(c)) (opens new window)
- Reverse mortgage disclosures (§ 1026.33(b)) (opens new window)
- Private education loan disclosures (§ 1026.47 (opens new window))
Closed-End Credit Disclosure Forms Review Procedures
Closed-end consumer credit transactions secured by real property or a cooperative unit, other than a reverse mortgage subject to § 1026.33 (opens new window), are subject to the disclosure, timing and other requirements under the TILA-RESPA Integrated Disclosure rule (TRID). Thus, for most closed-end mortgages, including construction-only loans and loans secured by vacant land or by 25 or more acres not covered by RESPA, the credit union must provide the Loan Estimate and the Closing Disclosure. There is a partial exemption in § 1026.3(h) (opens new window) from the requirement to provide the Loan Estimate and Closing Disclosure if the transaction meets all of the following criteria:
- Secured by a subordinate lien;
- Transaction is for the purpose of home buyer assistance such as down payments or closing costs, rehabilitation loans, energy efficiency assistance, or foreclosure prevention;
- Credit contract does not require the payment of interest;
- Credit contact provides for repayment that is forgiven, deferred for 20 years, or deferred until the property is sold or is no longer the consumer’s principal dwelling; and,
- Total costs payable by the consumer in connection with the transaction at consummation are limited to:
- recording fees,
- transfer taxes,
- a bona fide and reasonable application fee, and
- a bona fide and reasonable fee for housing counseling services; and the total of costs payable by the consumer for the application fee and housing counseling services is less than 1% of the amount of credit extended.
For those transactions meeting the criteria for a partial exemption, credit unions may provide either a compliant disclosure of the cost of credit under § 1026.18 (opens new window) or a compliant Loan Estimate and Closing Disclosure, and do not need to provide the special information booklet, Good Faith Estimate, or HUD-1 settlement statement.
NOTE: The GFE, HUD-1, and Truth-in-Lending forms continue to be used for transactions covered by the other disclosure requirements of TILA or RESPA (e.g., reverse mortgages) or before the effective date of the TRID Rule (October 3, 2015) (§§ 1026.19(e), (f) (opens new window)).
Closed-End Credit Disclosure Forms – Transactions under §§ 1026.19(e), (f)
For a closed-end credit transaction subject to §§ 1026.19(e) and (f), (opens new window) determine whether the credit union provides disclosures required under § 1026.37 (opens new window) (Loan Estimate) and § 1026.38 (opens new window) (Closing Disclosure). (§§ 1026.19(e), (opens new window) 1026.19(f)). (opens new window)
- For loans subject to § 1026.19(e), (opens new window) determine whether the credit union provides the good faith disclosures in the form required by § 1026.37 (opens new window) and conforming to the Loan Estimate in Appendix H (opens new window) (§§ 1026.19(e) (opens new window), 1026.37(o)). (opens new window)
- For loans subject to § 1026.19(f), (opens new window) determine whether the credit union provides the Closing Disclosure in the form required by § 1026.38 (opens new window) and conforming to the Closing Disclosure in Appendix H (opens new window) (§§ 1026.19(f), (opens new window) 1027.38(t) (opens new window)).
NOTE: Use of the Loan Estimate and Closing Disclosure is mandatory for transactions covered by the Real Estate Settlement Procedures Act (RESPA). For transactions not covered by RESPA, the Loan Estimate and Closing Disclosure may be considered a model form.
Loan Estimate
- Loan Estimate (Page 1 of the Loan Estimate). Determine whether the disclosures required for the Loan Estimate are accurately completed and include the following disclosures on the first page (§ 1026.37(a) (opens new window)). Disclosures are detailed below according to the designations made on the Loan Estimate form:
- The statement: “Save this Loan Estimate to compare with your Closing Disclosure” (§ 1026.37(a)(2)); (opens new window)
- Name and address of credit union. (§ 1026.37(a)(3)); (opens new window)
- Date Issued. (§ 1026.37(a)(4)); (opens new window)
- Applicants. (§ 1026.37(a)(5)); (opens new window)
- Property. The property address, including zip code (§ 1026.37(a)(6)) (opens new window);
- Sales Price (§ 1026.37(a)(7)); (opens new window)
- For transactions with a seller, the contract sale price of the property identified in § 1026.37(a)(6) (opens new window), labeled “Sale Price.”
- For transactions that do not have a seller, the estimated value of the property identified in § 1026.37(a)(6) (opens new window), labeled “Prop. Value.”
- Loan Term. Stated in years, months, or both, as applicable (§ 1026.37(a)(8)); (opens new window)
- Purpose. Loan purpose, categorized as “Purchase,” “Refinance,” or “Construction.” All other loan purposes must be categorized as “Home Equity Loan” (§ 1026.37(a)(9)); (opens new window)
- Product. Product type, including the type of interest rate categorized as “Adjustable Rate,” “Step Rate,” or “Fixed Rate.” This disclosure must be preceded by the type of feature that may change the consumer’s periodic payment, such as “Negative Amortization,” “Interest Only,” “Step Payment,” “Balloon Payment,” or “Seasonal Payment,” with the duration of any introductory rate or payment period and the first adjustment period if applicable (§ 1026.37(a)(10)); (opens new window)
- Loan Type. Categorized as “Conventional,” “ FHA,” “VA,” or “Other” (§ 1026.37(a)(11)); (opens new window)
- Loan ID #. (§ 1026.37(a)(12)); (opens new window) and
- Rate Lock. A statement of whether the disclosed interest rate is locked for a specific period. If so, the date and time (including time zone) that the lock will expire, along with an accompanying statement that the interest rate, any points and any lender credits may change unless the interest rate has been locked (§ 1026.37(a)(13)). (opens new window)
- Loan Terms (Page 1 of the Loan Estimate). Determine whether, a separate table under the heading “Loan Terms,”, contains the following required disclosures (§ 1026.37(b)): (opens new window)
- Loan Amount. (§ 1026.37(b)(1)) (opens new window)
- Interest Rate. (§ 1026.37(b)(2)) (opens new window)
- Principal and Interest. The applicable unit period (such as bi-weekly, monthly, yearly) must precede the initial periodic payment amount that will be due under the terms of the legal obligation, labeled “Principal & Interest”. (§ 1026.37(b)(3)) (opens new window)
- Prepayment Penalty. A statement of whether the loan contains a prepayment penalty, an affirmative or negative response to the question, the maximum amount of the prepayment penalty that may be imposed, and the date on which the penalty may no longer be applied. (§§ 1026.37(b)(4), 1026.37(b)(7)(i)) (opens new window) If the date is disclosed (for an affirmative response), determine whether it is disclosed as the year in which the event occurs, counting from the date of consummation. (§ 1026.37(b)(8)(iii)) (opens new window)
- Balloon Payment. A statement of whether the loan contains a balloon payment, an affirmative or negative response to the question, the maximum amount of the balloon payment and the due date of such payment. (§§ 1026.37(b)(5), (opens new window) 1026.37(b)(7)(ii)) (opens new window) If the date is disclosed (for an affirmative response), determine whether it is disclosed as the year in which the event occurs, counting from the due date of the initial periodic payment. (§ 1026.37(b)(8)(ii)) (opens new window)
- Whether the loan amount, interest rate or monthly principal and interest can increase after closing (§ 1026.37(b)(6)), (opens new window) and if so, the information required by §§ 1026.37(b)(6)(i)-(iii) (opens new window) and 1026.37(b)(8)(i)-(ii (opens new window)).
- Projected Payments (Page 1 of the Loan Estimate). Determine whether, under the heading “Projected Payments” (§ 1026.37(c)): (opens new window)
- All required fields in the table are completed, follow the formatting and statement requirements, are accurate, and itemize the periodic payments or range of payments together with an itemized estimate of taxes, insurance, assessments, and payments to be made with escrow account funds; (§§ 1026.37(c)(1) – (5)) (opens new window)
NOTE: If accurate, a credit union can indicate that a portion of taxes, insurance and assessments will be paid with escrow account funds, such as by using the word “some.” (Comment 1026.37(c)(4)(iv)-2 (opens new window)); - Each separate periodic payment or range of payments is itemized as follows: (§ 1026.37(c)(2)) (opens new window)
NOTE: The labels required pursuant to paragraph (c)(2) of this section must be listed under the subheading “Payment Calculation”. (§ 1026.37(c)(3)(i)) (opens new window)
- Principal and Interest. The amount payable for principal and interest, labeled “Principal & Interest”, including the term “only interest” if the payment or range of payments includes any interest only payment (§ 1026.37(c)(2)(i)): (opens new window)
- Adjustable Rate Loans. The maximum principal and interest payment must be determined by assuming that the interest rate in effect throughout the loan term is the maximum possible interest rate. The minimum amounts must be determined by assuming that the interest rate in effect throughout the loan term is the minimum possible interest rate. (§ 1026.37(c)(2)(i)(A)) (opens new window)
- Adjustable Rate and Negative Amortization Loans. The maximum principal and interest amounts (after the loan term period for which the loan principal balance may increase) must be determined by assuming the maximum principal amount permitted under the terms of the legal obligation at the end of the loan term period. The minimum amounts must be determined by assuming that the interest rate in effect throughout the loan term is the minimum possible interest rate. (§ 1026.37(c)(2)(i)(B)) (opens new window)
- Mortgage Insurance. The maximum amount payable for mortgage insurance premiums corresponding to the principal and interest payment disclosed, labeled “Mortgage Insurance.” (§ 1026.37(c)(2)(ii)) (opens new window)
- Escrow. The amount payable into an escrow account to pay some or all of the charges described in § 1026.37(c)(4)(ii) (opens new window), as applicable, labeled “Escrow,” together with a statement that the amount disclosed can increase over time. (§ 1026.37(c)(2)(iii) (opens new window))
- Total Monthly Payment. The total periodic payment, calculated as the sums disclosed as the “Principal & Interest,” “Mortgage Insurance,” and “Escrow”, labeled “Total Monthly Payment”. (§ 1026.37(c)(2)(iv)) (opens new window)
- Principal and Interest. The amount payable for principal and interest, labeled “Principal & Interest”, including the term “only interest” if the payment or range of payments includes any interest only payment (§ 1026.37(c)(2)(i)): (opens new window)
- If the amount of a periodic monthly payment may change, additional, separate periodic payments, or range of payments have been disclosed. Events requiring additional disclosure(s) include:
- The change of the periodic principal and interest payment or range of such payments,
- A scheduled balloon payment,
- The automatic termination of mortgage insurance, or
- The anniversary of the due date of the initial periodic payment or range of payments immediately following the occurrence of a change in the principal and interest payment or range of such payments. (§ 1026.37(c)(1)(i)) (opens new window)
- The credit union has met the following in disclosing a range of payments: (§ 1026.37(c)(1)(iii)) (opens new window)
- The credit union has disclosed both the minimum and maximum amount for both the principal and interest payment and the total periodic payment; (§ 1026.37(c)(1)(iii)) (opens new window)
- The credit union has accurately disclosed a range of payments where multiple events are combined into a single range of payments in order to meet the requirement that only four disclosures may be made; (§ 1026.37(c)(1)(iii)(A)) (opens new window)
- The credit union has accurately disclosed a range of payments where multiple events occur during a single year or an event occurs during the same year as the initial periodic payment or range of payments. If the event occurs during the same year as the initial periodic payment or range of payments, the credit union has disclosed the range that would apply during the year in which the events will occur; and, (§ 1026.37(c)(1)(iii)(B)) (opens new window)
NOTE: If multiple changes to periodic principal and interest payments would result in more than one separate periodic payment or range of payments in a single year, the credit union must combine the changes and disclose them as a single range of payments. (Comment 1026.37(c)(1)(iii)(B)-1 (opens new window)). - The credit union has accurately disclosed a range of payments if the periodic principal and interest payment may adjust based on index rates at the time an interest rate adjustment may occur. (§ 1026.37(c)(1)(iii)(C)) (opens new window)
- The credit union has not disclosed more than four separate periodic payments or ranges of payments. (§ 1026.37(c)(1)(ii)) (opens new window)
- If additional separate periodic payments or range of payments disclosures are required after the third separate periodic payment or range of payment disclosure, and the transaction does not involve a balloon payment, determine whether the credit union has disclosed the additional separate periodic payment or range of payments as a single fourth range of payments disclosure. (§ 1026.37(c)(1)(ii)) (opens new window)
- If additional separate periodic payments or range of payments disclosures are required and the transaction involves a final balloon payment, determine whether the credit union has disclosed the additional separate periodic payment or range of payments as a single range of payments after the second separate periodic payment disclosure. Disclosure of the final balloon payment must appear as the final disclosure, under the heading “Final Payment”. (§§ 1026.37(c)(1)(ii)(A (opens new window)), 1026.37(c)(3)(iii)) (opens new window)
- The automatic termination of mortgage insurance requires disclosure of an additional separate periodic payment or range of payments only if the total number of separate periodic payments or ranges of payments does not exceed three. (§ 1026.37(c)(1)(ii)(B)) (opens new window)
- Each separate periodic payment or range of payments must be disclosed under a subheading stating the years of the loan during which that payment or range of payments will apply. The years must be disclosed in sequence of whole years from the due date of the initial periodic payment. (§ 1026.37(c)(3)(ii)) (opens new window)
- Taxes, Insurance & Assessments. Determine whether the credit union accurately discloses: (§ 1026.37(c)(4)) (opens new window)
- The sum of all mortgage related obligations, expressed as a monthly amount, even if no escrow account for the payment of some or any of such charges will be established, labeled “Taxes, Insurance & Assessments.” (§§ 1026.37(c)(4)(i-ii)) (opens new window)
NOTE: The term mortgage related obligations, as used here, takes the definition used in § 1026.43(b)(8 (opens new window)), however, it does not include amounts identified in § 1026.4(b)(5). (opens new window) Amounts that must be disclosed as “Taxes, Insurance & Assessment” include premiums or other charges for credit life, accident, health, loss-of-income insurance; premiums or other charges for insurance against loss of or damage to property, or against liability arising out of the ownership or use of property; or premiums or charges paid for debt cancellation or debt suspension coverage. (§ 1026.43(b)(8)) (opens new window) - A statement that the mortgage related obligations disclosed can increase over time (§ 1026.37(c)(4)(iii)). (opens new window) If estimates are used for property taxes and homeowner’s insurance, they must reflect: (§ 1026.37(c)(5)) (opens new window)
- The taxable assessed value of the real property or cooperative unit securing the transaction after consummation, including the value of any improvements on the property or to be constructed on the property, if known. The disclosure must be made whether or not such construction will be financed from the proceeds of the transaction for property taxes; and (§ 1026.37(c)(5)(i)) (opens new window)
- The replacement costs of the property during the initial year after the transaction for premiums or other charges for insurance against loss of or damage to property, or against liability arising out of the ownership or use of property. (§ 1026.37(c)(5)(ii)) (opens new window)
- A statement of whether the mortgage related obligations include payments for property taxes; premiums or other charges for insurance against loss of or damage to property, or against liability arising out of the ownership or use of property; or as otherwise identified by § 1026.43(b)(8). (opens new window) The credit union must disclose whether the amounts will be paid by the credit union using escrow account funds. (§ 1026.37(c)(4)(iv)) (opens new window)
- A statement that the consumer must pay separately any mortgage related obligations that are not paid by the credit union using escrow account funds. (§ 1026.37(c)(4)(v)) (opens new window)
- A reference to the escrow account information contained on page 2 of the Loan Estimate, captioned “Initial Escrow Payment at Closing”. (§ 1026.37(c)(4)(vi)) (opens new window)
- The sum of all mortgage related obligations, expressed as a monthly amount, even if no escrow account for the payment of some or any of such charges will be established, labeled “Taxes, Insurance & Assessments.” (§§ 1026.37(c)(4)(i-ii)) (opens new window)
- All required fields in the table are completed, follow the formatting and statement requirements, are accurate, and itemize the periodic payments or range of payments together with an itemized estimate of taxes, insurance, assessments, and payments to be made with escrow account funds; (§§ 1026.37(c)(1) – (5)) (opens new window)
- Costs at Closing (Page 1 of the Loan Estimate). Determine whether, under the heading “Costs at Closing” the credit union discloses the Estimated Closing Costs (including Loan Costs and Other Costs, less Lender Credits) and the Estimated Cash to Close (including Closing Costs), based upon the calculations required by § 1026.37(f), (opens new window) (g), and (h) (and found on page two of the Loan Estimate). (§ 1026.37(d)(1)) (opens new window)
- Optional Alternative Table for Transactions without a Seller or for simultaneous subordinate financing. Determine whether, for transactions that do not involve a seller or for simultaneous subordinate financing, the credit union chose to use the alternative “Cash to Close” table. If so, determine whether the amount is calculated in accordance with § 1026.37(h)(2)(iv) (opens new window) (Calculating Cash to Close), includes a statement of whether the disclosed estimated amount is due from or to the consumer (opens new window); and includes a statement (referring the consumer (opens new window) to the alternative “Calculating Cash to Close” table pursuant to § 1026.37 (opens new window)(h)(2) (opens new window). (§ 1026.37(d)(2)) (opens new window)
NOTE: In a purchase transaction, the optional alternative disclosure may be used for the simultaneous subordinate financing Loan Estimate only if the first-lien Closing Disclosure will record the entirety of the seller’s transaction. (Comment 1026.37(d)(2)-1 (opens new window)) Credit unions may only use this alternative estimated cash to close disclosure in conjunction with the alternative disclosure under § 1026.37(h)(2) (opens new window). (Comment 37(d)(2)-1) (opens new window) - (opens new window)Website Reference (Page 1 of the Loan Estimate). Determine whether the credit union discloses that the consumer may obtain general information and tools on the Consumer Financial Protection Bureau’s website, and has included a link to the site specified in § 1026.37(e). (opens new window)
- Closing Cost Details: Loan Costs (Page 2 of the Loan Estimate). Determine on page 2 whether, under the heading “Loan Costs,” the credit union makes the following disclosures: (1026.37(f) (opens new window))
- Origination charges. Accurately itemized to reflect each amount and a subtotal of all amounts that the consumer will pay to each creditor and loan originator for originating and extending the credit. Determine whether the points paid to the credit union to reduce the interest rate are itemized separately, as both a percentage of the amount of credit extended and a dollar amount, and using the label “__% of Loan Amount (Points)”. Determine whether points paid is the first item listed. If points to reduce the interest rate are not paid, this disclosure must be left blank. (§ 1026.37(f)(1)) (opens new window)
- Services You Cannot Shop For. An accurate itemization, limited to thirteen items, of each amount and subtotal of all amounts that the consumer will pay for settlement services that the consumer cannot shop for, and that are provided by persons other than the credit union or mortgage broker. Determine whether the terms related to title insurance include “Title” as an introductory description. (§ 1026.37)(f)(2) (opens new window))
- Services You Can Shop For. An accurate itemization, limited to fourteen items, of each amount and subtotal of all amounts that the consumer will pay for settlement services that the consumer can shop for and that are provided by persons other than the credit union or mortgage broker. Determine whether the terms related to title insurance include “Title” as an introductory description. (§ 1026.37)(f)(3)) (opens new window)
- Total Loan Costs. An accurate sum of the subtotals required to be disclosed under § 1026.37(f) (opens new window) as Origination Charges, Services You Cannot Shop For and Services You Can Shop For. (§ 1026.37(f)(4)) (opens new window)
- Other than as noted in item 7a.Origination charges above (points), determine that items are ordered alphabetically by label under the applicable subheading. If there are more than the maximum allowable number of line items, determine that the remaining charges are disclosed in the aggregate in the last line as “Additional Charges.” (§§ 1026.37(f)(5), (f)(6)) (opens new window)
- Closing Cost Details: Other Costs (Page 2 of the Loan Estimate). Determine whether the credit union makes the following disclosures: (§ 1026.37(g)) (opens new window)
- Taxes and Other Government Fees. Accurately itemized to reflect amounts to be paid to State and local governments for taxes and other government fees, including subtotals for recording fees and other taxes. A separate line must be included for transfer taxes paid by the consumer. If not charged to the consumer, these fields must be left blank. (§ 1026.37(g)(1)) (opens new window)
- Prepaids. Accurately itemized to reflect amounts to be paid by the consumer in advance of the first scheduled payment and the subtotals of all such amounts. The disclosures must follow the required order and include the number of months and the total dollar amount to be paid at consummation for homeowner’s insurance and mortgage insurance premiums, the prepaid interest to be paid at consummation, based on daily interest, number of days, interest rate and the total to be collected; the number of months for which property taxes are to be paid; and the amount the consumer will pay at consummation. If any of these items are not charged to the consumer, the field must be left blank. A maximum of three additional items may be disclosed (including applicable time period covered by the payment at consummation and total to be paid) as Prepaids. (§ 1026.37(g)(2)) (opens new window)
- Initial Escrow Payment at Closing. Accurately itemized to reflect the amounts that the consumer will be expected to place into an escrow account at consummation to be applied to recurring periodic charges and subtotals of all amounts. The disclosure must provide the amount escrowed each month, the number of months of escrow, and the total amount to be paid into the escrow account by the consumer at consummation. Homeowner’s insurance premiums, mortgage insurance premiums, and property taxes must be separately subtotaled. If any of these items are not charged to the consumer, that field must be left blank. A maximum of five additional items may be disclosed as part of Initial Escrow Payment at Closing. (§ 1026.37(g)(3)) (opens new window)
- Other. An accurate itemization of costs that the consumer is likely to pay, or has contracted with a person other than the credit union or loan originator to pay, at closing and of which the credit union is aware at the time of issuing the Loan Estimate. Determine whether the credit union has used a descriptive label for each such amount, and provided the subtotal of all such amounts. Determine whether the terms related to title insurance include “Title” as an introductory description, and whether the parenthetical description “(optional)” is used at the end of the label for items disclosing any premiums paid for separate insurance, warranty, guarantee, or event-coverage products. A maximum of five items may be disclosed as “Other”. (§ 1026.37(g)(4)) (opens new window)
- Total Other Costs. An accurate sum of the subtotals for Taxes and Other Government Fees, Prepaids, Initial Escrow Payment at Closing, and Other disclosed pursuant to § 1026.37(g)(1) through (4) (opens new window). (§ 1026.37(g)(5)) (opens new window)
- Total Closing Costs. Accurate component amounts and sum of the following (§ 1026.37(g)(6)): (opens new window)
- D + I. A sum of the Total Loan Costs and Total Other Costs; and, (§ 1026.37(g)(6)(i)) (opens new window)
- Lender Credits. The amount of any lender credits, disclosed as a negative number. If no such amount is disclosed, this line must be left blank. (§ 1026.37(g)(6)(ii)) (opens new window)
- Determine that items follow the alphabetical ordering and addenda restrictions of §§ 1026.37(g)(7) and (g)(8) (opens new window).
- Closing Cost Details: Calculating Cash to Close (Page 2 of the Loan Estimate). Determine whether, under the heading “Calculating Cash to Close,” the credit union has accurately disclosed the total amount of cash or other funds that must be provided by the consumer at consummation, itemized into the following component amounts: (§ 1026.37(h)(1)) (opens new window)
- Total Closing Costs. The amount disclosed as the sum of the loan costs, other costs and lender credits, labeled “Total Closing Costs”. (§ 1026.37(h)(1)(i)) (opens new window)
- Closing Costs Financed (Paid from your Loan Amount). The amount of any closing costs to be paid out of loan proceeds, disclosed as a negative number, labeled “Closing Costs Financed (Paid from your Loan Amount)”. Determined by subtracting the estimated total amount of payments to third parties not otherwise disclosed under §§ 1026.37(f) and (g) (opens new window) from the loan amount disclosed under § 1026.37(b)(1) (opens new window). (§ 1026.37(h)(1)(ii)) (opens new window)
NOTE: (1) If the result of the calculation is zero or negative, the amount of $0 is disclosed. (2) If the result of the calculation is a positive number, the amount is disclosed as a negative number, but only to the extent that the absolute value of the number does not exceed the total amount of closing costs; (Comment 37(h)(1)(ii)-1) - Downpayment (opens new window)/Funds from Borrower. Labeled “Down Payment/Funds from Borrower”.
- In a purchase transaction, as defined in § 1026.37(a)(9)(i) (opens new window), disclosed as the amount determined by subtracting the sum of the loan amount, disclosed under § 1026.37(b)(1) (opens new window) and any amount of existing loans assumed or taken subject to that will be disclosed under § 1026.38(j)(2)(iv) (opens new window), from the sale price of the property disclosed under § 1026.37(a)(7)(i) (opens new window), except as required by § 1026.38(h)(1)(iii)(A)(2) (opens new window); (§ 1026.37(h)(1)(iii)(A)(1)) (opens new window)
- For a purchase transaction as defined in § 1026.37(a)(9)(i) (opens new window) that is a simultaneous subordinate financing transaction, a transaction involving or improvements to be made on the property, or when the sum of the loan amount disclosed under § 1026.37(b)(1) (opens new window) and any amount of existing loans assumed or taken subject to on the Closing Disclosure under § 1026.38(j)(2)(iv) (opens new window) exceeds the sale price of the property disclosed under § 1026.37(a)(7)(i) (opens new window), disclosed as the amount of estimated funds from the consumer determined in accordance with § 1026.37(h)(1)(v) (opens new window); (§ 1026.37(h)(1)(iii)(A)(2) (opens new window))
- For all other transactions, disclosed as the amount of estimated funds from the consumer (opens new window) determined in accordance with § 1026.37(h)(1)(v). (opens new window) (§ 1026.37(h)(1)(iii)(B)) (opens new window)
- Deposit.
- For a purchase transaction, disclosed as the amount that is paid to the seller or held in trust or escrow by an attorney or other party under the terms of the agreement for the sale of the property, as a negative number, labeled “Deposit”;
- For all other transactions, disclosed as $0. (§ 1026.37(h)(1)(iv)) (opens new window)
- Funds for Borrower. Disclosed as the amount of funds for the consumer, labeled “Funds for Borrower. Determined in accordance with § 1026.37(h)(1)(v) (opens new window) by subtracting the sum of the loan amount disclosed under § 1026.37(b)(1) (opens new window) and any amount of existing loans assumed or taken subject to that will be disclosed on the Closing Disclosure under § 1026.38(j)(2)(iv) (opens new window) (excluding any closing costs financed disclosed under § 1026.37(h)(1)(ii) (opens new window)) from the total amount of all existing debt being satisfied in the transaction. The total amount of all existing debt being satisfied in the transaction is the sum of the amounts that will be disclosed on the Closing Disclosure in the summaries of transactions table under §§ 1026.38(j)(1)(ii), (iii), and (v) (opens new window), as applicable.
- If the calculation yields a positive number, that amount is disclosed under the heading “Down Payment/Funds from Borrower,” (§§ 1026.37(h)(1)(iii)(A)(2) or (B) (opens new window), as applicable) and $0 is disclosed under the heading “Funds for Borrower,” under § 1026.37(h)(1)(v) (opens new window); (§ 1026.37(h)(1)(v)(A)) (opens new window)
- If the calculation yields a negative amount, the credit union discloses that amount as a negative number under the heading “Funds for Borrower,” (§ 1026.37(h)(1)(v)) (opens new window) and as $0 under the heading “Down Payment/Funds from Borrower under §§ 1026.37(h)(1)(iii)(A)(2) or (B) (opens new window), as applicable. (§ 1026.37(h)(1)(v)(B)); (opens new window)
- If the calculation yields “0,” then $0 is disclosed under both headings under §§ 1026.37(h)(1)(iii)(A)(2) or (B) (opens new window), as applicable, and § 1026.37(h)(1)(v) (opens new window). (§ 1026.37(h)(1)(v)(C) (opens new window))
- Seller Credits (opens new window). Determined by totaling the amount the seller will pay for Total Loan Costs under § 1026.37(f)(4) (opens new window) and Total Other Costs under § 1026.37(g)(5) (opens new window) disclosed as a negative number, to the extent known by the credit union at the time of the delivery of the Loan Estimate, labeled “Seller Credits”. (§ 1026.37(h)(1)(vi)) (opens new window)
- Non-specific seller credits. Determine whether general payments from the seller to the consumer that do not pay for a particular fee are disclosed in the seller credits row of the Calculating Cash to Close table. (Comment 37(h)(1)(vi)-1) (opens new window))
- Seller credits for specific charges. Determine whether credits for specific items disclosed under §§ 1026.37(f) and (g) (opens new window) are disclosed, at the credit union’s option either:
- In the seller credits row of the Calculating Cash to Close table together with any non-specific seller credits; or
- By reducing the amount of the specific charge in the Loan Costs or Other Costs table. (Comment 1026.37(h)(1)(vi)-2) (opens new window)
- Adjustments and Other Credits (opens new window). Determined by combining the Total Loan Costs (determined under § 1026.37(f) (opens new window)) and Total Other Costs (determined under § 1026.37(g)) (opens new window) that are paid by persons other than the loan originator (opens new window), credit (opens new window) union, consumer (opens new window), or seller, together with any other amounts not otherwise disclosed under §§ 1026.37(f) or (g) (opens new window) that are required to be paid by the consumer (opens new window) at closing in a transaction using the down payment/funds from borrower calculation under § 1026.37(h)(1)(iii)(A)(1) (opens new window) or pursuant to a purchase and sale contract, labeled “Adjustments and Other Credits”. (§ 1026.37(h)(1)(vii) (opens new window))
NOTE: This includes amounts known at the time the Loan Estimate is issued that are expected to be paid at closing by third parties not otherwise associated with the transaction, such as gifts from family members, or others not associated with the transaction, as well as proceeds from subordinate financing or other sources. (Comment 1026.37(h)(1)(vii)-1 and -5 (opens new window)) - Estimated Cash to Close. The sum of the amounts of the components required for Calculating Cash to Close disclosed as under §§ 1026.37(h)(1)(i) through (vii) (opens new window). (§ 1026.37(h)(1)(viii) (opens new window))
- Closing Cost Details: Optional Alternative Calculating Cash To Close Table for Transactions Without A Seller or for Simultaneous Subordinate Financing (Page 2 of the Loan Estimate). If the transaction does not involve a seller or for Simultaneous Subordinate Financing, and the credit union has chosen to provide the optional Alternative Calculating Cash to Close table modeled in Form H-24(G) in Appendix H (opens new window), determine whether the credit union accurately discloses the total amount of cash or other funds that must be provided by the consumer at consummation, itemized into the following component amounts: (§ 1026.37(h)(2)) (opens new window)
- Loan Amount. (§ 1026.37(h)(2)(i)) (opens new window)
- Total Closing Costs. Disclosed as a negative number if the amount disclosed under § 1026.37(g)(6 (opens new window)) is a positive number, and disclosed as a positive number if the amount disclosed under § 1026.37(g)(6 (opens new window)) is a negative number. (§ 1026.37(h)(2)(ii)) (opens new window)
- Total Payoffs and Payments. Disclosed as the total amount of payoffs and payments to be made to third parties that are not otherwise disclosed. (§ 1026.37(h)(2)(iii)) (opens new window)
- Cash to Close. Disclosed as the amount of cash or other funds due from or to the consumer and a statement of whether the disclosed estimated amount is due from or to the consumer. The amount must be calculated as the sum of the amounts disclosed under “Loan Amount,” “Total Closing Costs”,” and “Total Payoffs and Payments”. (§ 1026.37(h)(2)(iv)) (opens new window)
- Closing Costs Financed (Paid from your Loan Amount). Disclosed as the sum of the amounts under “Loan Amount,” and “Total Payoffs and Payments.” The sum is disclosed only to the extent it is greater than “0,” and it is less than or equal to the amount disclosed under “Total Closing Costs”. (§ 1026.37(h)(2)(v)) (opens new window)
NOTE: The optional Alternative Calculating Cash to Close table may only be provided in transactions without a seller or for simultaneous subordinate financing, In a purchase transaction the optional alternative disclosure may be used for the simultaneous subordinate financing Loan Estimate only if the first-lien Closing Disclosure will record the entirety of the transaction. The use of the alternative table for transactions without a seller or for simultaneous subordinate financing is optional, but credit unions may only use this alternative estimated cash to close disclosure in conjunction with the alternative disclosure under § 1026.37(d)(2). (opens new window) (Comment 1026.37(h)(2)-1 (opens new window)).
- Closing Cost Details: Adjustable Payment (AP) Table (Page 2 of the Loan Estimate). For loans where the periodic principal and interest payment may change after consummation (opens new window) based on a factor other than an interest rate adjustment, or for seasonal payment products as described in § 1026.37(a)(10)(ii)(E) (opens new window), determine whether the credit union discloses a separate table under the master headings “Closing Cost Details” and “Adjustable Payment (AP) Table” that contains the following information and satisfies the following requirements:
- Interest Only Payments. The disclosure states yes or no to the question of whether the transaction is an interest only product under § 1026.37 (a)(10)(ii)(B) (opens new window) and, if the answer is yes, the disclosure states the period during which interest only periodic payments are scheduled. (§ 1026.37(i)(1)) (opens new window)
- Optional Payments. The disclosure states yes or no to the question whether the terms of the legal obligation expressly provide that the consumer (opens new window) may elect to pay a specified periodic principal and interest payment in an amount other than the scheduled amount of the payment, and, if the answer is yes, the disclosure states the period during which the consumer (opens new window) may elect to make such payments. (§ 1026.37(i)(2)) (opens new window)
- Step Payments. The disclosure states yes or no to the question whether the transaction is a step payment product under § 1026.37(a)(10)(ii)(C) (opens new window) and, if the answer is yes, the disclosure states the period during which the regular periodic payments are scheduled to increase. (§ 1026.37(i)(3)) (opens new window)
- Seasonal Payments. The disclosure states yes or no to the question whether the transaction is a seasonal payment product under § 1026.37(a)(10)(ii)(E) (opens new window) and, if the answer is yes, the disclosure states the period during which periodic payments are not scheduled. (§ 1026.37(i)(4) (opens new window))
- Principal and Interest Payments. This label is immediately preceded by the applicable unit period and the disclosures must contain the following information:
- The number of the payment of the first periodic principal and interest payment that may change under the terms of the legal obligation (counting from the first periodic payment due after consummation (opens new window)), and the amount or range of the periodic principal and interest payment for such payment, labeled “First Change/Amount”; (§ 1026.37(i)(5)(i)) (opens new window)
- The frequency of subsequent changes to the periodic principal and interest payment, labeled “Subsequent Changes”; and (§ 1026.37(i)(5)(ii)) (opens new window)
- The maximum periodic principal and interest payment that may occur during the term of the transaction, and the first periodic principal and interest payment that can reach such maximum, counting from the first periodic payment due after consummation (opens new window), labeled “Maximum Payment”. (§ 1026.37(i)(5)(iii)) (opens new window)
NOTE: The AP table is required only if the periodic principal and interest payment may change after consummation based on a loan term other than a change to the interest rate, or the transaction contains a seasonal payment product feature as described in § 1026.37(a)(10)(ii)(E (opens new window)). If the transaction does not contain such loan terms, this table may not appear on the Loan Estimate. (Comment 1026.37(i)-1 (opens new window))
- Closing Cost Details: Adjustable Interest Rate (AIR) Table. If the interest rate may increase after consummation, determine whether the credit union discloses, as a separate table under the master headings “Closing Cost Details” and “Adjustable Interest Rate (AIR) Table,” the following information and satisfied the following requirements: (§ 1026.37(j)) (opens new window)
- Index + Margin. Disclosed if the interest rate may adjust and the product type is not a “Step Rate” under § 1026.37(a)(10)(i)(B) (opens new window). The disclosure must show the index upon which the adjustments to the interest rate are based and the margin that is added to the index to determine the interest rate, if any, labeled “Index + Margin.”. (§ 1026.37(j)(1)) (opens new window)
- Interest Rate Adjustments. If the product type is a “Step Rate” and not also an “Adjustable Rate” under § 1026.37(a)(10)(i)(A) (opens new window), the disclosure must show the maximum amount of any adjustments to the interest rate that are scheduled and pre-determined, labeled “Interest Rate Adjustments”. (§ 1026.37(j)(2)) (opens new window)
- Initial Interest Rate. The disclosure must show the initial interest rate at consummation (opens new window) of the loan transaction. (§ 1026.37(j)(3)) (opens new window)
- Minimum and Maximum Interest Rates. The disclosure must show the minimum and maximum interest rates for the loan, after any introductory period expires, labeled “Minimum/Maximum Interest Rate”. (§ 1026.37(j)(4)) (opens new window)
- Frequency of Adjustments. The following information, under the subheading “Change Frequency” is disclosed:
- The month when the interest rate after consummation (opens new window) may first change, calculated from the date interest for the first scheduled periodic payment begins to accrue, labeled “First Change”; and
- The frequency of interest rate adjustments after the initial adjustment to the interest rate, labeled, “Subsequent Changes”. (§ 1026.37(j)(5)) (opens new window)
- Limits on Interest Rate Changes. The following information, under the subheading “Limits on Interest Rate Changes,” is disclosed:
- The maximum possible change for the first adjustment of the interest rate after consummation (opens new window), labeled “First Change”; and
- The maximum possible change for subsequent adjustments of the interest rate after consummation (opens new window), labeled “Subsequent Changes.” (§ 1026.37(j)(6)) (opens new window)
NOTE: If the legal obligation does not permit the interest rate to adjust after consummation, the AIR table is not permitted to appear on the Loan Estimate. The credit union may not disclose a blank table or a table with “N/A” inserted within each row. (Comment 1026.37(j)-1 (opens new window))
- Additional Information About This Loan; Contact Information (Page 3 of the Loan Estimate). Determine whether the credit union accurately discloses under the master heading, “Additional Information About This Loan,” the following information:
- Lender/Mortgage Broker. The name and “NMLS ID/License ID” for the credi (opens new window)t union (labeled “Lender”) and the mortgage broker (labeled “Mortgage Broker”), if any. If the credit union or mortgage broker has not been assigned an NMLSR ID, the license number or other unique identifier issued to the credit union or mortgage broker by the applicable jurisdiction or regulating body must be disclosed, with the abbreviation for the State (opens new window) of the applicable jurisdiction or regulatory body stated before the word “License” in the label, if any. (§ 1026.37(k)(1) (opens new window))
- Loan Officer. The name and NMLSR ID of the individual loan officer (labeled “Loan Officer” and “NMLS ID/License ID,” respectively) of the credit (opens new window) union and the mortgage broker, if any, who is the primary contact for the consumer (opens new window). If the individual loan officer has not been assigned an NMLSR ID, the license number or other unique identifier issued by the applicable jurisdiction or regulating body with which the loan officer is licensed and/or registered shall be disclosed, with the abbreviation for the State (opens new window) of the applicable jurisdiction or regulatory body stated before the word “License” in the label, if any. (§ 1026.37(k)(2)) (opens new window)
- Email/Phone (respectively). The email address and telephone number of the loan officer. (§ 1026.37(k)(3)) (opens new window)
- Additional Information About This Loan: Comparisons (Page 3 of the Loan Estimate). Determine whether the credit union accurately discloses the following information for comparison purposes and includes the statement “Use these measures to compare this loan with other loans”: (§ 1026.37(l)) (opens new window)
- In 5 years (§ 1026.37(l)(1)) (opens new window)
- The total principal, interest, mortgage insurance, and loan costs scheduled to be paid through the end of the 60th month after the due date of the first periodic payment, expressed as a dollar amount, along with the statement “Total you will have paid in principal, interest, mortgage insurance, and loan costs”; and
- The principal scheduled to be paid through the end of the 60th month after the due date of the first periodic payment, expressed as a dollar amount, along with the statement “Principal you will have paid off”;
- Annual Percentage Rate (APR). Expressed as a percentage, and the following statement: “Your costs over the loan term expressed as a rate. This is not your interest rate”. (§ 1026.37(l)(2) (opens new window))
- Total Interest Percentage (TIP). The total amount of interest that the consumer (opens new window) will pay over the life of the loan, expressed as a percentage of the amount of credit (opens new window) extended, using the term “Total Interest Percentage,” the abbreviation “TIP,” and the statement “The total amount of interest that you will pay over the loan term as a percentage of your loan amount.” (§ 1026.37(l)(3)) (opens new window)
NOTE: The Total Interest Percentage includes prepaid interest that the consumer will pay, but does not include prepaid interest that someone other than the consumer will pay. (Comment 1026.37(l)(3)-1 (opens new window))
- In 5 years (§ 1026.37(l)(1)) (opens new window)
- Additional Information About This Loan: Other Considerations (Page 3 of the Loan Estimate). Determine whether the credit union accurately discloses the following: (§ 1026.37(m)) (opens new window)
- Appraisal. For transactions subject to 15 U.S.C. § 1639(h) (opens new window) or § 1691(e) (opens new window), as implemented in this part or Regulation B, 12 CFR 1002 (opens new window), respectively, a statement, labeled “Appraisal,” that: (§ 1026.37(m)(1)) (opens new window)
- The credit (opens new window) union may order an appraisal to determine the value of the property identified in § 1026.37(a)(6) (opens new window) and may charge the consumer (opens new window) for that appraisal;
- The credit (opens new window) union will promptly provide the consumer (opens new window) a copy of any appraisal, even if the transaction is not consummated; and
- The consumer (opens new window) may choose to pay for an additional appraisal of the property for the consumer (opens new window)'s use.
- Assumption. A statement of whether a subsequent purchaser of the property may be permitted to assume the remaining loan obligation on its original terms. (§ 1026.37(m)(2)) (opens new window)
- Homeowner's Insurance. At the option of the credit union (opens new window), a statement that homeowner's insurance is required on the property and that the consumer (opens new window) may choose the insurance provider. (§ 1026.37(m)(3)) (opens new window)
- Late Payment. A statement detailing any charge that may be imposed for a late payment; stated as a dollar amount or percentage charge of the late payment amount; and the number of days that a payment must be late to trigger the late payment fee. (§ 1026.37(m)(4)) (opens new window)
- Refinance. The following statement: “Refinancing this loan will depend on your future financial situation, the property value, and market conditions. You may not be able to refinance this loan.”. (§ 1026.37(m)(5)) (opens new window)
- Servicing. A statement of whether the credit (opens new window) union intends to service the loan or transfer the loan to another servicer. (§ 1026.37(m)(6)) (opens new window)
- Liability after Foreclosure. If the purpose of the credit (opens new window) transaction is to refinance an extension of credit (opens new window) as described in § 1026.37(a)(9)(ii) (opens new window), a brief statement that certain State (opens new window) law protections against liability for any deficiency after foreclosure may be lost, the potential consequences of the loss of such protections, and a statement that the consumer (opens new window) should consult an attorney for additional information. (§ 1026.37(m)(7) (opens new window))
- Construction Loans. In a transaction that involves a new construction, if the credit union reasonably expects settlement will occur more than 60 days after the Loan Estimate is issued and wishes to retain the option to provide a revised disclosure, a clear and conspicuous statement that a revised disclosure may be issued any time prior to 60 days before consummation, pursuant to § 1026.19(e)(3)(iv)(F) (opens new window). (§ 1026.37(m)(8) (opens new window))
- Appraisal. For transactions subject to 15 U.S.C. § 1639(h) (opens new window) or § 1691(e) (opens new window), as implemented in this part or Regulation B, 12 CFR 1002 (opens new window), respectively, a statement, labeled “Appraisal,” that: (§ 1026.37(m)(1)) (opens new window)
- Additional Information About This Loan: Confirm Receipt (Page 3 of the Loan Estimate). If the credit union chooses to provide a signature statement, determine whether the credit union accurately provides the following: “By signing, you are only confirming that you have received this form. You do not have to accept this loan because you have signed or received this form.” If the credit (opens new window) union does not include a line for the consumer (opens new window)'s signature, the credit (opens new window) union discloses the following statement (labeled “Loan Acceptance”): “You do not have to accept this loan because you have received this form or signed a loan application.” (§ 1026.37(n)) (opens new window)
- Form of disclosures.2 Determine whether the credit union made the disclosures required by § 1026.37 (opens new window) clearly and conspicuously in writing, in a form that the consumer (opens new window) may keep, with disclosures grouped together and segregated from everything else, containing only the information required by §§ 1026.37 (a)-(n) (opens new window), made in the same order, and positioned relative to the master headings, headings, subheadings, labels, and similar designations in the same manner, as shown in form H-24, set forth in Appendix H (opens new window): (§§ 1026.37(o)(1-2) (opens new window))
- Form H-24 required. Determine whether, for a transaction subject to § 1026.19(e) (opens new window) that is a federally related mortgage loan, as defined in Regulation X, 12 CFR § 1024.2 (opens new window), the credit union uses form H-24, set forth in Appendix H (opens new window). (§ 1026.37(o)(3)(i) (opens new window))
- Substantially similar disclosures. Determine whether the credit union makes the disclosures with headings, content, and format substantially similar to form H-24, set forth in Appendix H (opens new window) for any other transaction subject to § 1026.37 (opens new window). (§ 1026.37(o)(3)(ii) (opens new window))
- Rounding - nearest dollar. Determine whether the credit union accurately rounds the following figures to the nearest whole dollar: (§ 1026.37(o)(4)(i)(A) (opens new window))
- The dollar amounts for Loan Terms required by §§ 1026.37(b)(6)-(7) (opens new window), (i.e., adjustments after consummation and details about prepayment penalty and balloon payments);
- The dollar amounts for Projected Payments or range of payments required by § 1026.37(c)(1)(iii) (opens new window) (i.e., minimum and maximum amounts of principal and interest for projected periodic payments or range of payments);
- The dollar amounts for Mortgage Insurance required to be disclosed by § 1026.37(c)(2)(ii) (opens new window) (i.e., itemization of maximum amount of mortgage insurance premiums);
- The dollar amounts for Escrow required to be disclosed by § 1026.37(c)(2)(iii (opens new window));
- The dollar amounts for Taxes, Insurance and Assessments required to be disclosed by § 1026.37(c)(4)(ii) (opens new window);
- The dollar amounts for Loan Costs required to be disclosed by § 1026.37(f) (opens new window) (i.e., Origination charges, Services You Cannot Shop For, Services You Can Shop For, and Total Loan Costs);
- The dollar amounts for Other Costs required by § 1026.37(g) (opens new window) (i.e., Taxes and Other Government Fees, Prepaids (other than per diem prepaid interest), Initial Escrow Payment at Closing (other than monthly amounts of initial escrow payments), Other, Total Other Costs, and Total Closing Costs) except as noted for percentages;
- The dollar amounts for Calculating Cash to Close required to be disclosed by § 1026.37(h) (opens new window); and
- The dollar amounts for the Adjustable Payment (AP) Table required to be disclosed by § 1026.37(i) (opens new window).
- The dollar amounts for Comparisons required to be disclosed by § 1026.37(l (opens new window)).
- Rounding nearest whole cent. Determine that the credit union rounds or truncates the following to the nearest whole cent pursuant to § 1026.37(o)(4)(i)(A) (opens new window):
- The per diem amount required by § 1026.37(g)(2)(iii) (opens new window) (prepaid interest paid per day); and
- The figures disclosed pursuant to §§ 1026.37(g)(3)(i)-(iii) (opens new window) (initial escrow payment at closing for homeowner’s insurance, mortgage insurance, and property taxes) and § 1026.37(g)(3)(v) (opens new window) (additional escrow items).
- Loan amount. Determine that the credit union did not round the loan amount disclosed pursuant to § 1026.37(b)(1 (opens new window)), and truncated whole numbers at the decimal point. (§ 1026.37(o)(4)(i)(B) (opens new window))
- Total periodic payment. Determine that the credit union accurately rounds the total periodic payment required by § 1026.37(c)(2)(iv) (opens new window), if any of the component amounts of the figures disclosed pursuant to § 1026.37(o)(4)(i)(A) (opens new window) are rounded to the nearest whole dollar. (§ 1026.37(o)(4)(i)(C) (opens new window))
- Percentages. Determine that the credit union discloses the following percentages by rounding the exact amounts to three decimal places and then dropping any trailing zeros that occur to the right of the decimal point. (§ 1026.37(o)(4)(ii) (opens new window)) This procedure applies to the following:
- Interest rate and adjustments after consummation (i.e. adjustments to loan amount, interest rate, and periodic payment) disclosed pursuant to §§ 1026.37(b)(2) and (6) (opens new window);
- Points as a percentage of the loan amount disclosed pursuant to § 1026.37(f)(1)(i) (opens new window);
- Percentage of prepaid interest to be paid per day disclosed pursuant to § 1026.37(g)(2)(iii (opens new window));
- Index + Margin, Initial Interest Rate, Minimum/Maximum Interest Rate, and Limits on Interest Rate Changes (as disclosed on the Adjustable Interest Rate (AIR) Table) disclosed pursuant to § 1026.37(j) (opens new window); and
- Annual percentage rate – disclosed per § 1026.37(l)(2) (opens new window)
- Total interest percentage disclosed pursuant to § 1026.37(l)(3). (opens new window)
Closing Disclosure
- Closing Disclosure. Determine whether the disclosures required for the Closing Disclosure are accurately completed and include the statement: “This form is a statement of final loan terms and closing costs. Compare this document with your Loan Estimate.” (§ 1026.38(a)(2) (opens new window))
- Closing Information (Page 1 of the Closing Disclosure). Determine whether all fields required by § 1026.38(a)(3 (opens new window)) are complete and accurate:
- Date Issued. Indicating the date disclosures are delivered. (§ 1026.38(a)(3)(i) (opens new window))
- Closing Date. (§ 1026.38(a)(3)(ii) (opens new window))
- Disbursement Date. (§ 1026.38(a)(3)(iii) (opens new window))
- Settlement Agent. (§ 1026.38(a)(3)(iv) (opens new window))
- File #. Disclosing the identification number assigned to the transaction by the settlement agent. (§ 1026.38(a)(3)(v) (opens new window))
- Property. The address or location of the property as disclosed in the Loan Estimate. (§ 1026.38(a)(3)(vi) (opens new window))
- Sale Price. For transactions where there is a seller, the sale price, labeled “Sale Price,” and where there is no seller, the appraised property value labeled “Appraised Prop. Value.”. (§§ 1026.38(a)(3)(vii)(A)-(B) (opens new window))
NOTE: If the credit union has not obtained an appraisal, the credit union may disclose the estimated value of the property, using the label “Estimated Prop. Value.” (Comment §1026.38(a)(3)(vii)-1 (opens new window))
- Transaction information (Page 1 of the Closing Disclosure). Determine whether all fields required by § 1026.38(a)(4) (opens new window) are complete and accurate:
- Borrower. The consumer’s name and mailing address, labeled “Borrower.” (§ 1026.38(a)(4)(i) (opens new window))
- Seller. Where applicable, the seller’s name and mailing address, labeled “Seller.” (§ 1026.38(a)(4)(ii)) (opens new window)
- Lender. The name of the credit union making the disclosure, labeled “Lender.” (§ 1026.38(a)(4)(iii) (opens new window)).
- Loan Information (Page 1 of the Closing Disclosure). Determine whether all fields required by § 1026.38(a)(5) (opens new window) are complete and accurate:
- Loan Term. (§ 1026.38(a)(5)(i) (opens new window))
- Purpose. (§ 1026.38(a)(5)(ii (opens new window))
- Product. (§ 1026.38(a)(5)(iii) (opens new window))
- Loan Type. (§ 1026.38(a)(5)(iv) (opens new window))
- Loan ID #. (§ 1026.38(a)(5)(v) (opens new window))
- Mortgage Insurance Case Number (MIC #). The case number for any mortgage insurance policy, if required by the credit union. (§ 1026.38(a)(5)(vi) (opens new window))
- Loan Terms (Page 1 of the Closing Disclosure). Determine whether the credit union discloses, in a separate table labeled “Loan Terms,” the information required to be disclosed on the Loan Estimate under § 1026.37(b) (opens new window) reflecting the terms of the legal obligation at consummation. (§ 1026.38(b) (opens new window))
- Projected Payments (Page 1 of the Closing Disclosure). Determine whether the credit union discloses, in a separate table labeled “Projected Payments,” the projected payments or range of payments (in the same manner as required on the Loan Estimate under §§ 1026.37(c)(1) - (4)(v) (opens new window)) reflecting the terms of the legal obligation at consummation. Determine whether the credit union referred to the Escrow Account disclosure required by § 1026.38(l)(7) (opens new window) and calculated the estimated escrow payments: (§§ 1026.38(c)(1)-(2) (opens new window))
- For transactions subject to RESPA, under the escrow account analysis described in Regulation X, § 1024.17 (opens new window). (§ 1026.38(c)(1)(i) (opens new window))
- For transactions not subject to RESPA, either calculated under the escrow account analysis described in Regulation X, § 1024.17 (opens new window), or in the manner set forth in § 1026.37(c)(5) (opens new window). (§ 1026.38(c)(1)(ii) (opens new window))
- Costs at Closing (Page 1 of the Closing Disclosure). Determine whether the credit union discloses:
- Closing Costs. Disclosed as the sum of the dollar amounts disclosed on page two of the Closing Disclosure, pursuant to § 1026.38(f)(4) (opens new window) (Loan Costs), § 1026.38(g)(5) (opens new window) (Other Costs), and § 1026.38(h)(3) (opens new window) (Lender Credits), together with a statement referring the consumer to the disclosures on page two. (§§ 1026.38(d)(1)(i)(A)-(E) (opens new window))
- Cash to Close. Disclosed as the sum of the dollar amounts calculated in accordance with the Calculating Cash to Close table (§ 1026.38(i)(9)(ii) (opens new window)), together with a statement referring the consumer to the disclosures on page two (§§ 1026.38(d)(1)(ii)(A) – (B) (opens new window)), or
- Cash to Close (for simultaneous subordinate financing). Disclosed as the amount calculated according to § 1026.38(e)(5)(ii) (opens new window), together with a statement of whether the amount is due from or to the consumer and a reference to the alternative calculating Cash to Close table required pursuant to § 1026.38(e) (opens new window). (§§ 1026.38(d)(2)(i) – (iii) (opens new window))
- Closing Cost Details: Loan Costs (Page 2 of the Closing Disclosure). Determine whether the credit union disclosed all costs associated with the transaction, with columns stating whether the charge was borrower-paid at or before closing, seller-paid at or before closing, or paid by others, under the following subheadings:
- Origination Charges. Itemized amounts paid for charges disclosed on the Loan Estimate (§ 1026.37(f)(1) (opens new window)) and the total of borrower-paid amounts paid at or before closing; together with:
- The compensation (opens new window) paid by the credit union (opens new window) to a third-party loan originator (opens new window), and
- The name of the third-party loan originator (opens new window) receiving payment. (§ 1026.38(f)(1) (opens new window))
- Services Borrower Did Not Shop For. Itemized costs for each settlement service the credit (opens new window) union required but did not allow the consumer (opens new window) to shop for, with name of recipient, amount, and total costs designated borrower-paid at or before closing. Items listed in the Loan Estimate (§ 1026.37(f)(3) (opens new window)) are disclosed here if the consumer (opens new window) was provided a written list of settlement service providers under § 1026.19(e)(1)(vi)(C) (opens new window) and the consumer (opens new window) selected a settlement service provider from that written list. (§ 1026.38(f)(2)) (opens new window)
- Services Borrower Did Shop For. Itemized costs for each service required by the credit (opens new window) union, that the consumer (opens new window) shopped for in accordance with § 1026.19(e)(1)(vi)(A) (opens new window), with the amount, the name of recipient, and the total costs designated as borrower-paid at or before closing. If these items were disclosed on the Loan Estimate pursuant to § 1026.37(f)( (opens new window)3), they are disclosed here if the consumer (opens new window) was provided a written list of settlement service providers and did not select a settlement service provider from that written list. (§ 1026.38(f)(3) (opens new window))
- Total Loan Costs (Borrower-Paid). The sum of the amounts disclosed under § 1026.38(f)(5) (opens new window) as borrower-paid for the origination charge, services the borrower did not shop for and services the borrower did shop for. (§ 1026.38(f)(4) (opens new window))
- Loan Costs Subtotals. Calculation of the total borrower-paid costs at or before closing, showing each subtotal for the origination charge, services the borrower did not shop for, and services the borrower did shop for. (§ 1026.38 (f)(5)) (opens new window)
- Origination Charges. Itemized amounts paid for charges disclosed on the Loan Estimate (§ 1026.37(f)(1) (opens new window)) and the total of borrower-paid amounts paid at or before closing; together with:
- Cost Details: Other Costs (Page 2 of the Closing Disclosure). Determine whether the credit union disclosed all costs associated with the transaction (other than those disclosed in the “Loan Costs” table) with columns stating whether the charge was borrower-paid at or before closing, seller-paid at or before closing, or paid by others, including:
- Taxes and Other Government Fees. All taxes and government fees to be paid by the borrower at or before closing, including recording fees and transfer taxes, accurately itemized. Determine that the itemized transfer tax is accompanied by the name of the government entity assessing the transfer tax. (§ 1026.38(g)(1)(i)-(ii)) (opens new window)
NOTE: For additional guidance on taxes and other government fees, see Comments 1026.37(g)(1) (opens new window) For additional guidance on transfer taxes and recording fees, see Comments 1026.38(g)(1) (opens new window). - Prepaids. Accurately itemized prepaid charges described in the borrower’s Loan Estimate as required by § 1026.37(g)(2), (opens new window) the name of the person ultimately receiving the prepaid payment or the government entity assessing the property tax charged, and the total of all amounts designated as borrower-paid at or before closing. If prepaid interest is not collected for any period between closing and the date from which interest will be collected with the first monthly payment, then $0.00 is disclosed. (§ 1026.38(g)(2) (opens new window))
- Initial Escrow Payment at Closing. Accurate itemizations of each escrow amount required at closing as described on the borrower’s Loan Estimate pursuant to § 1026.37(g)(3) (opens new window) (e.g., homeowner’s insurance, mortgage insurance, property taxes, etc.), applicable aggregate adjustments pursuant to § 1024.17(d)(2) (opens new window), and the total of all amounts designated as borrower-paid at or before closing. (§ 1026.38(g)(3) (opens new window))
- Other. All charges, accurately itemized, for services required or related to the borrower’s transaction that are in addition to the charges disclosed in the Loan Costs table (§ 1026.38(f) (opens new window)) and in the Other Costs table (§§ 1026.38(g)(1)-(3) (opens new window)), for services required or obtained in the real estate closing by the consumer (opens new window), the seller, or other party; the name of the person (opens new window) ultimately receiving the payment; and the total of all such itemized amounts that are designated borrower-paid at or before closing, with the applicable designations for items that are optional or are components of title insurance services. (§§ 1026.38(g)(4)(i)-(ii) (opens new window))
- Total Other Costs (Borrower-Paid). Accurately totaled and disclosed sum of all amounts disclosed as borrower-paid. (§ 1026.38(g)(5) (opens new window))
- Other Costs Subtotals. Accurately added the individual subtotals in this “Closing Costs Details – Other Costs” table disclosed under §§ 1026.38(g)(1)-(4) (opens new window) to produce the total. (§ 1026.38(g)(6) (opens new window))
- Taxes and Other Government Fees. All taxes and government fees to be paid by the borrower at or before closing, including recording fees and transfer taxes, accurately itemized. Determine that the itemized transfer tax is accompanied by the name of the government entity assessing the transfer tax. (§ 1026.38(g)(1)(i)-(ii)) (opens new window)
- Closing Cost Details: Total Closing Costs (Page 2 of the Closing Disclosure). Determine whether the credit union:
- Follows the description, labeling, and ordering requirements for this table; and (§ 1026.38(h)(4) (opens new window))
- Accurately discloses the following closing costs totals:
- Total Closing Costs (Borrower Paid). The sum of subtotals for Closing Costs (§ 1026.38(h)(2) (opens new window)) and Lender Credits (§ 1026.38(h)(3) (opens new window)) (i.e., the following two items in this list). (§ 1026.38(h)(1) (opens new window))
- Closing Costs Subtotals. Consisting of the sum of “Loan Cost Subtotals” (§ 1026.38(f)(5) (opens new window) and the “Other Costs Subtotals” (§ 1026.38(g)(6) (opens new window)), designated as borrower-paid at or before closing; and the sum of costs paid at and before closing by the seller or other parties (as disclosed pursuant to §§ 1026.38(f) (opens new window) and (g)). (§ 1026.38(h)(2) (opens new window))
- Lender Credits. For general credits from the credit union for closing costs (as described in § 1026.37(g)(6)(ii) (opens new window), shown as a negative number, and designated as borrower-paid at closing. (§ 1026.38(h)(3) (opens new window))
NOTE: Credits that are for specific charges should be reflected in the Paid by Others column in the Closing Cost Details table (with a notation of “(L)” for lender permitted) under §§ 1026.38(f) and (g (opens new window)). (Comment 1026.38(h)(3)-1 (opens new window))
NOTE: If a refund is provided pursuant to § 1026.19(f)(2)(v) (opens new window), determine whether the credit union has provided a statement explaining that the refund (the amount described in the Loan Estimate under § 1026.37(g)(6)(ii) (opens new window)) includes a credit for the amount that exceeds the limitations on increases in closing costs under § 1026.19(e)(3) (opens new window), and the amount of such credit.
- Calculating Cash to Close Page 3 of the Closing Disclosure). Determine whether the credit union, for each of the following items, accurately includes the amount from the most recent Loan Estimate provided to the consumer, compared to the amount disclosed in the “Final” column, and provides the necessary answer to the question “Did This Change?” (with items in the latter column disclosed more prominently than other disclosures). (§§ 1026.38(i)(1)(i)-(iii) (opens new window))
- Total Closing Costs. The Total Closing Costs on the Calculating Cash to Close table of the most recent Loan Estimate disclosed under § 1026.37(h)(1)(i) (opens new window) compared to the final “Total Closing Costs” disclosed under § 1026.38(h)(1) (opens new window), and:
- If the amounts are different (unless due to rounding), the credit union has provided: (§§ 1026.38(i)(1)(i)-(iii) (opens new window))
- A statement of that fact; (§ 1026.38(i)(1)(iii)(A)(1) (opens new window))
- If the difference in the “Total Closing Costs” is attributable to differences in itemized charges that are included in either or both subtotals, a statement that the consumer (opens new window) should see the Total Loan Costs (under § 1026.38(f)(4) (opens new window)) and Total Other Costs (under § 1036.38(g)(5) (opens new window) subtotals disclosed (together with references to such disclosures), as applicable; and (§ 1026.38(i)(1)(iii)(A)(2) (opens new window))
- If the increase exceeds the limitations on increases in closing costs under § 1026.19(e)(3), (opens new window) a statement that such increase exceeds the legal limits by the dollar amount of the excess, and if any refund is provided pursuant to § 1026.19(f)(2)(v) (opens new window), a statement directing the consumer (opens new window) to the disclosure required under § 1026.38 (h)(3) (opens new window). or, if a principal reduction is used to provide the refund, a statement directing the consumer to the principal reduction disclosure under § 1026.38(j)(1)(v) (opens new window). The dollar amount must equal the sum total of all excesses of the limitations on increases in closing costs under § 1026.19(e)(3) (opens new window), taking into account the different methods of calculating excesses of the limitations on increases in closing costs under §§ 1026.19(e)(3)(i) and (ii) (opens new window) (§ 1026.38(i)(1)(iii)(A)(3) (opens new window))
- If the amount disclosed under § 1026.38(i)(l)(ii) (opens new window) (i.e., amount in the Final column) is equal to the amount disclosed under § 1026.38(i)(l)(i) (opens new window) (i.e., amount copied over from the most recent Loan Estimate), a statement of that fact. (§ 1026.38(i)(1)(iii)(B) (opens new window))
- If the amounts are different (unless due to rounding), the credit union has provided: (§§ 1026.38(i)(1)(i)-(iii) (opens new window))
- Closing Costs Paid Before Closing. Under the subheading “Loan Estimate,” the dollar amount “$0,” compared to the final amount of “Total Closing Costs” disclosed under § 1026.38(h)(2) (opens new window) and designated as borrower-paid before closing, stated as a negative number, and (§§ 1026.38(i)(2)(i)-(iii)) (opens new window):
- If these amounts are different (unless the difference is due to rounding), the credit union has provided a statement of that fact, along with a statement that the consumer (opens new window) paid such amounts prior to consummation (opens new window) of the transaction (§ 1026.38(i)(2)(iii)(A) (opens new window)); or if the amount disclosed under § 1026.38(i)(2)(ii) (opens new window) (amount in the Final column) is equal to the amount disclosed under § 1026.38(i)(2)(i)(0) (opens new window), a statement of that fact. (§ 1026.38(i)(2)(iii)(B)) (opens new window)
- Closing Costs Financed (Paid from your Loan Amount). Under the subheading “Loan Estimate,” the amount disclosed on Calculating Cash to Close table on the most recent Loan Estimate under § 1026.37(h)(1)(ii) (opens new window), compared to the actual amount of the closing costs that are to be paid out of loan proceeds, if any, stated as a negative number, under the subheading “Final”; and, (§§ 1026.38(i)(3)(i)-(iii)) (opens new window)
NOTE: For simultaneous subordinate financing transactions, regardless of whether a sale price was disclosed under § 1026.38(j)(1)(ii) (opens new window), no sale price will be included in the closing costs financed calculation as payment to third parties. (Comment 1026.38(i)(3)-1.ii (opens new window))- If the amounts are different (unless the difference is due to rounding), a statement of that fact, along with a statement that the consumer (opens new window) included the closing costs in the loan amount, which increased the loan amount; or, (§ 1026.38(i)(3)(iii)(A)) (opens new window)
- If the amount disclosed under § 1026.38(i)(3)(ii)( (opens new window)i.e., amount in the Final column) is equal to the amount disclosed pursuant to § 1026.38(i)(3)(i (opens new window)) (i.e., amount copied over from the most recent Loan Estimate), a statement of that fact. (§ 1026.38(i)(3)(iii)(B)) (opens new window)
- Down Payment/Funds from Borrower.
- Under the subheading “Loan Estimate,” the amount disclosed on the most recent Loan Estimate in the Calculating Cash to Close table under § 1026.37(h)(1)(iii) (opens new window), labeled “Down Payment/Funds from Borrower”.
- Under the subheading “Final”: (§ 1026.38(i)(4)(ii) (opens new window))
- In a purchase transaction as defined in § 1026.38(a)(9)(i) (opens new window), the amount determined by subtracting the sum of the loan amount disclosed under § 1026.38(b) (opens new window) and any amount of existing loans assumed or taken subject to that is disclosed under § 1026.38(j)(2)(iv) (opens new window) from the sale price of the property disclosed under § 1026.38(a)(3)(vii)(A (opens new window)), labeled “Down Payment/Funds from Borrower,” except as required by § 1026.38(i)(4)(ii)(A)(2 (opens new window));
- In a purchase transaction that is a simultaneous subordinate financing or that involves improvements to be made on the property, or when the sum of the loan amount disclosed under § 1026.38(b) (opens new window) and any amount of existing loans assumed or taken subject to that is disclosed under § 1026.38(j)(2)(iv) (opens new window) exceeds the sale price disclosed under § 1026.38(a)(3)(vii)(A) (opens new window), the amount of funds from the consumer as determined in accordance with § 1026.38(i)(6)(iv) (opens new window) labeled “Down Payment/Funds from Borrower,” or
- In all transaction not subject to § 1026.38(i)(4)(ii)(A) (opens new window), the amount of funds from the consumer as determined in accordance with § 1026.38(i)(6)(iv (opens new window)), labeled “Down Payment/Funds from Borrower.”
- Under the subheading “Did this change?,” disclosed more prominently than the other disclosures under § 1026.38(i)(4) (opens new window):
- If the amount disclosed under § 1026.38(i)(4)(ii) (opens new window) (such as, amount in the Final column) is different, unless due to rounding, from the amount disclosed under § 1026.38(i)(4)(i) (opens new window) (such as, amount copied over from the most recent Loan Estimate), a statement of that fact, along with a statement that the consumer (opens new window) increased or decreased this payment and can see further details in the “Summaries of Transactions” table; or (§ 1026.38(i)(4)(iii)(A) (opens new window))
- If the amount disclosed under § 1026.38(i)(4)(ii) (opens new window) is equal to the amount disclosed under § 1026.38(i)(4)(i) (opens new window), a statement of that fact. (§ 1026.38(i)(4)(iii)(B) (opens new window))
- Deposit. Under the subheading “Loan Estimate,” the Deposit amount disclosed on the Calculating Cash to Close table on the most recent Loan Estimate under § 1026.37(h)(1)(iv) (opens new window), labeled “Deposit”. Under the sub-heading “Final”, on the Summaries of Transactions table on the Closing Document the amount under § 1026.38(j)(2)(ii) (opens new window), stated as a negative number. Under the subheading “Did this Change?,” disclosed more prominently than the other disclosures under § 1026.38(i)(5) (opens new window).
NOTE: Under § 1026.37(h)(1)(iv) (opens new window), for all transactions other than a purchase transaction as defined in § 1026.37(a)(9)(i) (opens new window), the amount required to be disclosed is $0. In a purchase transaction in which no deposit is paid in connection with the transaction, the amount to be disclosed is $0. (Comment 1026.38(i)(5)-1) (opens new window)- If the amounts are different, unless due to rounding, a statement of that fact, along with a statement that the consumer (opens new window) increased or decreased this payment, as applicable, and that the consumer (opens new window) should see the details disclosed under § 1026.38(j)(2)(ii) (opens new window), Section L in the Summaries of Transactions table; or,
- If the amount disclosed under § 1026.38(i)(5)(ii) (opens new window), amount in the Final column, is equal to the amount disclosed under § 1026.38(i)(5)(i) (opens new window) (amount copied over from the Loan Estimate), a statement of that fact. (§ 1026.38(i)(5)(iii)(B)) (opens new window)
- Funds for Borrower. Under the subheading “Loan Estimate,” the amount disclosed on the Calculating Cash to Close table on the most recent Loan Estimate under § 1026.37(h)(1)(v) (opens new window), labeled “Funds for Borrower”. (§§ 1026.38(i)(6)(i)-(iii) (opens new window)) Under the subheading “Final,” the “Funds for Borrower,” labeled using that term, as determined in accordance with (§ 1026.38(i)(6)(iv) (opens new window)) Under the subheading “Did this Change?,” disclosed more prominently than the other disclosures under § 1026.38(i)(6) (opens new window): Changes between the “Loan Estimate” and “Final” column amounts are noted in the “Did this Change?” column in accordance with the requirements of § 1026.38(i)(6)(iii) (opens new window)
NOTE: The “Final” amount of “Funds for Borrower” to be disclosed under § 1026.38(i)(6)(ii) (opens new window) is calculated pursuant to § 1026.38(i)(6)(iv) (opens new window) by subtracting the sum of the loan amount disclosed under § 1026.38(b) (opens new window) and any amount of existing loans assumed or taken subject to that is disclosed under § 1026.38(j)(2)(iv) (opens new window) (excluding any closing costs financed disclosed under § 1026.38(i)(3)(ii (opens new window))) from the total amount of all existing debt being satisfied in the transaction. The “Final” amount is disclosed either as a negative number or as $0, depending on the result of the calculation, and is an amount to be disbursed to the consumer or a designee of the consumer at consummation, if any. (Comment 1026.38(i)(6)(ii)-1 (opens new window))
NOTE: When the down payment and funds from the borrower is determined in accordance with § 1026.38(i)(4)(ii)(A)(1 (opens new window)), the amount disclosed as “Funds for Borrower” is $0. (Comment 38(i)(6)(ii)-2 (opens new window))- If the amounts are different, unless due to rounding, a statement of that fact, along with a statement that the consumer (opens new window)'s available funds from the loan amount have increased or decreased, as applicable; or (§ 1026.38(i)(6)(iii)(A) (opens new window))
- If the amount disclosed under § 1026.38(i)(6)(ii) (opens new window) (amount in the Final column) is equal to the amount disclosed under § 1026.38(i)(6)(i) (amount (opens new window) copied over from the Loan Estimate), a statement of that fact. (§ 1026.38(i)(6)(iii)(B) (opens new window))
- Seller Credits. Under the subheading “Loan Estimate,” the amount disclosed on the Calculating Cash to Close table on the Loan Estimate under § 1026.37(h)(1)(vi) (opens new window), labeled “Seller Credit.” Under the subheading “Final,” the amount disclosed pursuant to § 1026.38(j)(2)(v) (opens new window), stated as a negative number. Under the subheading “Did this Change?,” disclosed more prominently than the other disclosures under § 1026.38(i)(7) (opens new window):
- If the amounts are different, unless due to rounding, determine whether the credit union discloses a statement that the consumer (opens new window) should see the details disclosed under either
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under § 1026.38(j)(2)(v) (opens new window) in the summaries of transactions table, and the seller-paid column of the closing cost details table under §§ 1026.38(f) (opens new window) or (g); or
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if the difference is attributable only to general seller credits disclosed under either § 1026.38(j)(2)(v) (opens new window) or only to specific seller credits disclosed in the seller-paid column of the closing costs detail table under §§ 1026.38(f) (opens new window) or (g), under only the applicable provision. (§ 1026.38(i)(7)(iii)(A) (opens new window))
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- If the amount disclosed under § 1026.38(i)(7)(ii) (opens new window) (i.e. amount in the Final column) is equal to the amount disclosed under § 1026.38(i)(7)(i) (opens new window) (i.e. amount copied over from the Loan Estimate), a statement of that fact. (§ 1026.38(i)(7)(iii)(B) (opens new window))
- If the amounts are different, unless due to rounding, determine whether the credit union discloses a statement that the consumer (opens new window) should see the details disclosed under either
- Adjustments and Other Credits. Under the subheading “Loan Estimate,” the amount disclosed on the Calculating Cash to Close table on the most recent Loan Estimate under § 1026.37(h)(1)(vii (opens new window)), compared to the amount listed pursuant to §§ 1026.38(j)(1)(v)-(x) (opens new window) (to the extent these amounts were not included in the calculation required by §§ 1026.38(i)(4) or (6) (opens new window)), and § 1026.38(j)(1)(vi). (opens new window) (See exam procedures below on Itemizations of Amounts Due From Borrower) reduced by the total of the amounts disclosed under §§ 1026.38(j)(2)(vi)-(xi) (opens new window) (See exam procedures below on Itemization Of Amounts Already Paid By Or On Behalf Of Borrower). (§§ 1026.38(i)(8)(i)-(ii) (opens new window))
NOTE: If the calculation yields a negative number, the amount is disclosed as a negative number. (Comment 1026.38(i)(8)(ii)-1 (opens new window))- If the amounts are different, unless due to rounding, statement of that fact, along with a statement that the consumer (opens new window) should see the details disclosed under §§ 1026.38(j)(l)(v) through (x) and (j)(2)(vi) through (xi) (opens new window) (Sections K and L in the Summaries of Transactions table); or (§ 1026.38(i)(8)(iii)(A) (opens new window))
- If the amount disclosed under § 1026.38(i)(8)(ii (opens new window)) (i.e. amount in the Final column) is equal to the amount disclosed under § 1026.38(i)(8)(i) (opens new window) (i.e. amount copied over from the most recent Loan Estimate), a statement of that fact. (§ 1026.38(i)(8)(iii)(B) (opens new window))
- Cash to Close. Under the subheading “Loan Estimate,” the amount disclosed on the Calculating Cash to Close table on the most recent Loan Estimate under § 1026.37(h)(1)(viii), (opens new window) compared to the “Final” amount listed pursuant to §§ 1026.38(i)(1) through (i)(8) (opens new window), and each disclosed more prominently than the other disclosures in this section. (§§ 1026.38(i)(9)(i)-(ii) (opens new window))
- Total Closing Costs. The Total Closing Costs on the Calculating Cash to Close table of the most recent Loan Estimate disclosed under § 1026.37(h)(1)(i) (opens new window) compared to the final “Total Closing Costs” disclosed under § 1026.38(h)(1) (opens new window), and:
- Alternative Cash to Close Table for Transactions without a Seller or for Simultaneous Subordinate Financing (Page 3 of the Closing Disclosure). Determine whether the credit union properly uses the optional Alternative Cash to Close table. (§ 1026.38(e)) (opens new window), and whether the table is disclosed under the heading “Calculating Cash to Close,” together with the statement “Use this table to see what has changed from your Loan Estimate.” Determine whether the table includes:
Note: This table may be used only in a transactions without a seller or for simultaneous subordinate financing. In a purchase transaction, the alternative disclosure may be used for the simultaneous subordinate financing Closing Disclosure only if the first-lien Closing Disclosure records the entirety of the seller’s transaction. The use of this alternative calculating cash to close table for transaction without a seller or for simultaneous subordinate transactions is required if the Loan Estimate provided to the consumer disclosed the optional alternative table under § 1026.38(d)(2) (opens new window). (Comments 1026.38(e)-1,(j)-3,(k)(2)(vii)-1, 38(t)(5)(vii)(B)-1 and -2 (opens new window))- Loan Amount. Labeled “Loan Amount”. Under the subheading “Loan Estimate,” the loan amount disclosed on the most recent Loan Estimate under § 1026.37(b)(1) (opens new window). Under the subheading “Final,” the loan amount disclosed under § 1026.38(b) (opens new window), disclosed more prominently than other disclosures in this section, under the subheading, “Did this change?”
- If the amounts are different (unless due to rounding), a statement of that fact along with a statement of whether this amount increased or decreased.
- If there is no change, a statement of that fact. (§§ 1026.38(e)(1)(i) – (iii) (opens new window))
- Total Closing Costs. Labeled “Total Closing Costs”. Under the subheading “Loan Estimate,” the amount disclosed on the most recent Loan Estimate under § 1026.38(h)(1) (opens new window). Under the subheading “Final, ”the final total closing costs disclosed under § 1026.38(h)(1 (opens new window)), disclosed as a negative number if the amount disclosed under § 1026.38(h)(1) (opens new window) is a positive number and disclosed as a positive number if the amount disclosed under § 1026.38(h)(1) (opens new window) is a negative number and disclosed more prominently than other disclosures, with the question: “Did this change?” If there is no change, a statement of that fact. If the amounts are different (unless due to rounding):
- A statement of that fact (§ 1026.38(e)(2)(iii)(A)(1) (opens new window));
- If there is a change because of differences in itemized charges that are included in either or both subtotals, a statement that the consumer (opens new window) should look at the total loan costs and total other costs subtotals disclosed below, together with references to those disclosures; and (§ 1026.38(e)(2)(iii)(A)(2) (opens new window))
- If the increase exceeds the legal limits for increases in closing costs under § 1026.19(e)(3) (opens new window); a statement of that fact; the dollar amount of the excess and, if any refund is provided, a reference to the disclosure required for including the refund in a lender credit under § 1026.38(h)(3) (opens new window), or if applicable, a statement directing the consumer to the principal reduction disclosure under § 1026.38(t)(5)(vii)(B) (opens new window). (§ 1026.38(e)(2)(iii)(A)(3) (opens new window))
- If there is no change and the amount disclosed under § 1026.38(e)(2)(i) (opens new window) is equal to the amount disclosed under § 1026.38(e)(2)(ii) (opens new window), a statement of that fact.
- Closing Costs Paid before Closing. Labeled “Closing Costs Paid Before Closing:” Under the subheading “Loan Estimate,” the amount of $0; and under the subheading “Final,” any amount designated as borrower-paid before closing under § 1026.38(h)(2) (opens new window), disclosed as a positive number. Disclosed more prominently than other disclosures, under the subheading “Did This Change?” (§ 1026.38(e)(3) (opens new window))
- If the amount disclosed under § 1026.38(e)(3)(ii) (opens new window) is different than the amount disclosed under § 1026.38(e)(3)(i) (opens new window), unless due to rounding, a statement of that fact along with a statement that the consumer paid such amounts prior to consummation; or (§ 1026.38(e)(3)(iii)(A) (opens new window))
- If the amount disclosed under § 1026.38(e)(3)(ii) (opens new window) is equal to the amount disclosed under § 1026.38(e)(3)(i) (opens new window), a statement of that fact. (§ 1026.38(e)(3)(iii)(B) (opens new window))
- Total Payoffs and Payments. Labeled “Total Payoffs and Payments.” Under the subheading “Loan Estimate,” the amount disclosed on the most recent Loan Estimate under § 1026.37(h)(2)(iii) (opens new window). Under the subheading “Final,” the total amount of payoffs and payments made to third parties not otherwise disclosed under § 1026.38(t)(5)(vii)(B) (opens new window), to the extent known, disclosed as a negative number if the total amount disclosed under § 1026.38(t)(5)(vii)(B) (opens new window) is a positive number and disclosed as a positive number if the total amount disclosed under § 1026.38(t)(5)(vii)(B) (opens new window) is a negative number. Determine whether these disclosures are disclosed more prominently than other disclosures under this paragraph under the subheading “Did This Change?” (§ 1026.38(e)(4) (opens new window))
- If the amount disclosed under § 1026.38(e)(4)(ii) (opens new window) is different than the amount disclosed under § 1026.38(e)(4)(i) (opens new window) (unless the difference is due to rounding), a statement of that fact, along with a reference to the “Payoffs and Payments” table that may be added pursuant to § 1026.38(t)(5)(viii)(B) (opens new window)) (§ 1026.38(e)(4) (opens new window)); or
- If the amount disclosed under § 1026.38(e)(4)(ii) (opens new window) is equal to the amount disclosed under § 1026.38(e)(4)(i) (opens new window), a statement of that fact. (§ 1026.38(e)(4)(iii)(B) (opens new window))
- Cash to or from the consumer. Labeled “Cash to Close”: Under the subheading “Loan Estimate”, a statement of whether the estimated amount is due from or to the consumer, as disclosed under § 1026.37(h)(2)(iv) (opens new window) on the most recent Loan Estimate; and a Under the subheading “Final.” a disclosure of the final amount due from or to the consumer disclosed as a positive number. (§§ 1026.38(e)(5)(i) – (ii) (opens new window))
- Closing Costs Financed (Paid from your Loan Amount). Labeled “Closing Costs Financed (Paid from your Loan Amount).” Disclosed as the sum of the amounts disclosed under §§ 1026.38(e)(1)(ii) and (e)(4)(ii) (opens new window) (the amounts in the Final Column of the Loan Amount and Total Payoffs and Payments). However, the amount is disclosed only to the extent that the sum is greater than zero and less than or equal to the sum disclosed under § 1026.38(h)(1) (opens new window) (Total Closing Costs) minus the sum disclosed under § 1026.38(h)(2) (opens new window) designated as borrower-paid before closing. (§ 1026.38(e)(6) (opens new window))
- Loan Amount. Labeled “Loan Amount”. Under the subheading “Loan Estimate,” the loan amount disclosed on the most recent Loan Estimate under § 1026.37(b)(1) (opens new window). Under the subheading “Final,” the loan amount disclosed under § 1026.38(b) (opens new window), disclosed more prominently than other disclosures in this section, under the subheading, “Did this change?”
- Borrower’s Transaction: Itemization of Amounts Due From Borrower at Closing (Page 3 of the Closing Disclosure). Determine whether the credit union accurately discloses the total amount due from the consumer (opens new window) at closing, calculated as the sum of items required to be disclosed by §§ 1026.38(j)(1)(ii) -(x) (opens new window) (the items described in this procedure), excluding items paid from funds other than closing funds (opens new window) as described in § 1026.38(j)(4)(i) (opens new window). Determine whether the credit union completes the summary of the borrower’s transaction as follows: (§ 1026.38(j)(1) (opens new window))
- Sale Price of Property. The amount of the contract sales price of the property being sold in a purchase real estate transaction, excluding the price of any tangible personal property if the consumer (opens new window) and seller have agreed to a separate price for such items (personal property does not include manufactured homes). (§ 1026.38(j)(1)(ii) (opens new window))
- Sale Price of Any Personal Property Included in Sale. The amount of the sales price of any tangible personal property excluded from the contract sales price pursuant to § 1026.38(j)(1)(ii) (opens new window). (§ 1026.38(j)(1)(iii) (opens new window))
- Closing Costs Paid at Closing. The total amount of closing costs disclosed that are designated borrower-paid at closing, calculated pursuant to § 1026.38(h)(2) (opens new window) (see procedure above regarding Closing Costs Subtotals). (§ 1026.38(j)(1)(iv) (opens new window))
- A description and the amount of any additional items that the seller has paid prior to the real estate closing, but reimbursed by the consumer (opens new window) at the real estate closing, and a description and the amount of any other items owed by the consumer (opens new window) at the real estate closing not otherwise disclosed pursuant to §§ 1026.38(f), (g), or (j) (opens new window). (§ 1026.38(j)(1)(v) (opens new window))
- The description “Adjustments for Items Paid by Seller in Advance”. (§ 1026.38(j)(1)(vi) (opens new window))
- City/Town Taxes. The prorated amount of any prepaid taxes due from the consumer (opens new window) to reimburse the seller at the real estate closing, and the time period corresponding to that amount. (§ 1026.38(j)(1)(vii) (opens new window))
- County Taxes. The prorated amount of any prepaid taxes due from the consumer (opens new window) to reimburse the seller at the real estate closing, and the time period corresponding to that amount. (§ 1026.38(j)(1)(viii) (opens new window))
- Assessments. The prorated amount of any prepaid assessments due from the consumer (opens new window) to reimburse the seller at the real estate closing, and the time period corresponding to that amount. (§ 1026.38(j)(1)(ix) (opens new window))
- A description and the amount of any additional items paid by the seller prior to the real estate closing that are due from the consumer (opens new window) at the real estate closing. (§ 1026.38(j)(1)(x) (opens new window))
- Borrower’s Transaction: Itemization of Amounts Paid Already by or on behalf of Borrower at Closing (Page 3 of the Closing Disclosure). Determine whether the credit union accurately discloses the sum of the amounts disclosed in §§ 1026.38(j)(2)(ii)-(xi) (opens new window) (the items described in this procedure), excluding items paid from funds other than closing funds (opens new window) as described in § 1026.38(j)(4)(i) (opens new window). Determine whether the credit union accurately completes the summary of borrower’s transaction as follows: (§ 1026.38(j)(2)(i) (opens new window))
- Deposit. Any amount that is paid to the seller or held in trust or escrow by an attorney or other party under the terms of the agreement for the sale of the property. (§ 1026.38(j)(2)(ii) (opens new window))
- Loan Amount. The amount of the consumer (opens new window)'s new loan amount or first user loan as disclosed pursuant to § 1026.38(b) (opens new window). (§ 1026.38(j)(2)(iii) (opens new window))
- Existing Loan(s) Assumed or Taken Subject To. The amount of any existing loans that the consumer (opens new window) is assuming, or any loans subject to which the consumer (opens new window) is taking title to the property. (§ 1026.38(j)(2)(iv) (opens new window))
- Seller Credit. The total amount of money that the seller will provide at the real estate closing as a lump sum not otherwise itemized to pay for loan costs as determined by § 1026.38(f) (opens new window) and other costs as determined by § 1026.38(g) (opens new window) and any other obligations of the seller to be paid directly to the consumer (opens new window). (§ 1026.38(j)(2)(v)) (opens new window)
- Other Credits. A description and amount of other items paid by or on behalf of the consumer (opens new window) and not otherwise disclosed pursuant to §§ 1026.38(f)-(h), (j)(2) (opens new window), labeled “Other Credits”; and amounts and descriptions of any additional amounts owed the consumer but payable to the seller before the real estate closing, under the heading “Adjustments.” (§ 1026.38(j)(2)(vi) (opens new window))
NOTE: Any financing arrangements or other new loans not otherwise disclosed under § 1026.38(j)(2)(iii) or (iv) (opens new window) must be disclosed under § 1026.38(j)(2)(vi) (opens new window) on the first-lien Closing Disclosure. The principal amount of subordinate financing is disclosed on the summaries of transactions table for the borrower’s transaction either on line 04 under the subheading “L. Paid Already by or on Behalf of Borrower at Closing,” or under the subheading “Other Credits.” (Comment 1026.38(j)(2)(vi)-2 (opens new window)) - The description “Adjustments for Items Unpaid by Seller”. (§ 1026.38(j)(2)(vii) (opens new window))
- City/Town Taxes. The prorated amount of any unpaid taxes due from the seller to reimburse the consumer (opens new window) at the real estate closing, and the time period corresponding to that amount. (§ 1026.38(j)(2)(viii) (opens new window))
- County Taxes. The prorated amount of any unpaid taxes due from the seller to reimburse the consumer at the real estate closing, and the time period corresponding to that amount. (§ 1026.38(j)(2)(ix) (opens new window)
- Assessments. The prorated amount of any unpaid assessments due from the seller to reimburse the consumer at the real estate closing, and the time period corresponding that amount. (§ 1026.38(j)(2)(x) (opens new window))
- A description and the amount of any additional items which have not yet been paid and which the consumer (opens new window) is expected to pay after the real estate closing, but which are attributable in part to a period of time prior to the real estate closing. (§ 1026.38(j)(2)(xi) (opens new window))
- Borrower’s Transaction: Calculation of Borrower’s Transaction (Page 3 of the Closing Disclosure). Determine whether the credit union accurately discloses the total amount due from, and already paid by, the consumer at closing by the following calculation: (§ 1026.38(j)(3) (opens new window))
- Total Due from Borrower at Closing. The amount disclosed in the Closing Disclosure, on the line captioned “Due from Borrower at Closing”. (§ 1026.38(j)(3)(i) (opens new window))
- Total Paid Already by or on Behalf of Borrower at Closing. The amount disclosed in the Closing Disclosure, on the line captioned “Paid Already by or on Behalf of Borrower at Closing,” if any, disclosed as a negative number. (§ 1026.38(j)(3)(ii) (opens new window))
- Cash to Close. A statement that the disclosed amount is due from or to the consumer (opens new window), and the amount due from or to the consumer (opens new window) at the real estate closing, calculated by the sum of the amounts disclosed as the “Total Due from Borrower at Closing” and “Total Paid Already by or on Behalf of Borrower at Closing”, labeled “Cash to Close”. (§ 1026.38(j)(3)(iii) (opens new window))
- Borrower’s Transaction: Paid Outside of Closing (Page 3 of the Closing Disclosure). Determine whether the credit union discloses other costs that are not paid from closing funds, but would otherwise be disclosed; describe the funds as “Paid Outside of Closing” or the abbreviation “P.O.C.,” and include the name of the party making the payment. (§ 1026.38(j)(4)(i) (opens new window))
NOTE: For purposes of §1026.38(j) (opens new window), “closing funds” means funds collected and disbursed at real estate closing. (§ 1026.38(j)(4)(ii) (opens new window)) - Seller’s Transaction: Itemization of Amounts Due to Seller at Closing (Page 3 of the Closing Disclosure). Determine whether the credit union accurately discloses the total amount due to the seller at the real estate closing, calculated as the sum of items required to be disclosed pursuant to §§ §(the items in this procedure), excluding items paid from funds other than closing funds as described in § 1026.38(k)(4)(i) (opens new window). Determine whether the credit union accurately completes the summary of seller’s transaction as follows: (§ 1026.38)(k)(1)(i) (opens new window))
- Sale Price of Property. The amount of the contract sales price of the property being sold, excluding the price of any tangible personal property if the consumer (opens new window) and seller have agreed to a separate price for such items. (§ 1026.38(k)(1)(ii) (opens new window))
- Sale Price of Any Personal Property Included in Sale. The amount of the sales price of any tangible personal property excluded from the contract sales price pursuant to section 1026.38(k)(1)(ii) (opens new window). (§ 1026.38(k)(1)(iii) (opens new window))
- A description and the amount of other items paid to the seller by the consumer (opens new window) pursuant to the contract of sale or other agreement, such as charges that were not disclosed pursuant to § 1026.37 (opens new window) on the Loan Estimate or items paid by the seller prior to the real estate closing but reimbursed by the consumer (opens new window) at the real estate closing. (§ 1026.38(k)(1)(iv)) (opens new window)
- The description “Adjustments for Items Paid by Seller in Advance”. (§ 1026.38(k)(1)(v) (opens new window))
- City/Town Taxes. The prorated amount of any prepaid taxes due from the consumer (opens new window) to reimburse the seller at the real estate closing, and the time period corresponding to that amount. (§ 1026.38(k)(1)(vi) (opens new window))
- County Taxes. The prorated amount of any prepaid taxes due from the consumer to reimburse the seller at the real estate closing, and the time period corresponding to that amount. (§ 1026.38(k)(1)(vii) (opens new window))
- Assessments. The prorated amount of any unpaid assessments due from the consumer to reimburse the seller at the real estate closing, and the time period corresponding that amount. (§ 1026.38(k)(1)(viii) (opens new window))
- A description and the amount of additional items paid by the seller prior to the real estate closing that are reimbursed by the consumer (opens new window) at the real estate closing. (§ 1026.38(k)(1)(ix) (opens new window))
- Seller’s Transaction: Itemization of Amounts Due from Seller at Closing (Page 3 of the Closing Disclosure). Determine whether the credit union accurately discloses the sum of the amounts disclosed in §§ 1026.38(k)(2)(ii)-(xiii) (opens new window) (the items in this procedure), excluding items paid from funds other than closing funds described in section 1026.38(k)(4)(i) (opens new window). Determine whether the credit union accurately completes the summary of the seller’s transaction as follows: (§ 1026.38(k)(2)(i) (opens new window))
- Excess Deposit. The amount of any excess deposit disbursed prior to closing. (§ 1026.38(k)(2)(ii) (opens new window))
- Closing Costs Paid at Closing. The amount of closing costs designated seller-paid at closing and disclosed pursuant to § 1026.38(h)(2) (opens new window). (§ 1026.38(k)(2)(iii) (opens new window))
- Existing Loan(s) Assumed or Taken Subject To. The amount of any existing loans assumed or taken subject to by the consumer. (§ 1026.38(k)(2)(iv) (opens new window))
- Payoff of First Mortgage Loan. The amount of a first lien loan secured by the property being sold that will be paid off at closing. (§ 1026.38(k)(2)(v) (opens new window))
- Payoff of Second Mortgage Loan. The amount of any loan secured by a second lien on the property that will be paid off as part of the real estate closing. (§ 1026.38(k)(2)(vi) (opens new window))
- Seller Credit. The total amount of seller funds to be provided at closing as a lump sum that has not otherwise been itemized to pay for loan costs as determined by § 1026.38(f) (opens new window) and other costs as determined by § 1026.38(g) (opens new window) and any other obligations of the seller to be paid directly to the consumer (opens new window). (§ 1026.38(k)(2)(vii) (opens new window))
- A description and amount of all other items required to be paid by the seller at closing, including any lien-related payoffs, fees, or obligations. (§ 1026.38(k)(2)(viii) (opens new window))
- The description “Adjustments for Items Unpaid by Seller”. (§ 1026.38(k)(2)(ix) (opens new window))
- City/Town Taxes. The prorated amount of unpaid taxes due from the seller to reimburse the consumer at the real estate closing, and the time period corresponding to that amount. (§ 1026.38(k)(2)(x) (opens new window)
- County Taxes. The prorated amount of any unpaid taxes due from the seller to the consumer at the real estate closing, and the time period corresponding to that amount. (§ 1026.38(k)(2)(xi) (opens new window))
- Assessments. The prorated amount of any unpaid assessments due from the seller to reimburse the consumer at the real estate closing, and the time period corresponding to that amount. (§ 1026.38(k)(2)(xii) (opens new window))
- A description and the amount of any additional items which have not yet been paid and which the consumer (opens new window) is expected to pay after the real estate closing, but which are attributable in part to a period of time prior to the real estate closing. (§ 1026.38(k)(2)(xiii) (opens new window))
- Seller’s Transaction: Calculation of Seller’s Transaction (Page 3 of the Closing Disclosure). Determine whether the credit union accurately discloses the total amount due to and from the seller at closing by the following calculation: (§ 1026.38(k)(3) (opens new window))
- Total Due to Seller Closing. The amount disclosed in the Closing Disclosure, on the line captioned “Due from Seller at Closing”. (§ 1026.38(k)(3)(i) (opens new window))
- Total Due from Seller at Closing. The amount disclosed in the Closing Disclosure on the line captioned “Due from Seller at Closing,” disclosed as a negative number. (§ 1026.38(k)(3)(ii) (opens new window))
- Cash. A statement that the disclosed amount is due from or to the seller and the amount due, calculated by the sum of the amounts disclosed as the “Total Due to Seller at Closing” and “Total Due from Seller at Closing”. (§ 1026.38(k)(3)(iii) (opens new window))
- Seller’s Transaction: Items Paid Outside of Closing Funds (Page 3 of the Closing Disclosure). Determine whether the credit union discloses other costs that are not paid out of closing funds, but would otherwise be disclosed in the Summaries of Transactions: Seller’s Transaction table; describing the funds as “Paid Outside of Closing” or the abbreviation “P.O.C.,” and including the name of the party making the payment. (§ 1026.38(k)(4)(i) (opens new window))
NOTE: For purposes of § 1026.38(k) (opens new window), “closing funds” means funds collected and disbursed at real estate closing. (§ 1026.38(k)(4)(ii) (opens new window))
NOTE: § 1026.38(k) (opens new window) does not apply in a transaction where there is no seller, such as a refinance transaction or a transaction with a construction purpose as defined in § 1026.37(a)(9)(iii) (opens new window), or in a simultaneous subordinate financing purchase transaction if the first-lien Closing Disclosure records the entirety of the seller’s transaction. (Comment 1026.38(k)-1) (opens new window) If § 1026.38(k) (opens new window) applies to a simultaneous subordinate financing transaction, § 1026.38(k) (opens new window) is completed based only on the terms and conditions of the simultaneous subordinate financing transaction and no contract sales price is disclosed under § 1026.38(k)(1)(ii (opens new window)) on the Closing Disclosure for the simultaneous subordinate financing. (Comment 1026.38(k)(1)-1 (opens new window)) - Payoff and Payments Table for Transactions without a Seller or for Simultaneous Subordinate Financing (Page 3 of the Closing Disclosure). Determine whether a credit union, using an optional modified Closing Disclosure (as illustrated by form H-25(J) in Appendix H (opens new window)), has provided alternative tables for Cash to Close, pursuant to § 1026.38(d)(2) (opens new window), and for Calculating Cash to Close pursuant to § 1026.38(e) (opens new window) and that the credit union itemizes the amounts of payments made at consummation to other parties from the credit extended to the consumer or funds provided by the consumer in connection with the transaction, including designees of the consumer; the payees and a description of the purpose of such disbursements under the subheading “To;” and the total amount of such payments, labeled “Total Payoffs and Payments.”. (§ 1026.38(t)(5)(vii)(B) (opens new window))
NOTE: Funds provided by designees of the consumer may include gift funds, grants, proceeds from loans that satisfy the partial exemption criteria in § 1026.3(h) (opens new window), and, on the Closing Disclosure for a simultaneous subordinate financing transaction, contributions from a seller for costs associated with the subordinate financing. (Comment 1026.38(t)(5)(vii)(B)-1 (opens new window)) - Disclosure of Subordinate Financing for a Transaction without a Seller, or for Simultaneous Subordinate Financing. (Page 3 of the Closing Disclosure)Determine whether the credit union permissibly modified form H-25 of Appendix H (opens new window), pursuant to the requirements of § 1026.38(t)(5)(vii) (opens new window).
- The information required by §§ 1026.38(a)(4)(ii), (f), (g), and (h) (opens new window) with respect to loan costs, other costs, and closing costs paid by the seller, may be deleted. (§ 1026.38(t)(5)(vii)(A) (opens new window))
- A table under the master heading “Closing Cost Details” required by § 1026.38(f) (opens new window) may be added with the heading “Payoffs and Payments” that itemizes the amounts of payments made at closing to other parties from the credit extended to the consumer or funds provided by the consumer in connection with the transaction, including designees of the consumer; the payees and a description of the purpose of such disbursements under the subheading “To”: and the total amount of such payments labeled “Total Payoffs and Payments.” (§ 1026.38(t)(5)(vii)(B) (opens new window))
- The tables required to be disclosed by §§ 1026.38(j) and (k) (opens new window) may be deleted. (§ 1026.38(t)(5)(vii)(C) (opens new window))
NOTE: The Commentary to § 1026.38(t)(5)(vii)(B) (opens new window) provides guidance as follows:- First-lien Closing Disclosure. On the Closing Disclosure for a first-lien transaction disclosed with the alternative tables pursuant to §§ 1026.38(d)(2) and (e) (opens new window) that also has simultaneous subordinate financing, determine that the proceeds of the subordinate financing are included in the payoff and payments table under § 1026.38(t)(5)(vii)(B) (opens new window) by disclosing, as a credit, the principal amount of the subordinate financing, and if the net proceeds of the subordinate financing are less than the principal amount of the subordinate financing, the net proceeds. (Comment 1026.38(t)(5)(vii)(B)-2.i (opens new window))
- Simultaneous subordinate financing – Closing Disclosure. On the Closing Disclosure for a simultaneous subordinate financing transaction disclosed with the alternative tables pursuant to §§ 1026.38(d)(2) and (e) (opens new window), the proceeds of the subordinate financing applied to the first lien transaction may be included in the payoffs and payments table under § 1026.38(t)(5)(vii)(B) (opens new window). (Comment 1026.38(t)(5)(vii)(B)-2.ii (opens new window))
- Simultaneous subordinate financing - Seller contribution. If a credit union discloses the alternative tables pursuant §§ 1026.38(d)(2) and (e) (opens new window) on the simultaneous subordinate financing Closing Disclosure, determine that the credit union also discloses as a credit in the payoffs and payments table on the simultaneous subordinate financing Closing Disclosure, any contributions from the seller toward the simultaneous subordinate financing. (See also Comments 1026.38(j)-3 and 38(k)(2)(vii)-1 (opens new window) for disclosure requirements applicable to the first-lien transaction when the alternative disclosures are used for a simultaneous subordinate financing transaction and a seller contributes to the costs of the subordinate financing.) (Comment 1026.38(t)(5)(vii)(B)-2.iii (opens new window))
NOTE: As required by § 1026.38(a)(3)(vii)(B) (opens new window), a form used for a transaction that does not involve a seller and is modified under § 1026.38(t)(5)(vii) (opens new window) must contain the label “Appraised Prop. Value”. Where an estimate is disclosed, rather than an appraisal, the label for the disclosure is changed to “Estimated Prop. Value.” (Comment 1026.38(a)(3)(vii)-1 (opens new window))
- Additional Information About This Loan: Loan Disclosures (Page 4 of the Closing Disclosure). Determine whether the credit union accurately provides the required disclosures: (§ 1026.38(l) (opens new window))
- Assumption. Whether the loan obligations may be assumed by a subsequent purchaser. (§ 1026.38(l)(1) (opens new window));
- Demand Feature. Whether the legal obligation includes a demand feature, and, if it does, a reference to the note or other loan contract for details. (§ 1026.38(l)(2) (opens new window))
- Late Payment. The dollar amount or percentage charge of any fee designated as a late payment (information required on the Loan Estimate by § 1026.37(m)(4) (opens new window)) and the number of days after which such a charge will be triggered. (§ 1026.38(l)(3) (opens new window))
- Negative Amortization (Increase in Loan Amount). Whether the regular period payments may cause the principal balance to increase.
- If the regular periodic payments do not cover all of the interest due, the credit union provides a statement that the borrower’s principal balance will increase, such balance will likely become larger than the original loan amount, and increases in such balance lower the consumer’s equity in the property.
- If the consumer may make regular periodic payments that do not cover all of the interest due, the credit union provides a statement that, if the consumer chooses a monthly payment option that does not cover all of the interest due, the principal balance may become larger than the original loan amount and the increases in the principal balance lower the consumer’s equity in the property. (§§ 1026.38(l)(4)(i)-(ii) (opens new window))
- Partial Payments. Whether the credit union that accepts less than the full amount due has provided a statement that the “lender,” (using that label) may accept partial payments and apply such payments to the consumer (opens new window)'s loan.
- If periodic payments that are less than the full amount due are accepted but not applied to a consumer (opens new window)'s loan until the consumer (opens new window) pays the remainder of the full amount due, a statement that the lender, may hold partial payments in a separate account until the consumer (opens new window) pays the remainder of the payment and then apply the full periodic payment to the consumer (opens new window)'s loan.
- If periodic payments that are less than the full amount due are not accepted, the lender, does not accept any partial payments; and
- A statement that, if the loan is sold, the new lender, may have a different policy. (§§ 1026.38(l)(5)(i)-(iv) (opens new window))
- Security Interest (opens new window). Whether the credit union states that the consumer (opens new window) is granting a security interest (opens new window) in the property securing the transaction, and that the borrower may lose the property if required payments are not made or otherwise fails to satisfy the requirements of the legal obligation. Determine that the credit union has included the property address and zip code. (§ 1026.38(l)(6) (opens new window))
- Escrow Account. Under the subheading “Escrow Account,” (§ 1026.38(l)(7) (opens new window)) whether the credit union provides:
- Under the reference “For now”: A statement that an escrow account may also be called an impound or trust account, whether the credit union has established or will establish(at or before consummation) an escrow account in connection with the transaction and the following information required under §§ 1026.38(l)(7)(i)(A)-(B) (opens new window):
- A statement that the credit (opens new window) union may be liable for penalties and interest if it fails to make a payment for any cost for which the escrow account is established;
- A statement that the consumer (opens new window) would have to pay such costs directly in the absence of the escrow account and
- A table, entitled “Escrow,” that contains, if an escrow account is or will be established, an itemization of the following:
- The total amount that the consumer will be required to pay into the account over the first year after consummation, labeled “Escrowed Property Costs over Year 1,” together with a descriptive name of each charge to be paid (in whole or in part) from the escrow account, calculated as the amount disclosed under § 1026.38 (l)(7)(i)(A)(4) (opens new window) multiplied by the number of periodic payments scheduled to be made to the escrow account during the first year after consummation (opens new window). (§ 1026.38(l)(7)(i)(A)(1) (opens new window))
- The estimated amount that the consumer is likely to pay during the first year after consummation (opens new window), for the mortgage-related obligations described in § 1026.43(b)(8) (opens new window), that are known to the credit union and that will not be paid using escrow account funds, labeled “Non-Escrowed Property Costs over Year 1,” together with a descriptive name of each such charge and a statement that the consumer (opens new window) may have to pay other costs that are not listed. (§ 1026.38(l)(7)(i)(A)(2) (opens new window))
NOTE: The credit union discloses this amount only if an escrow account will be established. The disclosure is based on payments during the first year after consummation. If the credit union elects to make disclosures required by § 1026.38(l)(7)(i)(A)(1) and (4) (opens new window) based on amounts derived from the escrow account analysis required under Regulation X, § 1024.17 (opens new window), then the credit union may make the disclosures required by § 1026.38(l)(7)(i)(A)(2) (opens new window) based on a 12-month period beginning with the borrower’s initial payment date (rather than beginning with consummation). (Comment 1026.38(l)(7)(i)(A)(2)-2 (opens new window); Comment 1026.38(l)(7)(i)(A)(5)-1) (opens new window) - The total amount disclosed and a reference to the disclosure made on the Closing Disclosure under the heading “Other Costs, Initial Escrow Payment at Closing,” pursuant to § 1026.38(g)(3) (opens new window), and a statement that the payment is a cushion for the escrow account, labeled “Initial Escrow Payment”. (§ 1026.38(l)(7)(i)(A)(3) (opens new window))
- The amount the consumer (opens new window) will be required to pay into an escrow account with each periodic payment during the first year after consummation (opens new window), labeled “Monthly Escrow Payment”. (§ 1026.38(l)(7)(i)(A)(4) (opens new window))
- No Escrow. If an escrow account will not be established for the consumer, determine whether there is:
- A statement that the consumer (opens new window) will not have an escrow account;
- The reason why an escrow account will not be established;
- A statement that the consumer (opens new window) must pay all property costs, such as taxes and homeowner's insurance, directly;
- A statement that the consumer (opens new window) may contact the credit (opens new window) union to inquire about the availability of an escrow account; and
- A table, titled “No Escrow,” that itemizes:
- The estimated total amount the consumer (opens new window) will pay directly for the mortgage-related obligations described in § 1026.43(b)(8) (opens new window) during the first year after consummation (opens new window) that are known to the credit union (opens new window) and a statement that, without an escrow account, the consumer (opens new window) must pay the identified costs, possibly in one or two large payments, labeled “Property Costs over Year 1”; and
- The amount of any fee the credit (opens new window) union imposes on the consumer (opens new window) for not establishing an escrow account in connection with the transaction, labeled “Escrow Waiver Fee”. (§ 1026.38(l)(7)(i)(B) (opens new window))
NOTE: § 1026.38(l)(7)(i)(B)(1) (opens new window) requires disclosure based on payments during the first year after consummation. A credit union may comply with this requirement by basing the disclosure on a 12-month period beginning with the borrower’s initial payment date or on a 12-month period beginning with consummation. (Comment 1026.38(l)(7)(i)(B)(1)-2) (opens new window)
- Under the reference “For now”: A statement that an escrow account may also be called an impound or trust account, whether the credit union has established or will establish(at or before consummation) an escrow account in connection with the transaction and the following information required under §§ 1026.38(l)(7)(i)(A)-(B) (opens new window):
- Under the reference “In the future” determine whether the credit union has disclosed under the reference “In the future”: (§ 1026.38(l)(7)(ii) (opens new window))
- A statement that the consumer (opens new window)'s property costs may change and that, as a result, the consumer (opens new window)'s escrow payment may change; (§ 1026.38(l)(7)(ii)(A) (opens new window))
- A statement that the consumer (opens new window) may be able to cancel any escrow account that has been established, but that the consumer (opens new window) is responsible for directly paying all property costs in the absence of an escrow account; and (§ 1026.38(l)(7)(ii)(B) (opens new window))
- A description of the consequences if the consumer (opens new window) fails to pay property costs, including the actions that a State (opens new window) or local government may take if property taxes are not paid and the actions the credit (opens new window) union may take if the consumer (opens new window) does not pay some or all property costs, such as adding amounts to the loan balance, adding an escrow account to the loan, or purchasing a property insurance policy on the consumer (opens new window)'s behalf that may be more expensive and provide fewer benefits than what the consumer (opens new window) could obtain directly. (§ 1026.38(l)(7)(ii)(C) (opens new window))
- Additional Information About This Loan: Adjustable Payment (AP) Table (Page 4 of the Closing Disclosure). Determine whether the credit union provides the AP disclosure required for the Loan Estimate under § 1026.37(i) (opens new window). (§ 1026.38(m)) (opens new window).
- Additional Information About This Loan: Adjustable Interest Rate (AIR) Table (Page 4 of the Closing Disclosure). Determine whether the credit union provides the AIR disclosures required for the Loan Estimate by § 1026.37(j) (opens new window). (§ 1026.38(n) (opens new window)).
- Loan Calculations (Page 5 of the Closing Disclosure). Determine whether the credit union provides a separate table and accurately discloses the following information: (§ 1026.38(o) (opens new window))
- Total of Payments. Expressed as a dollar amount, and a statement that the disclosure is the total the consumer (opens new window) will have paid after making all payments of principal, interest, mortgage insurance, and loan costs, as scheduled. The disclosed total of payments for each transaction shall be treated as accurate if the amount disclosed as the total of payments:
- Is understated by no more than $100, or
- Is greater than the amount required to be disclosed. (§ 1026.38(o)(1) (opens new window))
NOTE: For transactions subject to §§ 1026.19(e) and (f) (opens new window), special tolerances apply to the disclosure of the total of payments for purposes of the right of rescission and foreclosure. (§§ 1026.23(g)(1)(ii), (g)(2)(ii) and (h)(2)(ii)) (opens new window)
- Finance Charge. Expressed as a dollar amount, and the statement “The dollar amount the loan will cost you.” The finance charge and other disclosures affected by the disclosed finance charge (including the amount financed and the annual percentage rate) is accurately calculated if the amount disclosed as the finance charge: (§ 1026.38(o)(2) (opens new window))
- Is understated by no more than $100; or
- Is greater than the amount required to be disclosed.
- Amount Financed. Expressed as a dollar amount, and the following statement: “The loan amount available after paying your upfront finance charge”; (§ 1026.38(o)(3) (opens new window))
- Annual Percentage Rate (APR). Expressed as a percentage, with the following statement: “Your costs over the loan term expressed as a rate. This is not your interest rate”; (§ 1026.38(o)(4) (opens new window))
- Total Interest Percentage (TIP). Expressed as a percentage; with the following statement: “The total amount of interest that you will pay over the loan term as a percentage of your loan amount”. (§ 1026.38(o)(5) (opens new window))
- Total of Payments. Expressed as a dollar amount, and a statement that the disclosure is the total the consumer (opens new window) will have paid after making all payments of principal, interest, mortgage insurance, and loan costs, as scheduled. The disclosed total of payments for each transaction shall be treated as accurate if the amount disclosed as the total of payments:
- Other Disclosures (Page 5 of the Closing Disclosure). Determine whether the credit union accurately provides the following disclosures:
- Appraisal. For transactions subject to 15 U.S.C. 1639h (opens new window) or 1691(e) (opens new window), as implemented in this part or Regulation B, 12 CFR 1002 (opens new window), respectively, under the subheading “Appraisal”: (§ 1026.38(p)(1) (opens new window))
- If there was an appraisal of the property in connection with the loan, the credit union is required to provide the consumer with a copy at no additional cost to the consumer (opens new window) at least three days prior to consummation (opens new window); and (§ 1026.38(p)(1)(i) (opens new window))
- If the consumer (opens new window) has not yet received a copy of the appraisal, the consumer (opens new window) should contact the credit (opens new window) union using the information disclosed in the Closing Disclosure. (§ 1026.38(p)(1)(ii) (opens new window))
- Contract Details. A statement that the consumer (opens new window) should refer to the appropriate loan document and security instrument for information about nonpayment, what constitutes a default under the legal obligation, circumstances under which the credit (opens new window) union may accelerate the maturity of the obligation, and prepayment rebates and penalties. (§ 1026.38(p)(2) (opens new window))
- Liability after Foreclosure. A brief statement of whether, and the conditions under which, the consumer (opens new window) may remain responsible for any deficiency after foreclosure under applicable State (opens new window) law, a brief statement that certain protections may be lost if the consumer (opens new window) refinances or incurs additional debt on the property, and a statement that the consumer (opens new window) should consult an attorney for additional information. (§ 1026.38(p)(3) (opens new window))
- Refinance. The statement required on the Loan Estimate by § 1026.37(m)(5) (opens new window) that “Refinancing this loan will depend on your future financial situation, the property value, and market conditions. You may not be able to refinance this loan.” (§ 1026.38(p)(4) (opens new window))
- Tax Deductions. A statement that, if the extension of credit (opens new window) exceeds the fair market value of the property, the interest on the portion of the credit (opens new window) extension that is greater than the fair market value of the property is not tax deductible for Federal income tax purposes and a statement that the consumer (opens new window) should consult a tax adviser for further information. (§ 1026.38(p)(5) (opens new window))
- Loan Acceptance. If the credit (opens new window) union does not provide a line for the consumer (opens new window)'s signature, the credit union must include with the other disclosures the same statement required in the Loan Estimate (pursuant to § 1026.37(n)(2) (opens new window)) that “You do not have to accept this loan because you have received this form or signed a loan application.” (§ 1026.38(s)(2) (opens new window))
- Appraisal. For transactions subject to 15 U.S.C. 1639h (opens new window) or 1691(e) (opens new window), as implemented in this part or Regulation B, 12 CFR 1002 (opens new window), respectively, under the subheading “Appraisal”: (§ 1026.38(p)(1) (opens new window))
- Questions Notice (Page 5 of the Closing Disclosure). Determine whether the credit union provides a separate questions notice. The credit union must include a prominent question mark, a statement directing the consumer (opens new window) to use the contact information for questions, a reference to CFPB’s website for more information and to submit a complaint, and a link to www.consumerfinance.gov/mortgage-closing. (§§ 1026.38(q)(1)-(3) (opens new window))
- Contact Information (Page 5 of the Closing Disclosure). Determine whether the credit union provides the required contact information for each lender, (opens new window) mortgage broker, consumer (opens new window)'s real estate broker, seller's real estate broker, and settlement agent participating in the transaction; the name of the person (opens new window), address, NMLSR ID number, or if none, State and “License ID”; the name of the natural person (opens new window) who is the primary contact for the consumer at each entity, identified as “Contact”, along with that person’s Contact NMLS ID or Contact License ID, email address, and phone number. (§§ 1026.38(r)(1)-(7) (opens new window))
- Confirm Receipt (Page 5 of the Closing Disclosure). Determine whether, the credit union choses to provide a signature statement, and the credit union discloses above the signature line the statement: “By signing, you are only confirming that you have received this form. You do not have to accept this loan because you have signed or received this form.” (§ 1026.38(s)(1) (opens new window))
NOTE: If the credit union (opens new window) does not provide a line for the consumer (opens new window)'s signature, the credit union (opens new window) must include the following statement, labeled “Loan Acceptance:” “You do not have to accept this loan because you have received this form or signed a loan application.”(§ 1026.38(s)(2) (opens new window)) - Form of Disclosures. Determine whether the credit union follows the format and content of form H-25, set forth in Appendix H (opens new window); (§§ 1026.38(t)(1) and (3) (opens new window)), changes formatting only if there is an exception, including acceptable modifications in Appendix H (opens new window) for transactions without a seller (§ 1026.38(t)(5) (opens new window)); and complies with the following rounding rules for dollar amounts and percentages:
- Rounding - nearest dollar. The following dollar amounts are rounded to the nearest whole dollar: (§ 1026.38(t)(4)(i) (opens new window))
- The dollar amounts for Loan Terms (required to be disclosed by § 1026.38(b) (opens new window) that are required to be rounded by § 1026.37(o)(4)(i)(A) (opens new window) when disclosed under §§ 1026.37(b)(6) (opens new window) and (7) (opens new window) (i.e., adjustments after consummation and details about prepayment penalty and balloon payments);
- The dollar amounts for projected payments or range of payments required by § 1026.38(c) (opens new window) that are required to be rounded by § 1026.37(o)(4)(i)(A) (opens new window) when disclosed under § 1026.37(c)(1)(iii) (opens new window) (i.e., minimum and maximum amounts of principal and interest for projected periodic payments or range of payments);
- The dollar amounts required to be disclosed by § 1026.38(e (opens new window)) (alternative calculating Cash to Close table for transactions without a seller or for simultaneous subordinate financing) and § 1026.38(i) (opens new window) (calculating Cash to Close table) under the subheading “Loan Estimate”;
- The dollar amounts required to be disclosed by § 1026.38(m) (opens new window) (adjustable payment table); and
- The dollar amounts required to be disclosed by § 1026.38(c) (opens new window) (projected payments) that are required to be rounded by § 1026.37(o)(4)(i)(C) (opens new window) when disclosed under § 1026.37(c)(2)(iv) (opens new window) (i.e., total monthly payment).
- Percentages. The percentage amounts required to be disclosed under §§ 1026.38(b), 1026.38(f)(1), 1026.38(n), and 1026.38(o)(4) and (5) (opens new window)shall be disclosed by rounding the exact amounts to three decimal places and then dropping any trailing zeros to the right of the decimal point. (§ 1026.38(t)(4)(ii) (opens new window))
- Loan amount. The dollar amount required to be disclosed by § 1026.38(b) (opens new window) as required by § 1026.37(b)(1)) (opens new window) is disclosed as an unrounded number, except that if the amount is a whole number then the amount disclosed is truncated at the decimal point. (§§ 1026.38(t)(4) (opens new window)(iii))
- Use of Form H-25 not required in certain circumstances. For a transaction that is not a federally related mortgage loan, the credit union is not required to use Form H-25 of Appendix H, but the disclosures must be made with headings, content, and format substantially similar to Form H-25. (§ 1026.38(t)(3)(ii) (opens new window))
NOTE: For such loans, the use of Form H-25, if properly completed with accurate content, constitutes compliance with the clear and conspicuous and segregation requirement of § 1026.38(t)(1)(i) (opens new window). (Comment 1026.38(t)(3)-1 (opens new window)) - Exceptions. For example, modifications of Form H-25 are permitted to separate consumer and seller information, if modifications comply with the requirements of § 1026.38(t)(5)(v) (opens new window).
- Rounding - nearest dollar. The following dollar amounts are rounded to the nearest whole dollar: (§ 1026.38(t)(4)(i) (opens new window))
Construction or Construction-Permanent Loan Disclosures
TILA permits treating: (1) a series of advances under an agreement to extend credit up to a certain amount as one transaction, and (2) the construction and permanent phases of a multiple-advance construction loan that may be permanently financed by the same credit union as either one or more than one transaction. (§ 1026.17(c)(6) (opens new window); Comments 1026.17(c)(6)-1 through -5 (opens new window))
NOTE: A credit union has the option to use the method provided in Appendix D (opens new window), to calculate the annual percentage rate and other disclosures for construction loans in disclosing construction financing. (Comment 1026.17(c)(6)-2 (opens new window)) Further, credit unions may use methods in Appendix D (opens new window) to estimate and disclose the terms of multiple-advance construction loans pursuant to § 1026.37 and .38 (Comment 1026 App. D-7 (opens new window))
The following provisions of TILA and associated commentary apply to (1) construction-only, (2) construction-permanent combined (CP Loan-Combined), and/or (3) construction-permanent separate (CP Loan-Separate) disclosures, or some combination of these loan types, as noted. Determine:
- Timing of Loan Estimate. Whether the credit union has delivered or placed in the mail the Loan Estimate not later than the third business day after receiving the consumer’s application and not later than the seventh business day before consummation of the transaction. (§ 1026.19(e)(1)(iii) (opens new window))
NOTE: For a CP Loan-Combined, the credit union delivers or places in the mail one combined disclosure within these time frames. (Comment 1026.19(e)(1)(iii)-5 (opens new window))
NOTE: For a CP Loan-Separate for which an applicant for both the construction and permanent financing has been received (either as one application or a s a separate application), the credit union delivers or places in the mail the separate Loan Estimates for each phase within these timeframes. (Comment 1026.19(e)(1)(iii)-5 (opens new window)) If the credit union receives the application at separate times, the credit union must provide the Loan Estimate for each phase no later than the time frames applicable to the date it received the specific phase’s application (i.e., if it received the application for the permanent phase three days after the construction phase, it must deliver or place in the mail the permanent phase disclosure not later than the third day after receiving that application, not the construction phase application). (Comment 1026.19(e)(1)(iii)-5 (opens new window))
NOTE: For a Construction-only transaction for which an application has been received and the credit union is separately disclosing the advances, the credit union delivers or places in the mail separate Loan Estimates for each advance no later than three business days after receiving the consumer’s application. (Comment 1026.19(e)(1)(iii)-1 (opens new window)) - Allocation of fees and charges when disclosing multiple transaction: Whether fees and charges are allocated in construction-permanent loan or multiple-advance construction-only loan disclosures for purposes of calculating disclosures. (§ 1026.17(c)(6) (opens new window))
NOTE: If the credit union has charged separate amounts for finance charges and points and fees, such amounts are allocated to the phase for which they are charged. (Comment 1026.17(c)(6)-5 (opens new window))- CP Loan-Separate. The finance charges and points and fees that would not be imposed but for the construction financing are allocated to the construction phase, and all other finance charges and points and fees are allocated to the permanent financing.
- CP Loan-Separate. If a credit union charges a greater origination fee for construction-permanent financing than for construction-only financing, the fee difference is allocated to the permanent phase
- CP Loan-Separate. Fees and charges that are not used to compute the finance charge under § 1026.4 (opens new window) or points and fees under § 1026.32(b)(1) (opens new window) may be allocated between the transactions in any manner the credit union chooses.
- Sale Price
- Loan Estimate
- For transactions that involve a seller, whether the contract sale price of the property is disclosed. (§ 1026.37(a)(7)(i) (opens new window))
- For transactions that do not involve a seller, whether the estimated value of the property is disclosed as “Prop. Value.” (§ 1026.37(a)(7)(ii) (opens new window)).
NOTE: For transactions that do not involve a seller and transactions that involve a seller where the sale price is not yet known, the credit union discloses the estimated value of the property based on the best information reasonably available to the credit union at the time the disclosure is provided to the consumer. (Comment 1026.37(a)(7)-1 (opens new window), § 1026.17(c)(2)(i) (opens new window), Comment 1026.17(c)(2)(i)-1 (opens new window), and Comment 1026.19(e)A(1)(i)-1) (opens new window)
NOTE: For transactions involving construction where there is no seller, the credit union has the option to include the estimated value of the improvements to be made on the property. (Comment 1026.37(a)(7)-1) (opens new window)
- Closing Disclosure
- If there is a seller, whether the credit union has disclosed the contract sale price of the property. (§ 1026.38(a)(3)(vii)(A)) (opens new window)
- Where there is no seller, whether the credit union has disclosed the appraised value of the property used to determine approval of the credit transaction. (§ 1026.38(a)(3)(vii)(B (opens new window)))
NOTE: If the credit union has not obtained an appraisal, the credit union may disclose the estimated value of the property labeled “Estimated Prop. Value.” (Comment 1026.38(a)(3)(vii)(B) (opens new window))
NOTE: For transactions involving construction where there is no seller, this disclosure must be the value of the property that is used to determine the approval of the credit transaction. That disclosure includes any improvements to be made to the property if those improvements were considered when approving the loan. (Comment 1026.38(a)(3)(vii)-1 (opens new window))
- Loan Estimate
- Loan Term. Whether the term to maturity of the credit transaction is disclosed. (§§ 1026.37(a)(8) (opens new window), 1026.38(a)(5)(i) (opens new window))
NOTE: For a CP Loan-Combined, the loan term is the total combined term of the construction and permanent periods. (Comment 1026 Appendix D-7.i.A (opens new window)).
NOTE: For a CP Loan-Separate (Permanent Phase), the loan term of the permanent financing is counted from the date that interest for the permanent financing periodic payments begins to accrue, regardless of when the permanent phase is disclosed. (Comment 1026 Appendix D-7.i.B (opens new window)). - Product Type. Whether the loan product description includes:
- “Adjustable rate,” “Step rate,” or “Fixed rate,” as applicable, and the features that may change the periodic payment (Negative amortization, Interest only, Step payment, Balloon payment, Seasonal payment) (§§ 1026.37(a)(10) (opens new window), 1026.38(a)(5)(iii) (opens new window))
- “Interest Only” feature is disclosed if one or more regular periodic payments may be applied only to interest accrued and not to the loan principal. (§§ 1026.37(a)(10)(ii)(B) (opens new window), 1026.38(a)(5)(iii) (opens new window))
NOTE: If there is a final balloon payment that includes principal (typically construction-only and separate construction phase disclosures), the final balloon payment is excluded for purposes of determining the duration of the “Interest Only” payment period. (Comment 1026 Appendix D-7.ii.A (opens new window))
NOTE: For a CP Loan-Combined, the “Interest Only” payment period is the full term of the interest-only construction phase, plus any interest-only period in the permanent phase. (Comment 1026 Appendix D-7.ii.B (opens new window)) - “Adjustable Rate” product is disclosed if the interest rate may increase after consummation, but the rates that will apply or the periods for which they will apply are not known at consummation. (§ 1026.37(a)(10)(i)(A)) (opens new window)
NOTE: For a CP Loan-Combined and CP Loan-Separate (Permanent Phase), if the interest rate for the permanent phase is not known at consummation for a construction-permanent loan using a single, combined construction-permanent disclosure or using separate disclosures for the permanent phase, the credit union shall disclose the loan product under §§ 1026.37(a)(10) (opens new window) and 1026.38(a)(5)(iii) (opens new window) as “Adjustable Rate.” (Comment 1026 Appendix D-7.ii.C (opens new window))
NOTE: For a CP Loan-Combined transaction, if the interest rate for the permanent phase is known at consummation but different from the construction phase interest rate, the product is disclosed as “Step Rate.” (§ 1026.37(a)(10)(i)(B) (opens new window); Comment 1026 Appendix D-7.ii.C (opens new window))
- Interest Rate. Whether the interest rate that will be applicable to the transaction at consummation is disclosed; and if the interest rate at consummation is not known for an adjustable rate transaction, whether the fully-indexed rate (i.e., the interest rate calculated using the index value and margin at the time of consummation is disclosed. (§ 1026.37(b)(2) (opens new window))
NOTES: CP Loan-Combined and CP Loan-Separate (Permanent Phase):
If the permanent phase has an adjustable rate at consummation and separate disclosures are provided, the rate disclosed for the permanent financing is the fully-indexed rate pursuant to § 1026.37(b)(2) (opens new window) at the time of the consummation. (Comment 1026 Appendix D-7.iii (opens new window))
If the permanent phase has a rate that is not known at consummation, the credit union discloses the best information reasonably available at the time the disclosure is provided to the consumer. (Comment 1026.19(e)(1)(i)-1 (opens new window); § 1026.17(c)(2)(i) (opens new window); Comment 1026.17(c)(2)(i)-1 (opens new window))
If the permanent phase has a fixed rate that will not be adjusted when the construction phase converts to the permanent phase, that rate is used for disclosures. (Comment 1026 Appendix D-7.iii (opens new window))
If the loan contract secured by a principal dwelling provides that the permanent loan interest rate may adjust at conversion, and such rate adjustment results in a corresponding payment adjustment, and if the interest rate for the permanent phase will be fixed after the conversion, the credit union provides the adjustable rate disclosures in § 1026.20(c) (opens new window). However, if the loan contract secured by a principal dwelling provides that the permanent loan interest rate may adjust at conversion, and such rate adjustment results in a corresponding payment adjustment, and if the interest rate for the permanent phase is adjustable, the credit union provides the adjustable rate disclosures in §§ 1026.20(c) and (d) (opens new window). (Comment 1026 Appendix. D-7.iii (opens new window)) - Projected Payments. Whether a separate table itemizes each separate periodic payment (or range), together with estimated taxes, insurance and assessments, and escrow account payments. (§§ 1026.37(c) (opens new window), 1026.38(c) (opens new window))
NOTE: For a Construction-Only and CP Loan-Separate (Construction Phase), the construction phase is disclosed according to the requirements for the Projected Payments table, including disclosure of the amounts of any interest-only payments. If the terms of the construction phase do not account for repayment of the entire principal, the credit union must disclose a balloon payment in a separate column, and balloon payment disclosures are provided. (Comment 1026 Appendix D-7.v.A (opens new window))
NOTE: For a CP Loan-Combined, the Projected Payments table reflects the interest-only payments during the construction phase in the first column, which also reflects the amortizing payments, and mortgage insurance and escrow payments, if any, for the permanent phase if the term of the construction phase is not a full year. (Comment 1026 Appendix D-7.v.B (opens new window))
NOTE: For a CP Loan-Combined when only the terms of the permanent phase require mortgage insurance or escrow, the disclosure of such amounts depends on whether the first column of the table exclusively discloses the construction phase. If so, the credit union discloses “0” mortgage insurance and/or “-“ for escrow in the first column if the construction phase does not include mortgage insurance or escrow; if payments for both phases are disclosed in the first column, the amount of mortgage insurance premium or any escrow payment for the permanent phase is disclosed in the first column. (Comment 1026 Appendix D-7.v.C (opens new window)) - Disclosure of Construction Costs. (Construction-only; CP-Combined; CR-Separate Construction Phase)
NOTE: Construction costs are the costs of improvements to be made to the property that the consumer contracts for in connection with the financing transaction and that will be paid in whole or in part with loan proceeds. (Comment 1026 Appendix D-7.vi.A (opens new window))- Loan Estimate. Whether on the Loan Estimate, a credit union factors construction costs into the “funds for borrower” calculation in the Calculating Cash to Close table or the “Payoffs and Payments” calculation in the optional alternative calculating cash to close table for transactions without a seller or for simultaneous subordinate financing. (§ 1026.37(h) (opens new window); Comment Appendix D-7.vi.B (opens new window))
- Closing Disclosure. Whether on the Closing Disclosure, a credit union includes construction costs in the “Itemization of amounts due from borrower” in the “Summary of Borrower’s Transaction” (§ 1026.38(j)(1)(v) (opens new window)) and factors them into the “Down payment/funds from borrower” and “Funds for borrower” calculations of the Calculating Cash to Close table or in the “Payoffs and Payments” section of the Closing Cost details in the optional alternative Calculating Cash to Close Table for transactions without a seller or for simultaneous subordinate financing. (§ 1026.38(e) (opens new window) as modified under § 1026.38(t)(5)(vii)(B) (opens new window)). (Comment 1026 Appendix D-7.vi.C (opens new window))
NOTE: If a credit union places a portion of a construction loan’s proceeds in a reserve or other account at consummation, the credit union may separately disclose this from the other construction costs disclosed in the “Itemization of amounts due from borrower” in the Summaries of Transactions table under § 1026.38(j)(1)(v (opens new window)), if space permits. (Comment 1026 Appendix D-7.vi.D (opens new window)) The credit union may disclose the amount of such reserve or other account as a separate itemized cost, along with an itemized cost for the balance of the construction costs, under disclosure and calculation options described in Comments 1026 Appendix D-7.vi.B and C (opens new window).
- Inspection and Handling Fees. (Construction-only; CP-Combined; CP-Separate (Construction Phase) Whether inspection and handling fees, which are Loan Costs, are included in the Loan Cost table (or an addendum) and certain disclosures, including “In 5 Years” (§ 1026.37(l)(1) (opens new window)) and “Total of Payments” (§ 1026.38(o)(1) (opens new window)). (§§ 1026.37(f) (opens new window), 1026.38(f) (opens new window))
NOTE: Inspection and handling fees, for the staged disbursement of construction loan proceeds, including draw fees, are part of the finance charge. (Comments 1026.4(a)-1.ii.A, Appendix D-7.vii (opens new window))
NOTE: If inspection and handling fees are collected before or at consummation, the total of such fees is disclosed in the Loan Costs table. (Comments 1026.37(f)-3, Appendix. D-7.vi (opens new window)i)
NOTE: If inspection and handling fees will be collected after consummation, the total of such fees is disclosed in a separate addendum under the heading “Inspection and Handling Fees Collected After Closing” and the fees are not counted for purposes of the Calculating Cash to Close table. (Comments 1026.37(f)-3, 1026.37(f)(6)-3, 1026.38(f)-2, Appendix D-7.vii (opens new window)).
NOTE: If inspection and handling costs are collected, such costs are included in the sum of the “In 5 Years” disclosure (Loan Estimate) and the “Total of Payments” (Closing Disclosure), even when disclosed on an addendum. (Comment 1026 Appendix D-7.vii (opens new window))
Closed-End Credit Disclosure Forms – For transactions not subject to sections §§ 1026.19(e) and (f) (opens new window)
- General Disclosures. Determine that the disclosures are clear, conspicuous, and grouped together or segregated as required, in a form the consumer may keep.
- For loans subject to § 1026.18(s) (opens new window), the terms “Finance Charge” and “Annual Percentage Rate” and corresponding rates or amounts must be more conspicuous than other terms, except for the credit union’s identity. (§ 1026.17(a)(2) (opens new window)).
- For reverse mortgages subject to § 1024.33 (opens new window) in Regulation X, the disclosures required under § 1026.33(b) (opens new window).
- For private student loans the term “Annual Percentage Rate” and corresponding rate must be less conspicuous than the term “finance charge” and the corresponding amount, as well as less conspicuous than the interest rate, the notice of the right to cancel and credit union’s identity. (§§ 1026.17(a) (opens new window), 1026.47(b), and (c) (opens new window))
- Required Disclosures. Determine whether the disclosures are accurately completed and include the following disclosures, as applicable:
- Identity of the credit union; (§ 1026.18(a) (opens new window))
- Amount financed; (§ 1026.18(b) (opens new window))
- Itemization of amount financed; (§ 1026.18(c) (opens new window))
- Brief description of the APR; (§ 1026.18(e) (opens new window))
- Variable rate information; (§§ 1026.18(f)(1) or (2) (opens new window))
- Payment schedule; (§ 1026.18(g) (opens new window))
- Brief description of the total of payments; (§ 1026.18)(h) (opens new window))
- Demand feature; (§ 1026.18(i) (opens new window))
- Description of total sales price in a credit sale; (§ 1026.18(j) (opens new window))
- Prepayment penalties or rebates; (§ 1026.18(k) (opens new window))
- Late payment amount or percentage; (§ 1026.18(l) (opens new window))
- Description for security interest; (§ 1026.18(m) (opens new window))
- Insurance conditions for finance charge exclusions; (§§ 1026.4(d) and 1026.18(n) (opens new window))
- Statement concerning certain security interest charges; (§§ 1026.4(e) and 1026.18 (opens new window)(o))
- Statement referring to the contract; (§ 1026.18(p) (opens new window))
- Statement regarding assumption of the note; (§ 1026.18(q) (opens new window))
- Statement regarding required deposits; and (§ 1026.18(r) (opens new window))
- Interest rate and payment summary for mortgage transactions. (§ 1026.18(s) (opens new window))
- Scheduled Payments Disclosure. Determine that the credit union discloses the number, amounts, and timing of payments scheduled to repay the obligation (other than for a transaction that is subject to section 1026.18 (opens new window)(s)3. (§ 1026.18(g) (opens new window))
- Interest Rate and Payment Disclosures. Determine that the credit union discloses the following information about the interest rate and payments, as applicable. (§ 1026.18(s) (opens new window))
- Interest Rates
- For a fixed-rate mortgage, the interest rate at consummation. (§ 1026.18(s)(2)(i)(A) (opens new window))
- For an adjustable-rate or step-rate mortgage: (§ 1026.18(s)(2)(i)(B)) (opens new window)
- The interest rate at consummation and the period of time until the first interest rate adjustment may occur, labeled as the “introductory rate and monthly payment;”
NOTE: As set forth in Official Interpretation to § 1026.18(s)-1 (opens new window), if periodic payments are not due monthly, the credit union must use the appropriate term, such as “quarterly” or “annually.” - The maximum interest rate that may apply during the first five years after the date the first regular periodic payment will be due and the earliest date that rate may apply, labeled as “maximum during first five years”; and
- The maximum interest rate that may apply during the life of the loan and the earliest date that rate may apply, labeled as “maximum ever.”
- The interest rate at consummation and the period of time until the first interest rate adjustment may occur, labeled as the “introductory rate and monthly payment;”
- For a loan that provides for payment increases occurring without regard to an interest rate adjustment 4 (as described in § 1026.18(s)(3)(i)(B) (opens new window)), the interest rate in effect at the time the first payment increase is scheduled to occur and the date the increase will occur, labeled as “first adjustment” if the loan is an adjustable-rate mortgage or, otherwise, labeled as “first increase.” 5 (§ 1026.18(s)(2)(i)(C) (opens new window))
- For a negative amortization loan6 (§ 1026.18(s)(2)(ii) (opens new window)):
- The interest rate at consummation and, if it will adjust after consummation, the length of time until it will adjust, and the label “introductory” or “intro”;
- The maximum interest rate that could apply when the consumer must begin making fully amortizing payments under the terms of the legal obligation;
- If the minimum required payment will increase before the consumer must begin making fully amortizing payments, the maximum interest rate that could apply at the time of the first payment increase and the date the increase is scheduled to occur; and
- If a second increase in the minimum required payment may occur before the consumer must begin making fully amortizing payments, the maximum interest rate that could apply at the time of the second payment increase and the date the increase is scheduled to occur.
- Introductory rate for an amortizing adjustable-rate mortgage, if the interest rate at consummation is less than the fully indexed rate, the following (placed in a box directly beneath the table required by section 1026.18(s)(1) (opens new window) of the regulation, in a format substantially similar to Model Clause H–4(I) in the regulation’s Appendix H (opens new window)):
- The interest rate that applies at consummation and the period of time it applies;
- A statement that, even if market rates do not change, the interest rate will increase at the first adjustment and a designation of the place in sequence of the month or year, as applicable, of such rate adjustment (e.g., “in the third year”); and
- The fully-indexed rate.
- Payments for Amortizing Loans
- Principle and interest payments. If all periodic payments will be applied to accrued interest and principal, for each interest rate disclosed under § 1026.18(s)(2)(i) (opens new window): (§ 1026.18(s)(3)(i) (opens new window))
- The corresponding periodic principal and interest payment, labeled as “principal and interest”;
- If the periodic payment may increase without regard to an interest rate adjustment, the payment that corresponds to the first increase and the earliest date on which the increase could occur;
- If an escrow account is established, an estimate of the amount of taxes and insurance, including any mortgage insurance payable with each periodic payment; and
- The sum of the amounts disclosed under §§ 1026.18(s)(3)(i)(A) and (C) or 1026.18(s)(3)(i)(B) and (C) (opens new window), as applicable, labeled as “total estimated monthly payment.”
- Interest-only payments. If the loan is an interest-only loan, for each interest rate disclosed under § 1026.18(s)(2)(i) (opens new window), the corresponding periodic payment and (§ 1026.18(s)(3)(ii) (opens new window)):
- If the payment will be applied to only accrued interest, the amount applied to interest, labeled as “interest payment,” and a statement that none of the payment is being applied to principal;
- If the payment will be applied to accrued interest and principal, an itemization of the amount of the first such payment applied to accrued interest and to principal, labeled as “interest payment” and “principal payment,” respectively;
- The escrow information described in § 1026.18(s)(3)(i)(C) (opens new window); and
- The sum of all amounts required to be disclosed under §§ 1026.18(s)(3)(ii)(A) and (C) or 1026.18(s)(3)(ii)(B) and (C) (opens new window), as applicable, labeled as “total estimated monthly payment.”
- Payments for negative amortization loans. If the loan is a negative amortization loan: (§ 1026.18(s)(4) (opens new window))
- The minimum periodic payment required until the first payment increase or interest rate increase, corresponding to the interest rate disclosed under § 1026.18(s)(2)(ii)(A) (opens new window);
- The minimum periodic payment that would be due at the first payment increase and the second, if any, corresponding to the interest rates described in §§ 1026.18(s)(2)(ii)(C) and (D) (opens new window);
- A statement that the minimum payment pays only some interest, does not repay any principal, and will cause the loan amount to increase;
- The fully amortizing periodic payment amount at the earliest time when such a payment must be made, corresponding to the interest rate disclosed under § 1026.18 (s)(2)(ii)(B) (opens new window); and
- If applicable, in addition to the payments in §§ 1026.18(s)(4)(i) and (ii) (opens new window), for each interest rate disclosed under § 1026.18(s)(2)(ii) (opens new window), the amount of the fully amortizing periodic payment, labeled as the “full payment option,” and a statement that these payments pay all principal and all accrued interest.
NOTE: The information in §§1026.18(s)(2)–(4) (opens new window) must be disclosed in the form of a table with no more than five columns, and with headings and format substantially similar to Model Clause H–4(E), H–4(F), H–4(G), or H–4(H) in Appendix H (opens new window) of the regulation. The table must contain only the information required in §§ 1026.18 (s)(2)–(4) (opens new window), be placed in a prominent location, and be in a minimum 10-point font. (§ 1026.18(s)(1) (opens new window))
- Balloon payments. For loans with balloon payments (defined as a payment that is more than two times a regular periodic payment): (§ 1026.18(s)(5) (opens new window))
- Except as provided below, the balloon payment is disclosed separately from other periodic payments disclosed in the table (i.e., is outside the table and in a manner substantially similar to Model Clause H–4(J) in Appendix H (opens new window) to the regulation);
- If the balloon payment is scheduled to occur at the same time as another payment required to be disclosed in the table, the balloon payment must be disclosed in the table.
- Principle and interest payments. If all periodic payments will be applied to accrued interest and principal, for each interest rate disclosed under § 1026.18(s)(2)(i) (opens new window): (§ 1026.18(s)(3)(i) (opens new window))
- Interest Rates
- Negative Amortization. Determine that the following information is disclosed (close to the table required in § 1026.18(s)(1) (opens new window), with headings, content, and format similar to Model Clause H–4(G) in Appendix H (opens new window) to this part) for a negative amortization loan (other than a transaction secured by a consumer’s interest in a timeshare plan described in 11 U.S.C. 101(53D) (opens new window)): (§ 1026.18(s)(6) (opens new window))
- The maximum interest rate, the shortest period of time in which such interest rate could be reached, the amount of estimated taxes and insurance included in each payment disclosed, and a statement that the loan offers payment options, two of which are shown; and
- The dollar amount of the increase in the loan’s principal balance if the consumer makes only the minimum required payments for the maximum possible time and the earliest date the consumer must begin making fully amortizing payments, assuming that the maximum interest rate is reached at the earliest possible time.
- No Refinance Guarantee. Determine that the credit union disclosed a statement that there is no guarantee the consumer can refinance the transaction to lower the interest rate or periodic payments (other than a transaction secured by a consumer’s interest in a timeshare plan described in 11 U.S.C.101(53D) (opens new window)) . (§ 1026.18(t)(1) (opens new window))
NOTE: The statement required by § 1026.18(t)(1) (opens new window) must be in a form similar to Model Clause H–4(K) in Appendix H (opens new window) to the regulation. (§ 1026.18(t)(2) (opens new window)) - Variable Rate Disclosures. Determine all variable rate loans with a maturity greater than one year secured by a principal dwelling are given the following disclosures at the time of application: (§ 1026.19 (opens new window))
- Consumer Handbook on Adjustable Rate Mortgages or substitute;
- Statement that interest rate payments and/or terms can change;
- The index/formula and a source of information;
- Explanation of the interest rate/payment determination and margin;
- Statement that the consumer must ask for the current interest rate and margin;
- Statement that the interest rate is discounted, if applicable;
- Frequency of interest rate and payment changes;
- Rules relating to all changes;
- Either a historical example based on 15 years, or the initial rate and payment with a statement that the periodic payment may substantially increase or decrease together with a maximum interest rate and payment;
- Explanation of how to compute the loan payment, giving an example;
- Demand feature, if applicable;
- Statement of content and timing of adjustment notices; and
- Statement that other variable rate loan program disclosures are available, if applicable.
- Initial Rate Adjustment Disclosures. Determine that adjustable-rate mortgages with a maturity date greater than one year, secured by a principal dwelling, the credit union, assignee, or servicer provides the following initial rate adjustment disclosures: (§ 1026.20(d)(2) (opens new window))
- The date of the disclosure;
- An explanation that under the terms of the consumer’s adjustable rate mortgage, the time frame that the current rate has been in effect, when the current rate is scheduled to expire, the effective date of the new rate, when additional future interest rate adjustments are scheduled to occur and any other changes to loan terms, features, and options taking effect on the same date, and how the rate change may affect the payment and other loan terms;
- A table explaining the current interest rate and payment, the new interest rate and payment, and the date the first new payment is due;
NOTE: For interest-only and negative amortization adjustable-rate mortgages, the table must include how the current and new rates and payment will be allocated to interest, principal, and escrow (if applicable). See section 1026.20(d)(2)(iii)(C) for more on payment allocation disclosure requirements. - An explanation of how the interest rate is determined, including the specific index or formula used and a source of information about that index or formula, and the type and amount of any adjustment, including a margin and an explanation that a margin is the addition of a certain number of percentage points to the index;
- Any limits on the interest rate or payment increases at each interest rate adjustment and over the life of the loan (as applicable), including the extent such limits result in the credit union, assignee, or servicer foregoing any increase in the interest rate and the earliest date that such foregone interest rate increases may apply to future interest rate adjustments, subject to those limits;
- An explanation of how the new payment was determined, including the index or formula used to determine the new interest rate;
- Any adjustments to the index or formula used to determine the new payment, such as the addition of a margin;
- The expected loan balance on the date of the interest rate adjustment;
- The remaining loan term expected on the date of the interest rate adjustment and any changes to the term that may have occurred due to the interest rate change;
- If the credit union, assignee, or servicer provides an estimated rate payment, a statement that it will provide another disclosure with the actual interest rate to the consumer between two and four months before the first payment at the adjusted level is due, and that the credit union is using an estimated rate;
- If applicable, a statement that the new payment will not be allocated to pay loan principal and will not reduce the loan balance. If the new payment will result in negative amortization, a statement that the new payment will not be allocated to pay loan principal and that only part of the interest will be paid, which will add to the loan balance. If the new payment will result in negative amortization as a result of the interest rate adjustment, the statement must state the payment required to fully amortize the remaining balance at the new interest rate over the remainder of the loan term;
- A statement indicating the circumstances under which the credit union, assignee, or servicer may impose any prepayment penalty, the time period during which it may impose the penalty, and a statement that the consumer may contact the servicer for additional information, including the maximum amount of the penalty that may be charged to the consumer;
- A telephone number of the credit union, assignee, or servicer to call if the consumer anticipates not being able to make the new payment;
- A statement listing alternatives that consumers may pursue if they anticipate not being able to make the new payment;
- A web address to access either the CFPB or the Department of Housing and Urban Development’s (HUD) approved list of homeownership counselors and counseling organizations, the HUD toll-free number to access the HUD list of homeownership counselors and counseling organizations, and the CFPB’s website to access state housing finance authorities’ contact information.
- Rate Change with Payment Change. Determine that for any adjustable-rate mortgage with a maturity date greater than one year, secured by a principal dwelling, the credit union, assignee, or servicer provides the following rate adjustment disclosures for rate adjustments with a corresponding payment change: (§ 1026.20(c) (opens new window))
NOTE: A credit union, assignee or servicer subject to the Fair Debt Collection Practices Act (FDCPA) that has received the consumer’s notification to cease communication pursuant to FDCPA section 805(c) (opens new window) is exempt from this requirement.
NOTE: Model and sample disclosures H-4(D)(1) through (4) containing all necessary information can be found in Appendix H (opens new window). The disclosures required under §§ 1026.20(c) and (d) (opens new window) must be in the form of a table and in the same order as, and with headings and format similar to, the model disclosures. (§§ 1026.20(c)(3) and (d)(3) (opens new window))
NOTE: When examining a credit union, an assignee, or a servicer that continues to own the loan, if the entity states that another entity has the obligation to provide the disclosures, examiners must determine whether the entity takes steps to ensure that the other party (the credit union, assignee, or servicer, as applicable) is complying with the obligation to provide the disclosures.
NOTE: For interest-only and negatively amortizing payments, the table must include how the current and new rates and payment will be allocated to interest, principal, and escrow (if applicable). See § 1026.20(d)(2)(iii)(C) (opens new window) for more on payment allocation disclosure requirements.
- An explanation that under the terms of the consumer’s adjustable rate mortgage, the time frame that the current rate has been in effect is ending and the interest rate and payment will change, the effective date of the new rate, when additional future interest rate adjustments are scheduled to occur and any other changes to loan terms, features, and options taking effect on the same date, such as the expiration of interest-only or payment-option features; a table explaining the current interest rate and payment, the new interest rate and payment, and the date the first new payment is due;
- An explanation of how the interest rate is determined, including the specific index or formula used and a source of information about that index or formula, and the type and amount of any adjustment, including a margin and an explanation that a margin is the addition of a certain number of percentage points to the index, and any application of previously foregone interest rate increases from past rate adjustments;
- Any limits on the interest rate or payment increases at each interest rate adjustment and over the life of the loan (as applicable), including the extent to which such limits result in the credit union, assignee, or servicer foregoing any increase in the interest rate and the earliest date that such foregone interest rate increases may apply to future interest rate adjustments, subject to those limits;
- An explanation of how the new payment is determined, including the index or formula used to determine the new interest rate;
- Any adjustments to the index or formula the credit union, assignee, or servicer uses to determine the new payment, such as the addition of a margin or the application of any previously foregone interest rate increases from past interest rate adjustments;
- The expected loan balance on the date of the interest rate adjustment;
- The remaining loan term expected on the date of the interest rate adjustment and any changes to the term that may have occurred due to the interest rate change;
- If applicable, a statement that the new payment will not be allocated to pay loan principal and will not reduce the loan balance. If the new payment will result in negative amortization, a statement that the new payment will not be allocated to pay loan principal and that only part of the interest will be paid, which will add to the loan balance. If the new payment will result in negative amortization as a result of the interest rate adjustment, the statement must state the payment required to fully amortize the remaining balance at the new interest rate over the remainder of the loan term;
- A statement indicating the circumstances under which the credit union, assignee, or servicer may impose any prepayment penalty, the time period during which it may impose the penalty, and a statement that the consumer may contact the servicer for additional information, including the maximum amount of the penalty that may be charged to the consumer;
- High-Cost Mortgages. Determine that the disclosures required for high-cost mortgage transactions (§ 1026.32 (opens new window)) clearly and conspicuously include the items below. (§ 1026.32(c) (opens new window), see Form H-16 in Appendix H (opens new window))
- The required statement “you are not required to complete this agreement merely because you have received these disclosures or have signed a loan application. If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan.”
- The APR.
- Amount of the regular monthly (or other periodic) payment and the amount of any balloon payment. The regular payment must include amounts for voluntary items, such as credit life insurance or debt-cancellation coverage, only if the consumer has previously agreed to the amount (See the Official Interpretation to § 1026.32(c)(3) (opens new window)).
- Statement that the interest rate may increase and monthly payment may increase, and the amount of the single maximum monthly payment, based on the maximum interest rate allowed under the contract, if applicable.
- The amount borrowed. For a closed-end mortgage, the amount borrowed is the total amount borrowed, as reflected by the face amount of the note; and where the amount borrowed includes premiums or other charges for optional credit insurance or debt- cancellation coverage (grouped together with the amount borrowed), that fact must be stated. For an open-end credit plan, the amount borrowed is the credit limit for the plan when the account is opened.
- Escrow cancellation notice. For a closed-end loan secured by a first lien on real property or a dwelling (other than a reverse mortgage), where an escrow account (as defined under § 1024.17(b) (opens new window)) is cancelled, determine whether: (§ 1026.20(e) (opens new window))
- The credit union or servicer provided an Escrow Closing Notice with the following clearly and conspicuously disclosed: (§ 1026.20(e)(1) (opens new window)
- A statement informing the consumer (opens new window) of the date on which the consumer (opens new window) will no longer have an escrow account;
- A statement that an escrow account may also be called an impound or trust account;
- A statement of the reason why the escrow account will be closed;
- A statement that without an escrow account, the consumer (opens new window) must pay all property costs, such as taxes and homeowner's insurance, directly, possibly in one or two large payments a year;
- A table, titled “Cost to you,” that contains an itemization of the amount of any fee the credit union (opens new window) or servicer imposes on the consumer (opens new window) in connection with the closure of the consumer (opens new window)'s escrow account, labeled “Escrow Closing Fee,” and a statement that the fee is for closing the escrow account; and (§ 1026.20(e)(2)(i) (opens new window))
- Information under the reference “In the future” that includes: (§ 1026.20(e)(2)(ii) (opens new window))
- A statement of the consequences if the consumer (opens new window) fails to pay property costs, including the actions that a State (opens new window) or local government may take if property taxes are not paid and the actions the credit union (opens new window) or servicer may take if the consumer (opens new window) does not pay some or all property costs, such as adding amounts to the loan balance, adding an escrow account to the loan, or purchasing a property insurance policy on the consumer (opens new window)'s behalf that may be more expensive and provide fewer benefits than a policy that the consumer (opens new window) could obtain directly; (§ 1026.20(e)(2)(ii)(A) (opens new window))
- A statement with a telephone number that the consumer (opens new window) can use to request additional information about the cancellation of the escrow account; (§ 1026.20(e)(2)(ii)(B) (opens new window))
- A statement of whether the credit union (opens new window) or servicer offers the option of keeping the escrow account open and, as applicable, a telephone number the consumer (opens new window) can use to request that the account be kept open; and (§ 1026.20(e)(2)(ii)(C) (opens new window))
- A statement of whether there is a cut-off date by which the consumer (opens new window) can request that the account be kept open. (§ 1026.20(e)(2)(ii)(D) (opens new window))
- Form. The disclosure meets the formatting requirements of section 1026.20(e)(4) (opens new window), and is substantially similar to model form H-29 in Appendix H (opens new window). (1026.20(e)(4) (opens new window))
- Timing. The credit union or servicer ensures that the consumer receives the Escrow Closing Notice in the following time periods:
- If the cancellation is upon the consumer’s request, no later than three business days before the closure of the consumer’s escrow account; (§ 1026.20(e)(5)(i) (opens new window))
- If cancellation is other than upon the consumer’s request, no later than 30 business days before the closure of the consumer’s escrow account. (§ 1026.20(e)(5)(ii) (opens new window))
NOTE: If the disclosures are not provided in person, the consumer is considered to have received the disclosures three business days after they are delivered or placed in the mail. (§ 1026.20(e)(5)(iii) (opens new window))
- The credit union or servicer provided an Escrow Closing Notice with the following clearly and conspicuously disclosed: (§ 1026.20(e)(1) (opens new window)
Successors In Interest
If, upon confirmation, a servicer provided a confirmed successor in interest who is not liable on the mortgage loan obligation with an optional notice and acknowledgement form in accordance with § 1024.32(c)(1) (opens new window), determine whether the servicer provided a confirmed successor in interest any written disclosure required by the following (if applicable): § 1026.20(c) (opens new window) (rate adjustments with corresponding change in payment), § 1026.20(d) (opens new window) (initial rate adjustment), or § 1026.20(e) (opens new window) (escrow account cancellation notice), once the confirmed successor in interest either assumed the mortgage loan obligation under State law or provided the servicer an executed acknowledgement form in accordance with § 1024.32(c)(1)(iv) (opens new window) that the confirmed successor in interest has not revoked.
High-Cost Mortgages
Determine that the disclosures required for high-cost mortgage transactions (§ 1026.32 (opens new window)) clearly and conspicuously include the items below. (§ 1026.32(c) (opens new window), Form H-16 in Appendix H (opens new window))
- The required statement “you are not required to complete this agreement merely because you have received these disclosures or have signed a loan application. If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan.”
- The APR.
- Amount of the regular monthly (or other periodic) payment and the amount of any balloon payment. The regular payment should include amounts for voluntary items, such as credit life insurance or debt-cancellation coverage, only if the consumer has previously agreed to the amount (Comment 1026.32(c)(3) (opens new window)).
- Statement that the interest rate may increase and monthly payment may increase, and the amount of the single maximum monthly payment, based on the maximum interest rate allowed under the contract, if applicable. The amount borrowed. For a closed-end mortgage, the amount borrowed is the total amount borrowed, as reflected by the face amount of the note; and where the amount borrowed includes premiums or other charges for optional credit insurance or debt-cancellation coverage (grouped together with the amount borrowed), that fact shall be stated. For an open-end credit plan, the amount borrowed is the credit limit for the plan when the account is opened.
Notice of Transfer
For any open-end loan secured by a principal dwelling or for any closed-end mortgage loan secured by a dwelling or real property that was sold, assigned, or otherwise transferred to the covered person, determine that the covered person notifies the borrower clearly and conspicuously in writing, in a form that the consumer may keep of such transfer, including: (§ 1026.39 (opens new window))
- An identification of the loan that was sold, assigned, or otherwise transferred;
- The name, address, and telephone number of the covered person who owns the mortgage loan;
- The date of transfer (either the date of acquisition recognized in the books and records of the covered person or that of the transferring party) identified by the covered person;
- The name, address, and telephone number of an agent or party having authority, on behalf of the covered person, to receive notice of the right to rescind and resolve issues concerning the consumer’s payments on the mortgage loan;
- Where transfer of ownership of the debt to the covered person is or may be recorded in public records or, alternatively, that the transfer of ownership has not been recorded in public records at the time the covered person provides the disclosure; and,
- At the option of the covered person, any other relevant information about the transaction.
- If there are multiple covered persons, contact information for each of them, unless one of them has been authorized to receive the consumer’s notice of the right to rescind and resolve issues concerning the consumer’s payments on the loan.
- If the loan is a closed-end consumer mortgage loan secured by a dwelling or real property, other than a reverse mortgage transaction subject to § 1026.33 (opens new window) of this part, the following information about the covered person’s partial payment policy, under the subheading “Partial Payment”:
NOTE: This notice of sale or transfer must be provided for any consumer credit transaction that is secured by the principal dwelling of a consumer, except as noted above. This notification is required of the covered person even if the loan servicer remains the same. In addition, if more than one consumer is liable on the obligation, the covered person may mail or deliver the disclosure notice to any consumer who is primarily liable. And, if an acquisition involves multiple covered persons who each acquire a partial interest in the loan pursuant to separate and unrelated agreements, each covered person has a duty to ensure that disclosures related to its acquisition are accurate and provided in a timely manner unless an exception in § 1026.39(c) (opens new window) applies. The parties may, but are not required to, provide a single notice that satisfies the timing and content requirements applicable to each covered person. (Comment 1026.39(b)(5)-2 (opens new window))
NOTE: Each covered person must provide the notice of transfer or sale to confirmed successors in interest unless the exemption under § 1026.39(f) (opens new window) applies.- If periodic payments that are less than the full amount due are accepted, a statement that the covered person, using the term “lender,” may accept partial payments and apply such payments to the consumer’s loan;
- If periodic payments that are less than the full amount due are accepted but not applied to a consumer’s loan until the consumer pays the remainder of the full amount due, a statement that the covered person, using the term “lender,” may hold partial payments in a separate account until the consumer pays the remainder of the payment and then apply the full periodic payment to the consumer’s loan;
- If periodic payments that are less than the full amount due are not accepted, a statement that the covered person, using the term “lender,” does not accept any partial payments; and
- A statement that, if the loan is sold, the new covered person, using the term “lender,” may have a different policy.
NOTE: You may use the format of the partial payment disclosure illustrated by form H-25 of Appendix H (opens new window). The text illustrating the disclosure in form H-25 may be modified by you to suit the format of the mortgage transfer notice. (Comment 1026.39(d)(5)-1 (opens new window))
Treatment of Credit Balances
If an account’s credit balance is in excess of one dollar, determine whether the credit union:
- Credited the amount of the credit balance to the consumer’s account;
- Refunded any part of the remaining credit balance, upon the written request of the consumer; and
- Made a good faith effort to refund to the consumer by cash, check, or money order, or credit to a deposit account of the consumer, any part of the credit balance remaining in the account for more than six months, unless the consumer’s location was not known to the credit union and could not be traced through the consumer’s last known address or telephone number. (§ 1026.21 (opens new window))
Private Education Loans
For private education loans subject to Subpart F, ensure that the required disclosures are accurate (§ 1026.47 (opens new window)) and contain the following information:
- Application or solicitation disclosures disclose the following as required under § 1026.47(a) (opens new window) :
- Interest rate, including:
- Rate or range, and if the rate depends in part on a determination of the borrower’s creditworthiness or other factors, a statement to that effect;
- Whether rate is fixed or variable;
- If rate may increase after consummation, any limitations, or lack thereof, and if the limitation is imposed by law, that fact. Also, the credit union must state that the consumer’s actual rate may be higher or lower that that disclosed, if applicable; and
- Whether the rate will typically be higher if the loan is not co-signed or guaranteed.
- Fees and default or late payment costs.
- Repayment terms, including:
- Term of the loan, which is the period during which regularly scheduled payments of principal and interest will be due.
- Deferral options, or if consumer does not have the option to defer, that fact.
- For each available deferral option applicable, information about:
- Whether interest will accrue during deferral period; and
- If interest accrues, whether payment of interest may be deferred and added to the principal balance.
- A statement that, if the consumer files bankruptcy, the consumer may still be required to repay the loan.
- Cost estimates, based on an example of the total cost of the loan, calculated using:
- The highest interest rate and including all applicable finance charges;
- An amount financed of $10,000, or $5,000, if the credit union offers loans less than $10,000; and
- Calculated for each payment option.
- Eligibility (e.g., any age or school enrollment eligibility requirements).
- Alternatives to private education loans, including:
- A statement that the consumer may qualify for federal student loans;
- The interest rates available for each program available under title IV of the Higher Education Act of 1965 (opens new window), and whether the rate is variable or fixed;
- A statement that the consumer may obtain additional information about student federal financial assistance from his school or U.S. Department of Education, including an appropriate website; and
- A statement that a covered educational institution may have school specific educational loan benefits and terms not detailed in the loan disclosure forms.
- A statement that if the loan is approved, that the loan will be available for 30 days and the terms will not change, except for changes to the interest rate in the case of a variable rate and other changes permitted by law.
- A statement that before consummation, the borrower must complete a self- certification form obtained from the student’s institution of higher education.
- Interest rate, including:
- For approval disclosures, the following information is required under § 1026.47(b) (opens new window):
- Interest rate, information, including:
- Interest rate applicable to the loan
- Whether the interest rate is variable or fixed; and
- If the interest rate may increase after consummation, any limitations on the rate adjustments, or lack thereof.
- Fees and default or late payment costs, including:
- An itemization of the fees or range of fees required to obtain the loan; and
- Any fees, changes to the interest rate, and adjustments to principal based on the consumer’s defaults or late payments.
- Repayment terms, including:
- Principal amount;
- Term of the loan;
- A description of the payment deferral option chosen by the consumer, if applicable, and any other payment deferral options that the consumer may elect at a later time;
- Any payments required while the student is enrolled at the educational institution, based on the deferral option the consumer chooses;
- Amount of any unpaid interest that will accrue while the student is enrolled in school, based upon the deferral option chosen by the consumer;
- A statement that if the consumer files for bankruptcy, that the consumer may still be required to pay back the loan;
- An estimate of the total amount of payments calculated based upon:
- The interest rate applicable to the loan (compliance with § 1026.18(h) (opens new window) constitutes compliance with this requirement);
- The maximum possible rate of interest for the loan, or, if a maximum rate cannot be determined, a rate of 25 percent.
- If a maximum rate cannot be determined, the estimate of the total amount for repayment must include a statement that there is no maximum rate and that the total amount for repayment disclosed is an estimate.
- The maximum monthly payment based on the maximum rate of interest for the loan, or, if a maximum rate of interest cannot be determined, a rated of 25 percent. If a maximum cannot be determined, a statement that there is no maximum rate and that the monthly payment amount disclosed is an estimate and will be higher if the applicable interest rate increases.
- Alternatives to private education loans, including:
- A statement that the consumer may qualify for federal student loans;
- The interest rates available for each program available under Title IV of the Higher Education Act of 1965, and whether the rate is variable or fixed; and
- A statement that the consumer may obtain additional information about student federal financial assistance from his school or U.S. Department of Education, including an appropriate website.
- A statement that the consumer may accept the terms of the loan until the acceptance period under § 1026.48(c)(1) (opens new window) has expired. The statement must include:
- The specific date the acceptance period expires, based on the date the consumer receives the disclosures required under this subsection for the loan;
- The method or methods by which the consumer may communicate the acceptance (written, oral, or by electronic means; and
- A statement that except for changes to the interest rate and other changes permitted by law, the credit union may not change the rates and the terms of the loan during the 30-day acceptance period.
- Interest rate, information, including:
- After the consumer has accepted the loan according to § 1026.48(c)(1) (opens new window), final disclosures must disclose the information required under § 1026.47(c) (opens new window) and the following:
- Interest rate, including:
- Interest rate applicable to the loan;
- Whether the interest rate is variable or fixed; and
- If the interest rate may increase after consummation, any limitations on the rate adjustments, or lack thereof.
- Fees and default or late payment costs, including:
- An itemization of the fees or range of fees required to obtain the loan; and
- Any fees, changes to the interest rate, and adjustments to principal based on the consumer’s defaults or late payments.
- Repayment terms, including:
- Principal amount;
- Term of the loan;
- A description of the payment deferral option the consumer chooses, if applicable, and any other payment deferral options that the consumer may elect at a later time;
- Any payments required while the student is enrolled at the educational institution, based on the deferral option the consumer chooses;
- Amount of any unpaid interest that will accrue while the student is enrolled in school, based upon the deferral option the consumer chooses;
- A statement that if the consumer files for bankruptcy, that the consumer may still be required to pay back the loan;
- An estimate of the total amount of payments calculated based upon:
- The interest rate applicable to the loan (compliance with § 1026.18(h) (opens new window) constitutes compliance with this requirement);
- The maximum possible rate of interest for the loan, or, if a maximum rate cannot be determined, a rate of 25 percent;
- If a maximum rate cannot be determined, the estimate of the total amount for repayment must include a statement that there is no maximum rate and that the total amount for repayment disclosed is an estimate.
- The maximum monthly payment based on the maximum rate of interest for the loan, or, if a maximum rate of interest cannot be determined, a rated of 25 percent. If a maximum cannot be determined, a statement that there is no maximum rate and that the monthly payment amount disclosed is an estimate and will be higher if the applicable interest rate increases.
- In a text more conspicuous than any other required disclosure, except for the finance charge, the interest rate, and the credit union’s identity of the following disclosures:
- A statement that the consumer has the right to cancel the loan, without penalty, at any time before the midnight of the third business day after the date the consumer receives the final loan disclosures. The statement must include the specific date the cancellation period expires and that the consumer may cancel by that date; (§ 1026.47(c)(4)(i) (opens new window))
- A statement that the loan proceeds will not be disbursed until the cancellation period expires; (§ 1026.47(c)(4)(ii) (opens new window))
- The method or methods the consumer may use to cancel; and (§ 1026.47(c)(4)(ii) (opens new window))
- If the credit union permits cancellation by mail, the statement specifying that the consumer’s mailed request will be deemed timely if placed in the mail no later than the cancellation date specified on the disclosures. (§ 1026.47(c)(4)(ii) (opens new window))
- Interest rate, including:
Open-End Credit Disclosure Forms
- Determine that the credit union made the disclosures clearly and conspicuously. (§ 1026.5(a) (opens new window))
- Determine that the credit union made the applicable disclosures in writing, in a form that the consumer may keep, except: (§ 1026.5(a)(1)(ii) (opens new window))
- The following disclosures need not be written:
- Charges that are imposed as part of an open-end (not home-secured) plan that are not required to be disclosed; (§ 1026.6(b)(3) (opens new window))
- Reduction of the credit limit; (§ 1026.9(c)(2)(vi) (opens new window))
- When a finance charge is imposed at the time of the transaction; (§ 1026.9(d) (opens new window)) and
- Opt-in notice for over-the-limit transactions on credit card accounts. (§ 1026.56(b)(1)(i) (opens new window))
- The following disclosures need not be in a retainable form:
- Disclosures that need not be written as stated above (section 2a); (§ 1026.5(a)(1)(ii)(A) (opens new window))
- Alternative summary billing-rights statement; (§ 1026.9(a)(2) (opens new window))
- Credit and charge card renewal disclosures; (§ 1026.9(e) (opens new window))
- Payment requirements, except as provided in § 1026.7(b)(13) (opens new window); (§ 1026.10(b) (opens new window))
- Home-equity disclosures; (§ 1026.40(d) (opens new window)) and
- Credit and charge card applications and solicitations. (§ 1026.60 (opens new window))
- The following disclosures may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 (opens new window) et seq.):
- Credit and charge card applications and solicitations; (§ 1026.60 (opens new window))
- Requirements for home equity plans; and (§ 1026.40 (opens new window))
- Advertising. (§ 1026.16 (opens new window))
- The following disclosures need not be written:
- Determine that the terminology the credit union uses in providing the disclosures required by open end credit general disclosure requirements (§ 1026.5 (opens new window)) is consistent. (§ 1026.5(a)(2)(i) (opens new window))
- Determine that, for home-equity plans, the terms finance charge and annual percentage rate (APR), when required to be disclosed with a corresponding amount or percentage rate, are more conspicuous than any other required disclosure. The terms need not be more conspicuous when used for periodic statement disclosures and for advertisements. (§ 1026.5(a)(2)(ii) (opens new window))
- Determine that, if disclosures must be presented in a tabular format under § 1026.5(a)(3) (opens new window), that the term penalty APR must be used, as applicable. (§ 1026.5(a)(2)( (opens new window)iii))
NOTE: The term penalty APR need not be used in reference to the annual percentage rate that applies with the loss of a promotional rate, assuming the annual percentage rate that applies is no greater than the annual percentage rate that would have applied at the end of the promotional period; or if the annual percentage rate that applies with the loss of a promotional rate is a variable rate, the annual percentage rate is calculated using the same index and margin as would have been used to calculate the annual percentage rate that would have applied at the end of the promotional period. If credit insurance or debt cancellation or debt suspension coverage is required as part of the plan, the term required must be used and the program must be identified by its name. If an annual percentage rate must be presented in a tabular format, the term fixed, or a similar term, may not be used to describe such rate unless the credit union also specifies a time period that the rate will be fixed and the rate will not increase during that period, or if the credit union does not provide a time period, the rate will not increase while the plan is open.
Credit and Charge Card Application and Solicitation Disclosures
- Determine that the credit card solicitation or application disclosures were made clearly and conspicuously on or with a solicitation or an application. (§ 1026.60 (opens new window))
- For the disclosures in §§ 1026.60(b)(1)-(5) (opens new window) (except for §§ 1026.60(b)(1)(iv)(B) (opens new window)) and 1026.60(b)(7)-(15) (opens new window), determine that the credit union made the disclosures required for §§ 1026.60(c), 1026.60(d)(2), 1026.60 (e)(1) and 1026.60 (f) (opens new window) in the form of a table with headings, content, and format similar to the applicable tables found in G-10 in Appendix G (opens new window). (§ 1026.60(a)(2)(i) (opens new window))
- Determine that the table required by § 1026.60(a)(2)(i) (opens new window) contains only the information required or permitted by that section. If the credit union provides other information, determine that the information appears outside the table. (§ 1026.60(a)(2)(ii) (opens new window))
- Determine that the disclosures required by §§ 1026.60(b)(1)(iv)(B)-(C (opens new window)), and 1026.60(b)(6) (opens new window) are placed directly beneath the table required by § 1026.60(a)(2)(i) (opens new window). (§ 1026.60(a)(2)(iii) (opens new window))
- When a tabular format is required, determine that the following disclosures are disclosed in bold text: (§ 1026.60(a)(2)(iv)) (opens new window)
- Annual percentage rate required to be disclosed under § 1026.60(b)(1) (opens new window);
- Introductory rate required to be disclosed under § 1026.60(b)(1)(ii) (opens new window);
- Rate that will apply after a premium initial rate expires required to be disclosed under § 1026.60(b)(1)(iii) (opens new window); and
- Fee or percentage amounts or maximum limits on fee amounts required to be disclosed under §§ 1026.60(b)(2) (opens new window), 1026.60(b)(4) (opens new window), 1026.60(b)(8)-(13) (opens new window).
NOTE: Bold text must not be used for the amount of any periodic fee disclosed under § 1026.60(b)(2) (opens new window) that is not an annualized amount, and other APRs or fee amounts disclosed in the table. (§ 1026.60(a)(2)(iv) (opens new window))
- Determine that the card issuer discloses, on or with an solicitation or application: (§ 1026.60(b) (opens new window))
- Annual percentage rate. Each periodic rate that may be used to compute the finance charge on an outstanding balance for purchases, a cash advance, or a balance transfer, expressed as an annual percentage rate. When more than one rate applies for a category of transactions, determine that the credit union also discloses the range of balances to which each rate is applicable. (§ 1026.60(b)(1) (opens new window))
NOTE: The APR for purchases disclosed under § 1026.60(b)(1) (opens new window) must be in at least 16-point type, except for the following: Oral disclosures of the annual percentage rate for purchases; or a penalty rate that may apply upon the occurrence of one or more specific events.- Variable rate information. If a rate is a variable rate, determine that the card issuer discloses the fact that the rate may vary and how the rate is determined. Determine that the card issuer identifies the type of index or formula that it uses in setting the rate. Determine that the value of the index and the amount of the margin that the issuer uses to calculate the variable rate are not disclosed in the table. Determine further that any applicable limitations on rate increases are not included in the table. (§ 1026.60(b)(1)(i) (opens new window))
- Discounted initial rate. If the initial rate is an introductory rate, determine that the card issuer discloses in the table the introductory rate, the time period during which the introductory rate will remain in effect, and the term “introductory” or “intro” in immediate proximity to the introductory rate. Determine further that the card issuer discloses either the variable or fixed rate that would otherwise apply to the account. (§ 1026.60(b)(1)(ii) (opens new window))
- Premium initial rate. If the initial rate is temporary and is higher than the rate that will apply after the temporary rate expires, determine that the card issuer discloses the premium initial rate and the time period when the premium initial rate will remain in effect. Determine that the premium initial rate for purchases is in at least 16-point type. Determine that the issuer discloses in the table the rate that will apply after the premium initial rate expires, in at least 16-point type. (§ 1026.60(b)(1)(iii) (opens new window))
- Penalty rates. Except as for provided introductory rate or employee preferential rate requirements (discussed below), if a rate may increase as a penalty for one or more events specified in the account agreement, such as a late payment or an extension of credit that exceeds the credit limit, determine that the card issuer discloses the increased rate that may apply, a brief description of the event or events that may result in the increased rate, and a brief description of how long the increased rate will remain in effect. (§ 1026.60(b)(1)(iv)(A) (opens new window))
- Introductory rate. If the issuer discloses an introductory rate in the table or in any written or electronic promotional materials accompanying applications or solicitations (and subject to paragraph (c) or (e) of section 1026.60), determine that the issuer briefly discloses, directly beneath the table, the circumstances, if any, under which the introductory rate may be revoked, and the type of rate that will apply after the introductory rate is revoked. (§ 1026.60(b)(1)(iv)(B) (opens new window))
- Employee preferential rates. If the issuer discloses in the table a preferential APR for which only employees of the card issuer, employees of a third party, or other individuals with similar affiliations with the card issuer or third party are eligible, determine that the issuer briefly discloses directly beneath the table the circumstances under which such preferential rate may be revoked and the rate that will apply after the preferential rate is revoked. (§ 1026.60(b)(1)(iv)(C) (opens new window))
- Rates that depend on consumer’s creditworthiness. If a rate cannot be determined at the time disclosures are given because the rate depends, at least in part, on a later determination of the consumer’s creditworthiness, determine that the card issuer discloses the specific rates or the range of rates that could apply and a statement that the rate for which the consumer may qualify at account opening will depend on the consumer’s creditworthiness, and other factors if applicable. (§ 1026.60(b)(1)(v) (opens new window))
NOTE: If the rate that depends, at least in part, on a later determination of the consumer’s creditworthiness is a penalty rate, as described in § 1026.60(b)(1)(iv), (opens new window) the card issuer at its option may disclose the highest rate that could apply, instead of disclosing the specific rates or the range of rates that could apply. (§ 1026.60(b)(1)(v) (opens new window)) - APRs that vary by state. Determine that the card issuer does not list annual percentage rates for multiple states in the table. Note, however, that issuers imposing annual percentage rates that vary by state may, at the issuer’s option, disclose in the table: the specific annual percentage rate applicable to the consumer’s account; or the range of the annual percentage rates, if the disclosure includes a statement that the annual percentage rate varies by state and refers the consumer to a disclosure provided with the table where the annual percentage rate applicable to the consumer’s account is disclosed. (§ 1026.60(b)(1)(vi) (opens new window))
- Fees for issuance or availability. Determine that the card issuer discloses any annual or other periodic fee, expressed as an annualized amount, or any other fee that may be imposed for the issuance or availability of a credit or charge card, including any fee based on account activity or inactivity. (§ 1026.60(b)(2) (opens new window))
- Fixed finance charge; minimum interest charge. Determine that the credit union discloses any fixed finance charge that it could impose during a billing cycle, as well as a brief description of that charge. Determine that the credit union discloses any minimum interest charge if it exceeds $1.00 that it could impose during a billing cycle, and a brief description of the charge. (§ 1026.60(b)(3) (opens new window))
- Transaction charge. Determine that the credit union discloses any transaction charge imposed for the use of the card for purchases. (§ 1026.60(b)(4) (opens new window))
- Grace period. Determine that the issuer discloses the date by which or the period within which any credit extended for purchases may be repaid without incurring a finance charge due to a periodic interest rate and any conditions on the availability of the grace period. If there is no grace period, determine that this fact is disclosed. In disclosing in the tabular format a grace period that applies to all types of purchases, determine that the issuer uses the phrase “How to Avoid Paying Interest on Purchases” as the heading for the row describing the grace period. If a grace period is not offered on all types of purchases, in disclosing this fact in the tabular format, determine that the issuer uses the phrase “Paying Interest” as the heading for the row describing this fact.
NOTE: If the length of the grace period varies, the card issuer may disclose the range of days, the minimum number of days, or the average number of days in the grace period, if the disclosure is identified as a range, minimum, or average. (§ 1026.60(b)(5) (opens new window)) - Balance computation method. Determine that the credit union disclosed the name of the balance computation method that it uses to determine the balance on which the finance charge is computed, or an explanation of the method used if it is not listed. In determining which balance computation method to disclose, the credit union must have assumed that the credit extended will not be repaid within any grace period. (§ 1026.60(b)(6) (opens new window))
NOTE: Disclosures required by § 1026.60(b)(6) (opens new window) must be placed directly beneath the table. - Statement on charge card payments. Determine that the credit union discloses a statement that charges the consumer incurs by using the charge card are due when then consumer receives the periodic statement. (§ 1026.60(b)(7) (opens new window))
- Cash advance fee. Determine that the credit union disclosed any fee it imposed for an extension of credit in the form of cash or its equivalent. (§ 1026.60(b)(8) (opens new window))
- Late payment fee. Determine that the credit union disclosed any fee it imposed for a late payment. (§ 1026.60(b)(9) (opens new window))
- Over-the-limit fee. Determine that the credit union disclosed any fee it imposed for exceeding the credit limit. (§ 1026.60(b)(10) (opens new window))
- Balance transfer fee. Determine that the credit union disclosed any fee it imposed to transfer a balance. (§ 1026.60(b)(11) (opens new window))
- Returned payment fee. Determine that the credit union disclosed any fee it imposed for a returned payment. (§ 1026.60(b)(12) (opens new window))
- Required insurance, debt cancellation, or debt suspension coverage. Determine that the fee imposed for required insurance, debt cancellation or suspension coverage is disclosed if the insurance, debt cancellation or coverage is required as part of the plan. (§ 1026.60(b)(13) (opens new window))
- Available credit. Determine whether total of required fees for the issuance or availability of credit and/or security deposit debited to the account at account opening equal or exceed 15 percent of minimum credit limit for the account. If so, determine that the credit union disclosed, as applicable, the available credit remaining after the fees and/or security deposit are debited to the account. (§ 1026.60(b)(14 (opens new window)))
- Website reference. For issuers of credit cards that are not charge cards, determine that the credit union disclosed a reference to the website established by the Consumer Financial Protection Bureau (CFPB) and a statement that the consumers may obtain on the website information about shopping for and using credit cards. (§ 1026.60(b)(15 (opens new window)))
- Annual percentage rate. Each periodic rate that may be used to compute the finance charge on an outstanding balance for purchases, a cash advance, or a balance transfer, expressed as an annual percentage rate. When more than one rate applies for a category of transactions, determine that the credit union also discloses the range of balances to which each rate is applicable. (§ 1026.60(b)(1) (opens new window))
Requirements for Home Equity Plans
- Determine that the following home equity disclosures were made clearly and conspicuously, at the time of application. (§ 1026.40) (opens new window)
- Home equity brochure
- Statement that the consumer must retain a copy of the disclosure
- Statement of the time the specific terms are available
- Statement that terms are subject to change before the plan opens
- Statement that the consumer may receive a full refund of all fees
- Statement that the consumer’s dwelling secures the credit
- Statement that the consumer could lose the dwelling
- Credit union’s right to change, freeze, or terminate the account
- Statement that information about conditions for adverse action are available upon request
- Payment terms including the length of the draw and repayment periods, how the minimum payment is determined, the timing of payments, and an example based on $10,000 and a recent APR
- A recent APR imposed under the plan and a statement that the rate does not include costs other than interest (fixed rate plans only)
- Itemization of all fees paid to the credit union
- Estimate of any fees payable to third parties to open the account and a statement that the consumer may receive a good faith itemization of third-party fees
- Statement regarding negative amortization, as applicable
- Transaction requirements
- Statement that the consumer must consult a tax advisor regarding the deductibility of interest and charges under the plan
- For variable rate home equity plans, disclose the following:
- That the APR, payment, or term may change;
- The APR excludes costs other than interest;
- Identify the index and its source;
- How the APR will be determined;
- Statement that the consumer must request information on the current index value, margin, discount, premium, or APR;
- Statement that the initial rate is discounted and the duration of the discount, if applicable;
- Frequency of APR changes;
- Rules relating to changes in the index, APR, and payment amount;
- Lifetime rate cap and any annual caps, or a statement that there is no annual limitation;
- The minimum payment requirement, using the maximum APR, and when the credit union may impose the maximum APR;
- A historical example, based on a $10,000 balance, reflecting all significant plan terms
- Statement that the credit union will provide rate information on or with each periodic statement.
- For home-equity plans subject to § 1026.40 (opens new window), determine that the terms finance charge and annual percentage rate, when required to be disclosed with a corresponding amount or percentage rate, are more conspicuous than any other required disclosure.
NOTE: The terms need not be more conspicuous when used for periodic statement disclosures under § 1026.7(a)(4) (opens new window) and for advertisements under § 1026.16 (opens new window). (§ 1026.5(a)(2)(ii) (opens new window))
Account Opening Initial Disclosures
- The following requirements apply only to home-equity plans subject to the requirements of § 1026.40 (opens new window). Determine that the credit union discloses, as applicable (§ 1026.6(a)) (opens new window):
- Finance charge. The circumstances under which the credit union will impose a finance charge and an explanation of how it will be determined, including: a statement of when finance charges begin to accrue, and an explanation of whether or not any time period exists within which any credit extended may be repaid without incurring a finance charge; a disclosure of each periodic rate that the credit union may use to compute the finance charge, the range of balances to which it is applicable, and the corresponding annual percentage rate; an explanation of the method the credit union may use to determine the balance on which the finance charge may be computed; and, an explanation of how the credit union will determine the amount of any finance charge, including a description of how the credit union will determine any finance charge other than the periodic rate. (§ 1026.6(a)(1) (opens new window))
If a credit union offers a variable-rate plan, determine that the credit union discloses: the circumstances under which the rate(s) may increase; any limitations on the increase; and the effect(s) of an increase. When different periodic rates apply to different types of transactions, determine that the types of transactions to which the periodic rates must apply must also be disclosed. (§ 1026.6(a)(1) (opens new window)) - Other charges. The amount of any charge other than a finance charge that the credit union may impose as part of the plan, or an explanation of how the charge will be determined. (§ 1026.6(a)(2) (opens new window))
- Home-equity plan information. The following disclosures, as applicable (§ 1026.6(a)(3) (opens new window)):
- A statement of the conditions under which the credit union may take certain action, as described in § 1026.40(d)(4)(i), (opens new window) such as terminating the plan or changing the terms;
- The payment information described in §§ 1026.40(d)(5)(i) and (ii) (opens new window) for both the draw period and any repayment period;
- A statement that negative amortization may occur as described in § 1026.40(d)(9) (opens new window);
- A statement of any transaction requirements as described in § 1026.40(d)(10) (opens new window);
- A statement regarding the tax implications as described in § 1026.40(d)(11) (opens new window);
- A statement that the annual percentage rate imposed under the plan does not include costs other than interest as described in §§ 1026.40(d)(6) (opens new window) and 1026.40(d)(12)(ii) (opens new window); and
- The variable-rate disclosures described in §§ 1026.40(d)(12)(viii) (opens new window), 1026.40(d)(12)(x) (opens new window), 1026.40(d)(12)(xi) (opens new window), and 1026.40(d)(12)(xii) (opens new window), as well as the disclosure described in § 1026.40(d)(5)(iii), (opens new window) unless the disclosures the credit union provided with the application were in a form the consumer could keep and included a representative payment example for the category of payment option chosen by the consumer.
- Security interests. The fact that the credit union has or will acquire a security interest in the property purchased under the plan, or in other property identified by item or type. (§ 1026.6(a)(4) (opens new window))
- Statement of billing rights. A statement that outlines the consumer’s rights and the credit union’s responsibilities under §§ 1026.12(c) (opens new window) and 1026.13 (opens new window) and that is similar to the statement found in Model Form G–3 or, at the credit union’s option, G–3(A), in Appendix G (opens new window) to this part. (§ 1026.6(a)(5) (opens new window))
- Finance charge. The circumstances under which the credit union will impose a finance charge and an explanation of how it will be determined, including: a statement of when finance charges begin to accrue, and an explanation of whether or not any time period exists within which any credit extended may be repaid without incurring a finance charge; a disclosure of each periodic rate that the credit union may use to compute the finance charge, the range of balances to which it is applicable, and the corresponding annual percentage rate; an explanation of the method the credit union may use to determine the balance on which the finance charge may be computed; and, an explanation of how the credit union will determine the amount of any finance charge, including a description of how the credit union will determine any finance charge other than the periodic rate. (§ 1026.6(a)(1) (opens new window))
- For open-end (not home-secured) plans determine that the credit union provided the account- opening disclosures specified in §§ 1026.6(b)(2)(i)-(v) (opens new window) (except for § 1026.6 (b)(2)(i)(D)(2) (opens new window)) and §§ 1026.6 (b)(2)(vii)-(xiv) (opens new window) in the form of a table with the headings, content, and format substantially similar to any of the applicable tables in G–17 in Appendix G (opens new window). (§ 1026.6(b)(1) (opens new window))
- For open-end (not home-secured) plans, determine that the credit union discloses the following disclosures in bold text (§ 1026.6(b)(1)(i) (opens new window)):
- Any APR required to be disclosed under § 1026.6(b)(2)(i); (opens new window)
- Any introductory rate permitted to be disclosed under § 1026.6(b)(2)(i)(B) (opens new window) or required to be disclosed under § 1026.6(b)(2)(i)(F) (opens new window);
- Any rate that will apply after a premium initial rate expires permitted to be disclosed under § 1026.6(b)(2)(i)(C) (opens new window) or required to be disclosed pursuant to § 1026.6(b)(2)(i)(F) (opens new window); and
- Any fee or percentage amounts or maximum limits on fee amounts disclosed under §§ 1026.6(b)(2)(ii) (opens new window), 1026.6(b)(2)(iv) (opens new window), 1026.6(b)(2)(vii)-(xii). (opens new window)
- Determine that bold text is not used for: The amount of any periodic fee disclosed under § 1026.6(b)(2) (opens new window) that is not an annualized amount; and other annual percentage rates or fee amounts disclosed in the table. (§ 1026.6(b)(1)(i) (opens new window))
- Determine that only the information required or permitted by §§ 1026.6(b)(2)(i)-(v) (opens new window) (except for § 1026.6(b)(2)(i)(D)(2) (opens new window)) and 1026.6(b)(2)(vii)-(xiv) (opens new window) are provided in the table. Disclosures required by §§ 1026.6 (b)(2)(i)(D)(2) (opens new window), 1026.6(b)(2)(i)(D)(3) (opens new window), 1026.6(b)(2)(vi) (opens new window) and 1026.6(b)(2)(xv) (opens new window) must be placed directly below the table required by § 1026.6(b)(1). (opens new window) (§ 1026.6(b)(1)(ii)) (opens new window)
NOTE: Disclosures required by §§ 1026.6(b)(3)-(5) (opens new window) that are not otherwise required to be in the table and other information may be presented with the account agreement or account-opening disclosure statement, if such information appears outside the required table. - For credit unions that impose fees referred to in § 1026.6(b)(2)(vii)-(xi) (opens new window) that vary by state and that provide the disclosures required by § 1026.6(b) (opens new window) in person at the time the open-end (not home-secured) plan is established for financing the purchase of goods or services determine that the credit union discloses in the account-opening table either:
- The specific fee applicable to the consumer’s account, or
- The range of fees, a statement that the amount of the fee varies by state, and a reference to the account agreement or other disclosure provided with the account- opening table where the amount of the fee applicable to the consumer’s account is disclosed. (§ 1026.6(b)(1)(iii) (opens new window))
NOTE: A credit union is not permitted to list fees for multiple states in the account- opening summary table (§ 1026.6(b)(1)(iii) (opens new window)). - If the amount of any fee required to be disclosed under this section is determined on the basis of a percentage of another amount, the percentage used and the identification of the amount against which the percentage is applied may be disclosed instead of the amount of the fee. (§ 1026.6(b)(1)(iv) (opens new window))
- The following requirements apply to open-end (not home-secured). Determine that the credit union discloses in the appropriate format, as applicable:
- Annual percentage rate. Each periodic rate that the credit union may use to compute the finance charge on an outstanding balance for purchases, a cash advance, or a balance transfer, expressed as an APR. When more than one rate applies for a category of transactions, determine that the credit union discloses the range of balances to which each rate is applicable. Ensure that the APR for purchases disclosed under this paragraph is in at least 16-point type, except for a penalty rate that may apply upon the occurrence of one or more specific events. (§ 1026.6(b)(2)(i) (opens new window))
- Variable rate information. If the rate is a variable rate, determine that the credit union also disclosed the fact that the rate may vary and how the rate is determined (i.e., identify the type of index or formula used in setting the rate). (§ 1026.6(b)(2)(i)(A) (opens new window))
- Discounted initial rate. If the initial rate is an introductory rate, determine that the credit union disclosed that the rate would otherwise apply to the account. Where the rate is not tied to an index or formula, determine that the credit union disclosed the rate that will apply after the introductory rate expires. For a variable rate account, determine that the credit union disclosed a rate based on the applicable index or formula in accordance with the accuracy requirements. (§ 1026.6(b)(2)(i)(B) (opens new window))
- Premium initial rate. If the initial rate is temporary and is higher than the rate that will apply after the temporary rate expires, determine that the credit union disclosed the premium initial rate. Determine that the premium rate for purchases is in at least 16- point type. (§ 1026.6(b)(2)(i)(C) (opens new window))
- Penalty rates. Except for introductory rates and employee preferential rates (discussed below), if the rate is a penalty rate, determine that the credit union disclosed as part of the APR disclosure the increased rate that may apply, a brief description of the event or events that may result in the increased rate, and a brief description of how long the increased rate will remain in effect. (§ 1026.6(b)(2)(i)(D)(1) (opens new window))
- Introductory rates. If the credit union discloses in the table an introductory rate, as that term is defined in § 1026.16(g)(2)(ii) (opens new window), determine that the credit union briefly disclosed directly beneath the table the circumstances under which the introductory rate may be revoked, and the rate that will apply after the introductory rate is revoked. (§ 1026.6(b)(2)(i)(D)(2) (opens new window))
- Employee preferential rates. If the credit union discloses in the table a preferential APR for which only employees of the credit union, employees of a third party, or other individuals with similar affiliations with the credit union or third party are eligible, determine that the credit union briefly disclosed directly beneath the table the circumstances under which the preferential rate may be revoked, and the rate that will apply after the preferential rate is revoked. (§ 1026.6(b)(2)(i)(D)(3) (opens new window))
- Point of sale where APRs vary by state or based on creditworthiness. If the credit union imposes an APR that varies by state or based on the consumer’s creditworthiness and provides required disclosures in person at the time the open-end (not home-secured) plan is established for financing the purchase of goods or services, determine that the credit union discloses either: (§ 1026.6(b)(2)(i)(E) (opens new window))
- The specific APR applicable to the consumer’s account, or
- The range of the APRs, if the disclosure includes a statement that the APR varies by state or will be determined based on the consumer’s creditworthiness and refers the consumer to the account agreement or other disclosure the credit union provided with the account-opening table where the credit union disclosures the AP applicable to the consumer’s account. Determine that the credit union does not list APRs for multiple states in the account opening table.
- Credit card accounts under an open-end (not home-secured) consumer credit plan. Determine that the issuer discloses in the table: (§ 1026.6(b)(2)(i)(F) (opens new window))
- Any introductory rate, and
- Any rate that would apply upon expiration of a premium initial rate.
- Fees for issuance or availability. Determine that the credit union disclosed any annual or periodic fee that it may impose for the issuance or availability of an open-end plan (including any fee based on account activity or inactivity); how frequently it will impose the fee; and the annualized amount of the fee. (§ 1026.6(b)(2)(ii) (opens new window))
- Fixed finance charge and minimum interest charge. Determine that the credit union disclosed any fixed finance charge and any minimum interest charge if it exceeds $1.00 that the credit union can impose during a billing cycle, and a brief description of the charge. (§ 1026.6(b)(2)(iii) (opens new window))
- Non-periodic Fee. Determine that the credit union disclosed any non-periodic fee that relates to opening the plan. A credit union must disclose that the fee is a one-time fee. (§ 1026.6(b)(2)(ii)(B) (opens new window))
- Transaction charges. Determine that the credit union discloses any transaction charge the credit union imposes for use of the open-end plan for purchases. (§ 1026.6(b)(2)(iv) (opens new window))
- Grace period. The date by which or the period within which any credit extended may be repaid without incurring a finance charge due to a periodic interest rate and any conditions on the availability of the grace period. If the credit union does not provide a grace period, the credit union must disclose that fact. If the length of the grace period varies, the credit union may disclose the range of days, the minimum number of days, or the average number of the days in the grace period, if the disclosure is identified as a range, minimum, or average. In disclosing in the tabular format a grace period that applies to all features on the account, the credit union must use the phrase “How to Avoid Paying Interest” as the heading for the row describing the grace period. If a grace period is not offered on all features of the account, in disclosing this fact in the tabular format, the credit union must use the phrase “Paying Interest” as the heading for the row describing this fact. (§ 1026.6(b)(2)(v) (opens new window))
- Balance computation method. Determine that the credit union disclosed in the account opening disclosures the name of the balance computation method that is used to determine the balance on which the finance charge is computed for each feature, or an explanation of the method it used if it is not listed, along with a statement that an explanation of the methods required by section 1026.6(b)(4)(i)(D) (opens new window). In determining which balance computation method to disclose, the credit union must have assumed that the credit extended will not be repaid within any grace period. (§ 1026.6(b)(2)(vi) (opens new window))
- Cash advance fee. Determine that the credit union disclosed any fee it imposed for an extension of credit in the form of cash or its equivalent. (§ 1026.6(b)(2)(vii) (opens new window))
- Late payment fee. Determine that the credit union disclosed any fee it imposed for a late payment. (§ 1026.6(b)(2)(viii) (opens new window))
- Over-the-limit fee. Determine that the credit union disclosed any fee it imposed for exceeding the credit limit. (§ 1026.6(b)(2)(ix) (opens new window))
- Balance transfer fee. Determine that the credit union disclosed any fee it imposed to transfer a balance. (§ 1026.6(b)(2)(x) (opens new window))
- Returned payment fee. Determine that the credit union disclosed any fee it imposed for a returned payment. (§ 1026.6(b)(2)(xi)) (opens new window)
- Required insurance, debt cancellation, or debt suspension coverage. Determine that the fee the credit union imposed for required insurance, debt cancellation or suspension coverage is disclosed if the insurance, debt cancellation or coverage is required as part of the plan. Credit unions must also cross reference additional information about the insurance or coverage as applicable. (§ 1026.6(b)(2)(xii) (opens new window))
- Available credit. Determine whether total of required fees for the issuance or availability of credit and/or security deposit debited to the account at account opening equal or exceed 15 percent of the credit limit for the account. If so, determine that the credit union disclosed the available credit remaining after the fees and/or security deposit are debited to the account. (§ 1026.6(b)(2)(xiii) (opens new window))
- Website reference. For issuers of credit cards that are not charge cards, determine that the credit union disclosed a reference to the website established by the CFPB and a statement that the consumers may obtain information about shopping for and using credit cards on the website. (§ 1026.6(b)(2)(xiv) (opens new window))
- Billing error rights reference. Determine that the credit disclosed a statement that information about consumers’ right to dispute transactions is included in the account- opening disclosures. (§ 1026.6(b)(2)(xv) (opens new window))
- Charges and finance charges. For charges the credit union imposes as part of open-end (not home- secured) plan, the circumstances under which the credit union may impose the charge, including the amount of the charge or explanation of how the credit union determines the charge. For finance charges, a statement of when finance charges begin to accrue, including an explanation of whether or not any time period exists within which any credit extended may be repaid without incurring a finance charge. If the credit union provides such a time period, a credit union may, at its option and without disclosure, impose no finance charge when it receives payment after the time period’s expiration. (§ 1026.6(b)(3)(i) (opens new window))
- Rates for open-end (not home-secured) plans. Determine that the credit union disclosed, as applicable, for each periodic rate that may be used to calculate interest: (§ 1026.6(b)(4)(i) (opens new window))
- The rate (expressed as a periodic rate and a corresponding APR),
- The range of balances to which the rate is applicable,
- The type of transaction to which the periodic rate applies, and
- An explanation of the method the credit union used to determine the balance to which the rate is applied.
- Variable-rate Accounts. For interest rate changes that are tied to increases in an index or formula (variable-rate accounts) determine that the following are specifically set forth in the account agreement: (§ 1026.6(b)(4)(ii) (opens new window))
- The fact that the annual percentage rate may increase;
- How the rate is determined, including the margin;
- The circumstances under which the rate may increase;
- The frequency with which the rate may increase;
- Any limitation on the amount the rate may change;
- The effect(s) of an increase; and
- Except as specified in § 1026.6(b)(4)(ii)(H), (opens new window) a rate is accurate if it is a rate as of a specified date and this rate was in effect within the last 30 days before the credit union provides the disclosures.
- Rate changes not due to index or formula. For interest rate changes that are specifically set forth in the account agreement and not tied to increases in an index or formula, determine that the credit union discloses: (§ 1026.6(b)(4)(iii) (opens new window))
- The initial rate (expressed as a periodic rate and a corresponding APR);
- How long the initial rate will remain in effect and the specific events that cause the initial rate to change;
- The rate (expressed as a periodic rate and a corresponding APR) that will apply when the initial rate is no longer in effect and any limitation on the time period the new rate will remain in effect;
- The balances to which the new rate will apply; and
- The balances to which the current rate at the time of the change will apply.
- Voluntary credit insurance, debt cancellation, or debt suspension. Determine that the credit union disclosed the applicable disclosures if the credit union offers optional credit insurance, or debt cancellation or debt suspension coverage. (§ 1026.6(b)(5)(i) (opens new window))
- Security interests. Determine that the credit union disclosed the fact that the credit union has or will acquire a security interest in the property purchased under the plan, or in other property identified by item or type. (§ 1026.6(b)(5)(ii) (opens new window))
- Statement of billing rights. Determine that the credit union disclosed a statement that outlines the consumer’s rights and the credit union’s responsibilities. (§ 1026.6(b)(5)(iii) (opens new window))
Periodic Statement Disclosures
- Rules affecting home-equity plans. For home-equity plans subject to the requirements of § 1026.40 (opens new window), determine that the credit union disclosed on the periodic statement all items below. (§ 1026.7(a) (opens new window))
NOTE: The requirements of § 1026.7(a) (opens new window) apply only to home-equity plans subject to the requirements of § 1026.40 (opens new window). Alternatively, a credit union subject to the rules affecting home-equity plans may, at its option, comply with any of the requirements of § 1026.7(b) (opens new window); however, any credit union that chooses not to provide a disclosure under § 1026.7(a)(7) (opens new window) must comply with § 1026.7(b)(6) (opens new window).- Previous balance. The account balance outstanding at the beginning of the billing cycle. (§ 1026.7(a)(1) (opens new window))
- Identification of transactions. An identification of each credit transaction in accordance with § 1026.8. (opens new window) (§ 1026.7(a)(2) (opens new window))
- Credits. Any credit to the account during the billing cycle, including the amount and the date of crediting. The date need not be provided if a delay in accounting does not result in any finance or other charge. (§ 1026.7(a)(3) (opens new window))
- Periodic rates. Each periodic rate that the credit union may use to compute the finance charge, the range of balances to which it is applicable, and the corresponding annual percentage rate. If different periodic rates apply to different types of transactions, the credit union must also disclose the types of transactions to which the periodic rates apply. For variable-rate plans, the fact that the periodic rate(s) may vary. (§ 1026.7(a)(4) (opens new window))
NOTE: If the credit union does not impose a finance charge when the outstanding balance is less than a certain amount, the credit union is not required to disclose that fact, or the balance below which it will not impose a finance charge.
NOTE: Further, an annual percentage rate that differs from the rate that would otherwise apply and is offered only for a promotional period need not be disclosed except in periods in which the offered rate is actually applied. - Balance on which finance charge computed. The amount of the balance to which a periodic rate was applied and an explanation of how that balance was determined. When a balance is determined without first deducting all credits and payments made during the billing cycle, the credit union must disclose the fact and the amount of the credits and payments must be disclosed. (§ 1026.7(a)(5) (opens new window))
- Amount of finance charge and other charges. (§ 1026.7(a)(6) (opens new window))
- Finance charges. The amount of any finance charge debited or added to the account during the billing cycle, using the term finance charge. Determine that the components of the finance charge are individually itemized and identified to show the amount(s) due to the application of any periodic rates and the amounts(s) of any other type of finance charge.
NOTE: If there is more than one periodic rate, the amount of the finance charge attributable to each rate need not be separately itemized and identified. (§ 1026.7(a)(6)(i) (opens new window)) - Other charges. The amounts, itemized and identified by type, of any charges other than finance charges debited to the account during the billing cycle. (§ 1026.7(a)(6)(ii) (opens new window))
NOTE: Credit unions may comply with § 1026.7(a)(6) (opens new window), or with § 1026.7(b)(6) (opens new window), at their option.
- Finance charges. The amount of any finance charge debited or added to the account during the billing cycle, using the term finance charge. Determine that the components of the finance charge are individually itemized and identified to show the amount(s) due to the application of any periodic rates and the amounts(s) of any other type of finance charge.
- Annual percentage rate. At a credit union’s option, when a finance charge is imposed during the billing cycle, the annual percentage rate(s) determined under § 1026.14(c) (opens new window) using the term annual percentage rate. (§ 1026.7(a)(7) (opens new window))
- Grace period. The date by which or the time period within which the new balance or any portion of the new balance must be paid to avoid additional finance charges. (§ 1026.7(a)(8) (opens new window))
- Address for notice of billing errors. The address to be used for notice of billing errors. Alternatively, the address may be provided on the billing rights statement permitted by § 1026.9(a)(2) (opens new window). (§ 1026.7(a)(9) (opens new window))
- Closing date of billing cycle; new balance. The closing date of the billing cycle and the account balance outstanding on that date. (§ 1026.7(a)(10) (opens new window))
- Rules affecting open-end (not home-secured) plans. The requirements of § 1026.7(b) (opens new window) apply only to plans other than home-equity plans subject to the requirements of § 1026.40 (opens new window). For applicable plans, determine that the credit union discloses on the periodic statement: (§ 1026.7(b) (opens new window))
- Previous balance. The account balance outstanding at the beginning of the billing cycle. (§ 1026.7(b)(1) (opens new window))
- Identification of transactions. An identification of each credit transaction in accordance with § 1026.8. (opens new window) (§ 1026.7(b)(2) (opens new window))
- Credits. Any credit to the account during the billing cycle, including the amount and the date of crediting. The date need not be provided if a delay in crediting does not result in any finance or other charge. (§ 1026.7(b)(3) (opens new window))
- Periodic rates. Each periodic rate that may be used to compute the interest charge expressed as an annual percentage rate and using the term Annual Percentage Rate, along with the range of balances to which it is applicable. (§ 1026.7(b)(4) (opens new window))
NOTE: If no interest charge is imposed when the outstanding balance is less than a certain amount, the credit union is not required to disclose that fact, or the balance below which no interest charge will be imposed. The types of transactions to which the periodic rates apply must also be disclosed. For variable-rate plans, the fact that the APR may vary; and a promotional rate, as that term is defined in §1026.16(g)(2)(i (opens new window)), is required to be disclosed only in periods in which the offered rate is actually applied. - Balance on which finance charge computed. The amount of the balance to which a periodic rate was applied and an explanation of how that balance was determined, using the term Balance Subject to Interest Rate. (§ 1026.7(b)(5) (opens new window))
- Charges imposed. The amounts of any charges imposed as part of a plan as stated in § 1026.6(b)(3) (opens new window), grouped together, in proximity to transactions identified under paragraph (b)(2) of this section, substantially similar to Sample G–18(A) in Appendix G (opens new window). (§ 1026.7(b)(6) (opens new window))
- Interest. Finance charges attributable to periodic interest rates, using the term Interest Charge, must be grouped together under the heading Interest Charged, itemized and totaled by type of transaction, and a total of finance charges attributable to periodic interest rates, using the term Total Interest, must be disclosed for the statement period and calendar year to date, using a format substantially similar to Sample G–18(A).
- Fees. Charges imposed as part of the plan other than charges attributable to periodic interest rates must be grouped together under the heading Fees, identified consistent with the feature or type, and itemized, and a total of charges, using the term Fees, must be disclosed for the statement period and calendar year to date, using a format substantially similar to Sample G–18(A).
- Change-in-terms and increased penalty rate summary for open-end (not home- secured) plans. Credit unions that provide a change-in-terms notice required by § 1026.9(c) (opens new window), or a rate increase notice required by § 1026.9(g) (opens new window), on or with the periodic statement, must disclose the information in §§ 1026.9(c)(2)(iv)(A) and (B) (opens new window) (if applicable) or 1026.9(g)(3)(i) (opens new window) on the periodic statement in accordance with the format requirements in §§ 1026.9(c)(2)(iv)(D), (opens new window) and 1026.9(g)(3)(ii) (opens new window). See Forms G–18(F) and G–18(G) in Appendix G (opens new window). (§ 1026.7(b)(7) (opens new window))
- Grace period. The date by which or the time period within which the new balance or any portion of the new balance must be paid to avoid additional finance charges. If such a time period is provided, a credit union may, at its option and without disclosure, impose no finance charge if payment is received after the time period’s expiration. (§ 1026.7(b)(8) (opens new window))
- Address for notice of billing errors. The address to be used for notice of billing errors. Alternatively, the address may be provided on the billing rights statement permitted by § 1026.9(a)(2). (opens new window) (§ 1026.7(b)(9) (opens new window))
- Closing date of billing cycle; new balance. The closing date of the billing cycle and the account balance outstanding on that date disclosed in accordance with § 1026.7(b)(13) (opens new window). (§ 1026.7(b)(10) (opens new window))
- Due date; late payment costs. With the exception of periodic statements the credit union provides solely for charge cards and periodic statements the credit union provides for a charged-off account where payment of the entire account balance is due immediately, determine that the credit union disclosed the following (in accordance with § 1026.7(b)(13) (opens new window)) for a credit card account under an open-end (not home-secured) consumer credit plan:
- The due date for a payment (the due date must be the same day of the month for each billing cycle); (§ 1026.7(b)(11)(i)(A) (opens new window))
- The amount of any late payment fee and any increased periodic rate(s) (expressed as an annual percentage rate(s)) that the credit union may impose on the account as a result of a late payment. If a range of late payment fees may be assessed, verify that the card issuer either states a range of fees or the highest fee and an indication that the fee imposed could be lower. (§ 1026.7(b)(11)(i)(B) (opens new window))
NOTE: If the rate may be increased for more than one feature or balance, the card issuer may state the range of rates or the highest rate that could apply and at the issuer’s option an indication that the rate imposed could be lower.
NOTE: Further, with the exception of the negative or no amortization disclosures required by § 1026.7(b)(12)(ii), (opens new window) the repayment disclosures in § 1026.7(b)(12) (opens new window) (as listed in step l below) are not required for:- Charge card accounts that require payment of outstanding balances in full at the end of each billing cycle;
- A billing cycle immediately following two consecutive billing cycles in which the consumer paid the entire balance in full, had a zero outstanding balance or had a credit balance; and
- A billing cycle where paying the minimum payment due for that billing cycle will pay the entire outstanding balance on the account for that billing cycle.
- Repayment Disclosures.
- In general. Given those exceptions above, determine that the card issuer disclosed on the periodic statement: (§ 1026.7(b)(12) (opens new window))
- The following statement with a bold heading: “Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance”; (§ 1026.7(b)(12)(i)(A)) (opens new window)
- The minimum payment repayment estimate, as described in Appendix M1 (opens new window).
NOTE: If the minimum payment repayment estimate is less than two years, determine that the card issuer disclosed the estimate in months. Otherwise, the estimate must be disclosed in years and rounded to the nearest whole year; (§ 1026.7(b)(12)(i)(B) (opens new window)) - The minimum payment total cost estimate, as described in Appendix M1 (opens new window), rounded to the nearest whole dollar or to the nearest cent, at the card issuer’s option; (§ 1026.7(b)(12)(i)(C) (opens new window))
- A statement that the minimum payment repayment estimate and the minimum payment total cost estimate are based on the current outstanding balance shown on the periodic statement. A statement that the minimum payment repayment estimate and the minimum payment total cost estimate are based on the assumption that only minimum payments are made and no other amounts are added to the balance; (§ 1026.7(b)(12)(i)(D) (opens new window))
- A toll-free telephone number where the consumer may obtain information about credit counseling services from the card issuer; and (§ 1026.7(b)(12)(i)(E) (opens new window))
- The disclosures required for section 1026.7(b)(12)(i)(F)(1) (opens new window):
- The estimated monthly payment for repayment in 36 months, as described in Appendix M1 (opens new window). The estimated monthly payment for repayment in 36 months must be rounded to the nearest whole dollar or to the nearest cent, at the card issuer’s option; (§ 1026.7(b)(12)(i)(F)(1)(i)) (opens new window)
- A statement that the card issuer estimates that the consumer will repay the outstanding balance shown on the periodic statement in three years if the consumer pays the estimated monthly payment for three years; (§ 1026.7(b)(12)(i)(F)(1)(ii) (opens new window))
- The total cost estimate for repayment in 36 months, as described in Appendix M1 (opens new window). The total cost estimate for repayment in 36 months must be rounded to the nearest whole dollar or to the nearest cent, at the card issuer’s option; and (§ 1026.7(b)(12)(i)(F)(1)(iii) (opens new window))
- The savings estimate for repayment in 36 months, as described in Appendix M1 (opens new window). The savings estimate for repayment in 36 months must be rounded to the nearest whole dollar or to the nearest cent, at the card issuer’s option. (§ 1026.7(b)(12)(i)(F)(1)(iv) (opens new window))
NOTE: The disclosures (a through d above) required for § 1026.7(b)(12)(i)(F)(1) (opens new window) do not apply to a periodic statement in any of the following circumstances:- The minimum payment repayment estimate that is disclosed on the periodic statement under § 1026.7(b)(12)(i)(B) (opens new window) after rounding is three years or less;
- The estimated monthly payment for repayment in 36 months, as described in Appendix M1 (opens new window), rounded to the nearest whole dollar or nearest cent that is calculated for a particular billing cycle is less than the minimum payment required for the plan for that billing cycle; and
- A billing cycle where an account has both a balance in a revolving feature where the required minimum payments for this feature will not amortize that balance in a fixed amount of time specified in the account agreement and a balance in a fixed repayment feature where the required minimum payment for this fixed repayment feature will amortize that balance in a fixed amount of time specified in the account agreement which is less than 36 months.
- Negative or no amortization. If negative or no amortization occurs when calculating the minimum payment estimate as described in Appendix M1 (opens new window), determine that the card issuer provides the following disclosures on each periodic statement instead of the disclosures set forth in § 1026.7(b)(12)(i) (opens new window): (§ 1026.7(b)(12)(ii)) (opens new window)
- “Minimum Payment Warning: Even if you make no more charges using this card, if you make only the minimum payment each month we estimate you will never pay off the balance shown on this statement because your payment will be less than the interest charged each month”; (§ 1026.7(b)(12)(ii)(A) (opens new window))
- “If you make more than the minimum payment each period, you will pay less in interest and pay off your balance sooner”; (§ 1026.7(b)(12)(ii)(B) (opens new window))
- The estimated monthly payment for repayment in 36 months rounded to the nearest whole dollar or to the nearest cent, at the credit union’s option; (§ 1026.7(b)(12)(ii)(C) (opens new window))
- A statement that the card issuer estimates that the consumer will repay the outstanding balance shown on the periodic statement in three years if the consumer pays the estimated monthly payment each month for three years; and (§ 1026.7(b)(12)(ii)(D) (opens new window))
- A toll-free telephone number where the consumer may obtain from the card issuer information about credit counseling services consistent with § 1026.7(b)(12)(iv) (opens new window). (§ 1026.7(b)(12)(ii)(E) (opens new window))
- Format Requirements. Verify that the items required to be disclosed, as addressed in the procedures in step 12 above (required by § 1026.7(b)(12) (opens new window)) are disclosed according to the format requirements of § 1026.7(b)(13) (opens new window) and are similar to the samples provided in Appendix G (opens new window).
- Provision of information about credit counseling services. Determine that a card issuer provides (to the extent available from the United States Trustee or a bankruptcy administrator) through the disclosed toll-free telephone number the name, street address, telephone number, and website address for at least three organizations that have been approved by the United States Trustee or a bankruptcy administrator to provide credit counseling services in either the state in which the billing address for the account is located or the state the consumer specified. At least annually the card issuer must update the credit counseling information it discloses for consistency with the information available from the United States Trustee or a bankruptcy administrator. (§ 1026.7(b)(12)(iv) (opens new window))
- In general. Given those exceptions above, determine that the card issuer disclosed on the periodic statement: (§ 1026.7(b)(12) (opens new window))
- Format Requirements. Determine that the card issuer provided periodic statement disclosures according to the following format requirements: (§ 1026.7(b)(13) (opens new window))
- The due date is disclosed on the front of the first page of the periodic statement and that the amount of the late payment fee and the APR(s) are stated in close proximity thereto;
- The ending balance and the repayment disclosures (required by § 1026.7(b)(12)) (opens new window) are disclosed closely proximate to the minimum payment due; and
- The due date, late payment fee and APR, ending balance, minimum payment due, and repayment disclosures are grouped together.
NOTE: Sample G-18(D) in Appendix G (opens new window) sets forth an example of how these terms may be grouped.
- Deferred Interest or Similar Transactions. For accounts with an outstanding balance subject to a deferred interest or similar program, determine that the credit union disclosed the date by which that outstanding balance must be paid in full in order to avoid the obligation to pay finance charges on such balance on the front of any page of each periodic statement issued during the deferred interest period beginning with the first periodic statement issued during the deferred interest period that reflects the deferred interest or similar transaction. The disclosure provided under this paragraph must be similar to Sample G–18(H) in Appendix G (opens new window). (§ 1026.7(b)(14) (opens new window))
Subsequent Disclosure Requirements
- Determine whether the credit union mailed or delivered the billing rights statement at least once per calendar year, at intervals of not less than 6 months or more than 18 months, customers and whether the institution used the short form notice with each periodic statement. (§ 1026.9(a)(1) (opens new window))
NOTE: As an alternative to the annual billing rights statement (§ 1026.9(a)(1) (opens new window)), the credit union may mail or deliver, on or with each periodic statement, a statement substantially similar to Model Form G–4 or Model Form G–4(A) in Appendix G, (opens new window) as applicable. Credit unions offering home-equity plans subject to the requirements of § 1026.40 (opens new window) may use either Model Form, at their option. (§ 1026.9(a)(2) (opens new window)) - If, 30 days after mailing or delivering the account-opening disclosures under §§ 1026.6(a)(1) (opens new window) or 1026.6(a)(1) (opens new window), the credit union adds a credit feature or furnishes a credit access device (other than as a renewal, resupply, or the original issuance of a credit card, or except with regard to checks that access a credit card account) on the same finance charge terms, determine that the credit union discloses, before the consumer uses the feature or device for the first time, that it is for use in obtaining credit under the terms previously disclosed. (§ 1026.9(b)(1) (opens new window))
- Determine that, except with regard to checks that access a credit card account, whenever a credit feature is added or a credit access device is mailed or delivered to the consumer, and the finance charge terms for the feature or device differ from disclosures previously given, the disclosures required by § 1026.6(a)(1) (opens new window) or (b)(3)(ii)(A) that are applicable to the added feature or device are given before the consumer uses the feature or device for the first time. (§ 1026.9(b)(2) (opens new window))
- Checks that access a credit card account. For open-end plans not subject to the requirements of § 1026.40 (opens new window), if checks that can be used to access a credit card account are provided to the consumer more than 30 days after account-opening disclosures under § 1026.6(b) (opens new window) are mailed or delivered, or the credit union provides them within 30 days of the account-opening disclosures and the finance charge terms for the checks differ from the finance charge terms previously disclosed, determine that the credit union discloses on the front of the page containing the checks the following terms in the form of a table with the headings, content, and form similar to Sample G–19 in Appendix G (opens new window). (§ 1026.9(b)(3) (opens new window))
- If a promotional rate applies to the checks, determine that the credit union discloses:
- The promotional rate and the time period during which the promotional rate will remain in effect; (§ 1026.9(b)(3)(i)(A)(1) (opens new window))
- The type of rate that will apply (such as whether the purchase or cash advance rate applies) after the promotional rate expires, and the annual percentage rate that will apply after the promotional rate expires. For a variable-rate account, a credit union must disclose an annual percentage rate based on the applicable index or formula according to the accuracy requirements set forth in § 1026.9(b)(3)(ii) (opens new window); and (§1026.9(b)(3)(i)(A)(2) (opens new window))
- The date, if any, by which the consumer must use the checks in order to qualify for the promotional rate. If the credit union will honor checks used after such date but will apply an annual percentage rate other than the promotional rate, the credit union must disclose this fact and the type of annual percentage rate that will apply if the consumer uses the checks after such date. (§ 1026.9(b)(3)(i)(A)(3) (opens new window))
- If any APR required to be disclosed under § 1026.9(b)(3)(i) (opens new window) is a variable rate, determine that the credit union also disclosed the fact that the rate may vary and how the rate is determined. Determine that the credit union identified the type of index or formula used in setting the rate. Determine that the credit union does not disclose the value of the index and the amount of the margin that are used to calculate the variable rate in the table and that any applicable limitations on rate increases are not included in the table (§ 1026.9(b)(3)(iii) (opens new window)).
- If no promotional rate applies to the checks, determine that the credit union discloses the type of rate that will apply to the checks and the applicable annual percentage rate. For a variable-rate account, a credit union must disclose an annual percentage rate based on the applicable index or formula in accordance with the accuracy requirements in § 1026.9(b)(3)(ii). (opens new window) (§ 1026.9(b)(3)(i)(B)(1) (opens new window))
- Determine that the credit union discloses:
- Any transaction fees applicable to the checks disclosed under § 1026.6(b)(2)(iv) (opens new window); and (§ 1026.9(b)(3)(i)(C) (opens new window))
- Whether or not a grace period is given within which any credit extended by use of the checks may be repaid without incurring a finance charge due to a periodic interest rate. When disclosing whether there is a grace period, the phrase “How to Avoid Paying Interest on Check Transactions” must be used as the row heading when a grace period applies to credit extended by the use of the checks. When disclosing the fact that no grace period exists for credit extended by use of the checks, the phrase “Paying Interest” must be used as the row heading. (§ 1026.9(b)(3)(i)(D) (opens new window))
NOTE: The disclosures in § 1026.9(b)(3)(i) (opens new window) must be accurate as of the time the disclosures are mailed or delivered. A variable APR is accurate if it was in effect within 60 days of when the disclosures are mailed or delivered. (§ 1026.9(b)(3)(ii) (opens new window))
- If a promotional rate applies to the checks, determine that the credit union discloses:
- Determine, for home-equity plans subject to the requirements of § 1026.40 (opens new window):
- Whenever any term required to be disclosed under § 1026.6(a) (opens new window) is changed or the required minimum periodic payment is increased, the credit union mailed or delivered written notice of the change at least 15 days before the effective date of the change. If the consumer agreed to the change, determine that the credit union provided the notice before the change went into effect; and (§ 1026.9(c)(1)(i) (opens new window))
- If the credit union prohibits additional extensions of credit or reduces the credit limit that the credit union mailed or delivered notice of the action not later than three business days after such action is taken. The notice must contain the specific reasons for the action. (§ 1026.9(c)(1)(iii) (opens new window))
NOTE: Notice is not required when the change involves a reduction of any component of a finance charge or other charge or when the change results from an agreement involving a court proceeding. (§ 1026.9(c)(1)(ii) (opens new window))
- For plans other than home-equity plans subject to the requirements of § 1026.40 (opens new window), except as provided in §§ 1026.9(c)(2)(i)(B), 1026.9(c)(2)(iii) and 1026.9(c)(2)(v) (opens new window), when a significant change in account terms as described in § 1026.9(c)(2)(ii) (opens new window) is made, determine that the credit union provides a written notice of the change at least 45 days before the effective date of the change to each consumer who may be affected. (§ 1026.9(c)(2)(i)(A) (opens new window))
- The 45-day timing requirement, however, does not apply if the consumer has agreed to a particular change as described in § 1026.9(c)(2)(i)(B) (opens new window). For these instances, however, determine that the credit union provided a notice according to the timing requirements of section 1026.9(c)(2)(i)(B) (opens new window). (§ 1026.9(c)(2)(i)(A) (opens new window))
- For open-end (not home-secured) plans, determine that increases in the rate applicable to a consumer’s account due to delinquency, default or as a penalty described in § 1026.9(g) (opens new window) that are not due to a change in the contractual terms of the consumer’s account are disclosed under § 1026.9(g (opens new window)) instead of § 1026.9(c)(2) (opens new window). (§ 1026.9(c)(2)(i)(A) (opens new window))
- When a notice of change in terms is required, determine that it is mailed or delivered no later than the effective date of the change, if the consumer agrees to the particular change. § 1026.9(c)(2)(i)(B) (opens new window) applies only when a consumer substitutes collateral or when the credit union can advance additional credit only if a change relatively unique to that consumer is made, such as the consumer’s providing additional security or paying an increased minimum payment amount. (§ 1026.9(c)(2)(i)(B) (opens new window))
NOTE: The 45-day timing requirements discussed in step 7 above does not apply in certain narrow circumstances, as described in § 1026.9(c)(2)(i)(B) (opens new window). The following are not considered agreements between the consumer and the credit union for purposes of § 1026.9(c)(2)(i)(B) (opens new window):- The consumer’s general acceptance of the credit union’s contract reservation of the right to change terms;
- The consumer’s use of the account (which might imply acceptance of its terms under state law);
- The consumer’s acceptance of a unilateral term change that is not particular to that consumer, but rather is of general applicability to consumers with that type of account; and,
- The consumer’s request to reopen a closed account or to upgrade an existing account to another account the credit union offers with different credit or other features. (§ 1026.9(c)(2)(i)(B) (opens new window))
- The 45-day advance notice requirement applies to changes to the following terms: (§ 1026.9(c)(2)(ii) (opens new window))
- APR increase, including each periodic rate that may be used to compute the finance charge on outstanding balances for purchases, a cash advance, or a balance transfer (such rates may include any discounted initial rate, premium initial rate, or penalty rate that may be applied to the account);
- Variable-rate information;
- Discounted or premium initial rates;
- Penalty rates;
- Fees for issuance or availability, including any fee based upon account activity or inactivity;
- Fixed finance charge or minimum interest charge, if it exceeds $1.00;
- Transaction charge for purchases;
- Grace period;
- Balance computation method;
- Cash advance fee;
- Late payment fee;
- Over-the-limit fee;
- Balance transfer fee;
- Returned payment fee;
- Required insurance, debt cancellation, or debt suspension coverage; and
- Increase in required minimum periodic payment, or the acquisition of a security interest.
- APR increase, including each periodic rate that may be used to compute the finance charge on outstanding balances for purchases, a cash advance, or a balance transfer (such rates may include any discounted initial rate, premium initial rate, or penalty rate that may be applied to the account);
- Except as provided in § 1026.9(c)(2)(vi) (opens new window), if a credit union increases any component of a charge, or introduces a new charge, required to be disclosed under § 1026.6(b)(3) (opens new window) that is not a significant change in account terms as described in § 1026.9(c)(2)(ii) (opens new window), determine that the credit union either: (§ 1026.9(c)(2)(iii) (opens new window))
- Complies with the requirements of § 1026.9(c)(2)(i), (opens new window) or
- Provides notice of the amount of the charge before the consumer agrees to or becomes obligated to pay the charge, at a time and in a manner that a consumer would be likely to notice the disclosure of the charge, either in writing or orally.
- Ensure that the written change-in-terms notice contains the following disclosures: (§ 1026.9(c)(2)(iv)(A) (opens new window))
- A summary of the changes made to terms required by §§ 1026.6(b)(1)-(2) or (4) (opens new window), a description of any increase in the required minimum payment, and a description of any security interests being acquired by the credit union;
- A statement that changes are being made to the account;
- For accounts other than credit card accounts under an open-end (not home-secured) consumer credit plan subject to § 1026.9(c)(2)(iv)(B) (opens new window), a statement indicating that the consumer has the right to opt out of the changes, if applicable, and a reference to the opt-out right provided in the notice, if applicable;
- The date the changes will become effective;
- If applicable, a statement that the consumer may find additional information about the summarized changes, and other changes, in the notice;
- In the case of a rate change, other than a penalty rate, a statement that if a penalty rate currently applies to the consumer’s account, the new rate described in the notice will not apply to the consumer’s account until the consumer’s account balances are no longer subject to the penalty rate;
- If the change in terms being disclosed is an increase in the APR, the balances to which the increased rate will apply. If applicable, credit unions must disclose a statement identifying the balances to which the current rate will apply as of the effective date of the change; and
- If the change in terms being disclosed is an increase in an annual percentage rate for a credit card account under an open-end (not home-secured) consumer credit plan, a statement of no more than four principal reasons for the rate increase, listed in their order of importance.
NOTE: The disclosed reasons must accurately describe the principal factors actually considered by the card issuer in increasing the rate. (Comment 1026.9(c)(2)(iv)-11 (opens new window))
- In addition to the disclosures in § 1026.9(c)(2)(iv)(A), (opens new window) if a card issuer makes a significant change in account terms on a credit card account under an open-end (not home- secured) consumer credit plan, determine that the credit union provides the following information on the notice provided pursuant to § 1026.9(c)(2)(i (opens new window)): (§ 1026.9(c)(2)(iv)(B)) (opens new window)
NOTE: The credit union is not required to provide this information in the case of an increase in the required minimum periodic payment, an increase in a fee as a result of a reevaluation of a determination made under § 1026.52(b)(1)(i) (opens new window) or an adjustment to the safe harbors in § 1026.52(b)(1)(ii) (opens new window) to reflect changes in the Consumer Price Index, a change in an annual percentage rate applicable to a consumer’s account, an increase in a fee previously reduced consistent with 50 U.S.C. 3937 (opens new window) (Servicemembers Civil Relief Act) or similar federal or state statute or regulation if the amount of the increased fee does not exceed the amount of that fee before the reduction, or when the change results from the credit union not receiving the consumer’s required minimum periodic payment within 60 days after the due date for that payment.- A statement that the consumer has the right to reject the change or changes before the effective date of the changes, unless the consumer fails to make a required minimum periodic payment within 60 days after the due date for that payment;
- Instructions for rejecting the change or changes, and a toll-free telephone number that the consumer may use to notify the credit union of the rejection; and
- If applicable, a statement that if the consumer rejects the change or changes, the consumer’s ability to use the account for further advances will be terminated or suspended.
- Changes resulting from failure to make minimum periodic payment within 60 days from due date for credit card accounts under an open-end (not home-secured) consumer credit plan. For a credit card account under an open-end (not home-secured) consumer credit plan: (§ 1026.9(c)(2)(iv)(C) (opens new window))
- If the significant change required to be disclosed under § 1026.9(c)(2)(i) (opens new window) of this section is an increase in an annual percentage rate or a fee or charge required to be disclosed under §§ 1026.6(b)(2)(ii), 1026.6(b)(2)(iii), or 1026.6(b)(2)(xii) (opens new window) based on the consumer’s failure to make a minimum periodic payment within 60 days from the due date for that payment, determine that the notice provided under § 1026.6(c)(2)(i) (opens new window) states that the increase will cease to apply to transactions that occurred before or within 14 days of provision of the notice, if the credit union receives six consecutive required minimum periodic payments on or before the payment due date, beginning with the first payment due following the effective date of the increase;
- If the significant change required to be disclosed under § 1026.9(c)(2)(i) (opens new window) is an increase in a fee or charge required to be disclosed under §§ 1026.6(b)(2)(ii), 1026.(b)(2)(iii), or 1026.(b)(2)(xii) (opens new window) based on the consumer’s failure to make a minimum periodic payment within 60 days from the due date for that payment, determine that the notice provided under § 1026.9(c)(2)(i) (opens new window) also states the reason for the increase.
- Determine that the summary of changes described in § 1026.9(c)(2)(iv)(A)(1) (opens new window) is in a tabular format (except for a summary of any increase in the required minimum periodic payment, a summary of a term required to be disclosed under § 1026.6(b)(4) (opens new window) that is not required to be disclosed under §§ 1026.6(b)(1) and (b)(2) (opens new window), or a description of any security interest being acquired by the credit union), with headings and format substantially similar to any of the account-opening tables found in G–17 in Appendix G (opens new window). Determine that the table discloses the changed term and information relevant to the change, if that relevant information is required by §§ 1026.6(b)(1) and 1026.6(b)(2) (opens new window). Determine that the new terms are described in the same level of detail as required when disclosing the terms under § 1026.6(b)(2) (opens new window). (§ 1026.9(c)(2)(iv)(D)(1) (opens new window))
- If a notice required by § 1026.9(c)(2)(i) (opens new window) (change in terms) is included on or with a periodic statement, determine that the information described in § 1026.6(c)(2)(iv)(A)(1) (opens new window) is disclosed on the front of any page of the statement. Determine that the summary of changes described in § 1026.9(c)(2)(iv)(A)(1) (opens new window) immediately follows the information described in §§ 1026.9(c)(2)(iv)(A)(2)-(7) (opens new window) and, if applicable, §§ 1026.9(c)(2)(iv)(A)(8) (opens new window), 1026.9(c)(2)(iv)(B), (opens new window) and 1026.9(c)(2)(iv)(C), (opens new window) and is substantially similar to the format shown in Sample G-20 or G-21 in Appendix G (opens new window). (§ 1026.9(c)(2)(iv)(D)(2) (opens new window))
- If a notice required by § 1026.9(c)(2)(i) (opens new window) is not included on or with a periodic statement, determine that the information described in § 1026.9(c)(2)(iv)(A)(1) (opens new window) is disclosed on the front of the first page of the notice or segregated on a separate page from other information given with the notice. (§ 1026.9(c)(2)(iv)(D)(3) (opens new window))
NOTE: The summary of changes required to be in a table under § 1026.9(c)(2)(iv)(A)(1) (opens new window) may be on more than one page, and may use both the front and reverse sides, so long as the table begins on the front of the first page of the notice and there is a reference on the first page indicating that the table continues on the following page. - Determine that the summary of changes described in § 1026.9(c)(2)(iv)(A)(1) (opens new window) immediately follows the information described in §§ 1026.9(c)(2)(iv)(A)(2)-(7) (opens new window) and, if applicable, §§ 1026.9(c)(2)(iv)(A)(8) (opens new window), 1026.9(c)(2)(iv)(B) (opens new window), and 1026.9(c)(2)(iv)(C) (opens new window), and is similar to the format shown in Sample G-20 or G-21 in Appendix G to Part 1026 (opens new window). (§ 1026.9(c)(2)(iv)(D)(3) (opens new window))
- For open-end plans (other than home equity plans subject to the requirements of § 1026.40), note that a credit union is not required to provide notice under this section if: (§ 1026.9(c)(2)(v) (opens new window))
- The change involves:
- Charges for documentary evidence;
- A reduction of any component of a finance or other charge;
- A suspension of future credit privileges (except as provided in § 1026.9(c)(2)(vi) (opens new window)) or termination of an account or plan;
- When the change results from an agreement involving a court proceeding;
- When the change is an extension of the grace period; or
- The change is applicable only to checks that access a credit card account and the changed terms are disclosed on or with the checks in accordance with § 1026.9(b)(3) (opens new window). (§ 1026.9(c)(2)(v)(A) (opens new window))
- The change is an increase in an APR upon the expiration of a specified period of time, if: (§ 1026.9(c)(2)(v)(B) (opens new window))
- Before commencement of that period, the credit union disclosed in writing to the consumer, in a clear and conspicuous manner, the length of the period and the APR or fee that would apply after expiration of the period;
- The disclosure of the length of the period and the APR or fee that would apply after expiration of the period are set forth in close proximity and in equal prominence to the first listing of the disclosure of the rate or fee that applies during the specified period of time; and
- The APR or fee that applies after that period does not exceed the rate disclosed under § 1026.9(c)(2)(v)(B)(1) (opens new window) or, if the rate disclosed under § 1026.9(c)(2)(v)(B)(1) (opens new window) was a variable rate, the rate following any such increase is a variable rate determined by the same formula (index and margin) that was used to calculate the variable rate disclosed under § 1026.9(c)(2)(v)(B)(1) (opens new window).
- The change is an increase in a variable APR according to a credit card or other account agreement that provides for changes in the rate according to operation of an index that is not under the control of the credit union and is available to the general public (§ 1026.9(c)(2)(v)(C)) (opens new window); or
- The change is an increase in an APR, a fee or charge required to be disclosed under §§ 1026.6(b)(2)(ii), (b)(2)(iii), (b)(2)(viii), 1026.6(b)(2)(ix) or 1026.6(b)(2)(xii) (opens new window), or the required minimum periodic payment due to the completion of a workout or temporary hardship arrangement by the consumer or the consumer’s failure to comply with the terms of such an arrangement, provided that: (§ 1026.9(c)(2)(v)(D) (opens new window))
- The APR or fee or charge applicable to a category of transactions or the required minimum periodic payment following any such increase does not exceed the rate or fee or charge or required minimum periodic payment that applied to that category of transactions before commencement of the arrangement or, if the rate that applied to a category of transactions before the commencement of the workout or temporary hardship arrangement was a variable rate, the rate following any such increase is a variable rate determined by the same formula (index and margin) that applied to the category of transactions before commencement of the workout or temporary hardship arrangement; and
- The credit union has provided the consumer, before the commencement of such arrangement, with a clear and conspicuous disclosure of the terms of the arrangement (including any increases due to such completion or failure). This disclosure must be provided in writing. However, a credit union may provide the disclosure of the terms of the arrangement orally by telephone, if the credit union mails or delivers a written disclosure of the terms of the arrangement to the consumer as soon as reasonably practical after it provides the oral disclosure.
- The change involves:
- For open-end plans that are not subject to the requirements of § 1026.40 (opens new window), if a credit union decreases the credit limit on the account, determine that the credit union provides advance notice of the decrease before an over-the-limit fee or a penalty rate can be imposed solely as a result of the consumer exceeding the newly decreased credit limit. Determine that the credit union provides the notice in writing or orally at least 45 days before imposing the over-the-limit fee or penalty rate and that it states that the credit limit on the account has been or will be decreased. (§ 1026.9(c)(2)(vi) (opens new window))
- Determine that the credit union provides the disclosures contained in §§ 1026.60(b)(1)-(7) (opens new window) if the account is renewed and (1) the card issuer imposes an annual or other periodic fee for the renewal or (2) the card issuer has changed or amended any term of the account required to be disclosed under §§ 1026.6(b)(1)-(2) (opens new window) that it has not previously disclosed to the consumer. Additionally, the disclosure the credit union provides upon renewal must disclose how and when the cardholder may terminate the credit to avoid paying the renewal fee, if any. (§ 1026.9(e) (opens new window))
- For plans other than home-equity plans subject to the requirements of § 1026.40 (opens new window) (except as provided in § 1026.9(g)(4)) (opens new window), determine that the credit union provides a written notice to each consumer who may be affected when: (§ 1026.9(g)(1) (opens new window))
- A rate is increased due to the consumer’s delinquency or default; or
- A rate is increased as a penalty for one or more events specified in the account agreement, such as making a late payment or obtaining an extension of credit that exceeds the credit limit.
- Whenever any notice is required to be given under paragraph § 1026.9(g)(1) (opens new window), determine that the credit union provided written notice of the increase in rates at least 45 days before the effective date of the increase. The credit union must provide the notice after the occurrence of the events described in §§ 1026.9(g)(1)(i)-(ii) (opens new window) that trigger the imposition of the rate increase. (§ 1026.9(g)(2) (opens new window))
- If a credit union is increasing the rate due to delinquency or default or as a penalty, determine that the credit union provided the following information on the notice sent pursuant to § 1026.9(g)(1) (opens new window): (§ 1026.9(g)(3)(i)(A) (opens new window))
- A statement that the delinquency or default rate or penalty rate, as applicable, has been triggered;
- The date on which the delinquency or default rate or penalty rate will apply;
- The circumstances under which the delinquency or default rate or penalty rate, as applicable, will cease to apply to the consumer’s account, or that the delinquency or default rate or penalty rate will remain in effect for a potentially indefinite time period;
- A statement indicating to which balances the credit union will apply the delinquency or default rate or penalty rate;
- If applicable, a description of any balances to which the current rate will continue to apply as of the effective date of the rate increase, unless a consumer fails to make a minimum periodic payment within 60 days from the due date for that payment; and
- For a credit card account under an open-end (not home-secured) consumer credit plan, a statement of no more than four principal reasons for the rate increase, listed in their order of importance.
NOTE: The disclosed reasons must accurately describe the principal factors that the card issuer actually considered in increasing the rate. (Comment 1026.9(g) - 7 (opens new window))
- For a credit card account under an open-end (not home-secured) consumer credit plan, if the rate increase required to be disclosed under § 1026.9(g)(1) (opens new window) is an increase under § 1026.55(b)(4) (opens new window) based on the consumer’s failure to make a minimum periodic payment within 60 days from the due date for that payment, determine that the notice provided under § 1026.9(g)(1) (opens new window) also states that the increase will cease to apply to transactions that occurred before or within 14 days of provision of the notice, if the credit union receives six consecutive required minimum periodic payments on or before the payment due date, beginning with the first payment due following the effective date of the increase. (§ 1026.9(g)(3)(i)(B) (opens new window))
- If a notice required by § 1026.9(g)(1) (opens new window) (Increase in rates due to delinquency or default or as a penalty) is included on or with a periodic statement, determine that the disclosure described in § 1026.9(g)(3)(i) (opens new window) is in the form of a table and provided on the front of any page of the periodic statement, above the notice described in § 1026.9(c)(2)(iv) (opens new window) if the credit union provides that notice on the same statement. (§ 1026.9(g)(3)(ii)(A) (opens new window))
- If a notice required by § 1026.9(g)(1) (opens new window) (increase in rates) is not included on or with a periodic statement, determine that the information described in § 1026.9(g)(3)(i) (opens new window) is disclosed on the front of the first page of the notice. Ensure that the credit union includes only information related to the increase in the rate to a penalty rate with the notice.
NOTE: This notice may be combined with a notice described in §§ 1026.9(c)(2)(iv) or (g)(4) (opens new window) (A statement indicating to which balances the delinquency or default rate or penalty rate will be applied) of this section. (§ 1026.9(g)(3)(ii)(B) (opens new window)) - Exception for Decreases in the Credit Limit. If a credit union does not provide the 45-day notice under § 1026.9(g)(1 (opens new window)) before increasing the rate for obtaining an extension of credit that exceeds the credit limit, determine that the credit union provides at least 45 days in advance of imposing the penalty rate a notice, in writing, that includes: (§ 1026.9(g)(4) (opens new window))
- A statement that the credit limit on the account has or will be decreased;
- The date on which the penalty rate will apply, if the outstanding balance exceeds the credit limit as of that date;
- A statement that the credit union will not impose the penalty rate on that date, if the outstanding balance does not exceed the credit limit as of that date;
- The circumstances under which the penalty rate, if applied, will cease to apply to the account, or that the penalty rate, if applied, will remain in effect for a potentially indefinite period of time;
- A statement indicating to which balances the penalty rate may be applied; and
- If applicable, a description of any balances to which the current rate will continue to apply as of the effective date of the rate increase, unless the consumer fails to make a minimum periodic payment within 60 days from the due date for that payment.
In addition to this notice, determine that the credit union does not increase the applicable rate to the penalty rate if the outstanding balance does not exceed the credit limit on the date set forth in the notice. (§ 1026.9(g)(4)(ii) (opens new window))
- If a notice provided under § 1026.9(g)(4)(i) (opens new window) is included on or with a periodic statement, determine that the information described in § 1026.9(g)(4)(i) (opens new window) is in the form of a table and provided on the front of any page of the periodic statement; or, (§ 1026.9(g)(4)(iii)(A) (opens new window))
- If a notice required by § 1026.9(g)(4)(i) (opens new window) is not included on or with a periodic statement, determine that the information described in § 1026.9(g)(4)(i) (opens new window) is disclosed on the front of the first page of the notice. Determine that only information related to the reduction in credit limit is included with the notice, except that this notice may be combined with a notice described in §§ 1026.9(c)(2)(iv) or 1026.9(g)(1) (opens new window). (§ 1026.9(g)(4)(iii)(B) (opens new window))
- When the consumer is given the right to reject a significant change to an account term before the effective date of the change, determine whether the consumer was given the option to reject the change by notifying the credit union of the rejection before the effective date of the change. (§ 1026.9(h)(1) (opens new window))
- If the credit union was notified of the rejection of a significant change to an account term, determine that the credit union did not:
- Apply the charge to the account;
- Impose a fee or charge or treat the account as in default solely as a result of the rejection; or
- Require repayment of the balance on the account using a method that is LESS beneficial to the consumer than one of the following methods:
- The method of repayment for the account on the date on which the credit union was notified of the rejection;
- An amortization period of not less than five years, beginning no earlier than the date on which the credit union was notified of the rejection; or
- A required minimum periodic payment that includes a percentage of the balance that is equal to no more than twice the percentage required on the date on which the credit union was notified of the rejection. (§ 1026.9(h)(2) (opens new window))
NOTE: These requirements do not apply if the credit union has not received the consumer’s required minimum periodic payment within 60 days after the due date for that payment and the credit union has provided timely change in terms disclosures. (§ 1026.9(h)(3) (opens new window))
- Determine that a statement of the maximum interest rate that the credit union may impose during the term of the obligation is made for any dwelling-secured loan in which the APR may increase during the plan. (§ 1026.30(b) (opens new window))
- For any open-end mortgage loan (credit transaction that is secured by the principal dwelling of a consumer) that was sold, assigned, or otherwise transferred to the covered person, determine that the covered person notifies the borrower in writing of such transfer, including: (§ 1026.39 (opens new window))
- An identification of the loan that was sold, assigned, or otherwise transferred;
- The name, address, and telephone number of the covered person who owns the mortgage loan;
- The date of transfer (either the date of acquisition recognized in the books and records of the covered person or that of the transferring party) the covered person identifies;
- The name, address, and telephone number of an agent or party having authority, on behalf of the covered person, to receive notice of the right to rescind and resolve issues concerning the consumer’s payments on the mortgage loan;
- Where transfer of ownership of the debt to the covered person is or may be recorded in public records or, alternatively, that the transfer of ownership has not been recorded in public records at the time the covered person provides the disclosure;
- At the option of the covered person, any other relevant information about the transaction; and
- If there are multiple covered persons, contact information for each of them, unless one of them has been authorized to receive the consumer’s notice of the right to rescind and resolve issues concerning the consumer’s payments on the loan. (§§ 1026.39(d)-(e) (opens new window))
NOTE: A covered person must provide this notice of sale or transfer for any consumer credit transaction that is secured by the principal dwelling of a consumer. The covered person must provide this notification even if the loan servicer remains the same. In addition, if more than one consumer is liable on the obligation, the covered person may mail or deliver the disclosure notice to any consumer who is primarily liable. And, if an acquisition involves multiple covered persons who each acquire a partial interest in the loan due to separate and unrelated agreements, each covered person has a duty to ensure that disclosures related to its acquisition are accurate and provided in a timely manner unless an exception in § 1026.39(c) (opens new window) applies. The parties may, but are not required to, provide a single notice that satisfies the timing and content requirements applicable to each covered person. (Comment 1026.39(b)(5) – 2) (opens new window)
Disclosure Requirements for Over-the-Limit Transactions
- Determine that the oral, written or electronic “opt-in” notice includes all of the following applicable items (and not any information not specified in or otherwise permitted): (§ 1026.56(e)(1) (opens new window))
- Fees. The dollar amount of any fees or charges the card issuer assessed on a consumer’s account for an over-the-limit transaction;
- APR(s). Any increased periodic rate(s) (expressed as an APR(s)) that the issuer may impose on the account as a result of an over-the-limit transaction; and
- Disclosure of opt-in right. An explanation of the consumer’s right to affirmatively consent to the card issuer’s payment of over-the-limit transactions, including the method(s) the consumer may use to consent.
- Determine that the written notice informing the consumer of the right to revoke consent following the assessment of an over-the-limit fee or charge describes that right, including the method(s) by which the consumer may revoke consent. (§ 1026.56(e)(2) (opens new window))
Reverse Mortgage Forms Review Procedures (Both Open- and Closed-End)
Determine that the disclosures required for reverse mortgage transactions are similar to the model form in appendix K and include the items below: (§ 1026.33 (opens new window))
- A statement that the consumer is not obligated to complete the reverse mortgage transaction merely because he or she has received the disclosures or signed an application;
- A good faith projection of the total cost of the credit expressed as a table of “total annual loan cost rates” including payments to the consumer, additional credit union compensation, limitations on consumer liability, assumed annual appreciation, and the assumed loan period;
- An itemization of loan terms, charges, the age of the youngest borrower, and the appraised property value; and
- An explanation of the table of total annual loan costs rates.
NOTE: Forms that include or involve current transactions, such as change in terms notices, periodic billing statements, rescission notices, and billing error communications, are verified for accuracy when the file review worksheets are completed.
Timing Requirements
- Open-End Credit. Review credit union policies, procedures, and systems to determine, either separately or when completing the actual file review, whether the institution furnishes the applicable disclosures listed below when required by TILA. Take into account products that have different features, such as closed-end loans or credit card accounts that are fixed or variable rate.
- Credit card application and solicitation disclosures. On or with the application. (§ 1026.60(b) (opens new window))
- HELOC disclosures. At the time the institution provides the application or within three business days under certain circumstances. (§ 1026.40(b) (opens new window))
- Open-end credit initial disclosures. Before the first transaction is made under the plan. (§ 1026.5(b)(1) (opens new window))
- Card Holder Agreement. Verify that the card issuer sends to the cardholder or otherwise make available to the cardholder a copy of the cardholder’s agreement in electronic or paper form no later than 30 days after the issuer receives the cardholder’s request. (§ 1026.58(e)(1)(ii) (opens new window)) Determine that the issuer has adequate procedures for ensuring that this requirement is met.
- Periodic statement disclosures for open-end credit under § 1026.7 (opens new window). Required if at the end of a billing cycle, the account has a debit or credit balance of $1 or more or if the institution has imposed a finance charge. (§ 1026.5(b)(2)(i) (opens new window)) Also, the credit union must adopt procedures to ensure that periodic statements for credit card accounts are mailed or delivered at least 21 days before the payment due date and the date any grace period expires (for non-credit card open-end credit, there is a 21-day rule if there is a grace period and a 14-day rule if there is no grace period). (§ 1026.5(b)(2)(ii)(B)(2) (opens new window))
- Statement of billing rights. At least once per year. (§ 1026.9(a) (opens new window))
- Supplemental credit devices. Before the first transaction under the plan. (§ 1026.9(b) (opens new window))
- Open-end credit change in significant terms as a result of a change in contractual terms. Forty-five days before the effective change date. (§ 1026.9(c)(2) (opens new window))
- Open-end change in terms or rates due to delinquency or default or as a penalty. Forty-five days before the effective change date. (§ 1026.9(g) (opens new window))
- Finance charge imposed at time of transaction. Before imposing any fee. (§ 1026.9(d) (opens new window))
- Disclosures upon renewal of credit or charge card. Thirty days or one billing cycle, whichever is less before the delivery of the periodic statement on which the renewal fee is charged, or at least 30 days before the scheduled renewal date if the credit union has changed or amended any term that must be disclosed under sections §§ 1026.6(b)(1)-(2) (opens new window) that has not previously been disclosed to the consumer. (§ 1026.9(e) (opens new window))
- Change in credit account insurance provider. Certain information 30 days before the change in provider occurs and certain information 30 days after the change in provider occurs. The institution may provide a combined disclosure 30 days before the change in provider occurs. (§ 1026.9(f) (opens new window))
Closed End Credit Secured By a Dwelling
- Closed-End Credit Secured by a Dwelling.
- Closed-end credit disclosures for transactions not subject to §§ 1026.19(e) (opens new window)-(f) must be made before consummation. (§ 1026.17(b) (opens new window))
- Disclosures for reverse mortgages. Several disclosure timing requirements apply to reverse mortgages subject to § 1026.33 (opens new window) and RESPA:
- Determine whether the credit union provides early TIL disclosures within three business days after receiving the consumer’s written application. The credit union is required to deliver or mail the early disclosures no later than three business days after receiving the consumer’s application and at least seven business days before consummation. (§§ 1026.19(a)(1)(i) and (2)(i) (opens new window)) No fees may be charged before the consumer receives the early disclosures except for credit report fees. (§ 1026.19(a) (opens new window)) If the APR stated in the early disclosures is not considered accurate under § 1026.22 (opens new window) when compared to the APR at consummation, determine whether the credit union provided corrected disclosures of all changed terms, including the APR, that the consumer received no later than the third business day before consummation and that the credit union delivered or placed in the mail the corrected disclosures not later than the seventh business day before consummation. (§§ 1026.19(a)(2)(i),(ii) and (iii) (opens new window))
- Determine whether the credit union provides the disclosures required pursuant to § 1026.33 (opens new window) (and found in paragraph d of the model form in Appendix K (opens new window)) either three days prior to consummation (for a closed-end transaction) or prior to the first transaction (for an open-end credit plan). ( § 1026.31(c)(2) (opens new window))
NOTE: For closed-end credit transactions secured by a dwelling not subject to the TILA-RESPA rule, the prohibition on charging fees (other than credit report fees) before the consumer receives the early TIL disclosure is more limited than the prohibition for closed-end credit transactions secured by a dwelling that are subject to TILA-RESPA. (§ 1026.19(a) (opens new window)) For TILA-RESPA closed-end transactions, credit unions are prohibited from charging fees (other than credit report fees) prior to receipt of disclosures and an intent to proceed with the transaction. (§ 1026.19(e)(2) (opens new window))
- Disclosures for high-cost mortgages. Three business days before consummation or account opening. If such disclosures became inaccurate due to a change by the credit union, ensure that the credit union provided new, accurate disclosures no later than three business days before consummation or account opening. (§ 1026.31(c)(1) (opens new window))
NOTE: The three business day waiting period prior to consummation requirement does not apply where the credit union extends a second offer with a lower annual percentage rate to the consumer. (15 U.S.C. 1639(b)(3) (opens new window)) - Disclosures for initial rate change to an adjustable-rate mortgage securing a principal dwelling (other than a transaction subject to § 1026.19(e)-(f) (opens new window)) with terms of more than one year:
- For adjustable-rate mortgages, credit unions, assignees, or servicers are generally required to provide information about the first interest rate change to consumers between 210 and 240 days before the date the first payment at the new rate is due.
NOTE: If the first payment change occurs within the first 210 days, credit unions, assignees, or servicers are required to provide the disclosure at consummation. (§ 1026.20(d) (opens new window))
NOTE: When examining a credit union that continues to own the loan, an assignee, or a servicer, if the entity states that another entity has the obligation to provide the disclosures, examiners must determine whether the entity takes steps to ensure that the other party (the credit union, assignee, or servicer, as applicable) is complying with the obligation to provide the disclosures.
- For adjustable-rate mortgages, credit unions, assignees, or servicers are generally required to provide information about the first interest rate change to consumers between 210 and 240 days before the date the first payment at the new rate is due.
- Additional disclosures for adjustable-rate mortgages securing a principal dwelling (other than a transaction subject to §§ 1026.19(e) (opens new window)-(f)) with a term of more than one year, where a rate change affects the amount of payment:
- For adjustable-rate mortgages where the payment changes with a rate change, the institution must provide disclosures to consumers between 60 and 120 days before the first payment at the new rate is due;
- For adjustable-rate mortgages where the payment change is caused by a rate change that is uniformly scheduled every 60 days (or more frequently), the institution must provide disclosures to consumers between 25 and 120 days before the first payment at the new rate;
- For adjustable-rate mortgages originated before January 10, 2015, where the interest rate and payment are calculated based on an index that is available less than 45 days before the change, an institution must provide disclosures between 25 and 120 days before the first payment at the new rate is due; and
- For adjustable-rate mortgages where the payment adjustment occurs within 60 days of consummation and the new interest rate after adjustment provided at consummation was an estimate, disclosure are required as soon as practical, but no later than 25 days before the first payment at the new rate is due. (§ 1026.20(c) (opens new window))
NOTE: The requirements of § 1026.20(c) (opens new window) do not apply to: ARMS with terms of one year or less; first interest rate adjustments to an ARM if the first adjusted payment is due within 210 days after consummation and the new interest rate disclosed at consummation was not an estimate; or the credit union, assignee or servicer when the servicer is subject to the Fair Debt Collections Practices Act (FDCPA) and the consumer has notified the servicer to cease communication under FDCPA section 805(c) (opens new window). (§ 1026.20(c)(1)(ii) (opens new window))
- Notice of new creditor. On or before the 30th calendar day after the acquisition. (§ 1026.39 (opens new window))
- For private education loans subject to Subpart F, determine that: (§ 1026.46 (opens new window))
- The institution provided application or solicitation disclosures on or with any application or solicitation; (§ 1026.46(d)(1)(i) (opens new window))
- The institution provided approval disclosures before consummation on or with any notice of approval provided to the consumer; and (§ 1026.46(d)(2) (opens new window))
- The institution provided final disclosures after the consumer accepts the loan and at least three business days before disbursing the private education loan funds. (§ 1026.46(d)(3) (opens new window))
- Determine that the issuer provides a written over-the-limit notice before assessing any over-the-limit fee or charge on a consumer’s account. (§ 1026.56(d)(1)(i) (opens new window))
- Determine that, if a consumer consents to the card issuer’s payment of any over-the-limit transaction by oral or electronic means, the card issuer provides the required written notice immediately before obtaining that consent. (§ 1026.56(d)(1)(ii) (opens new window))
- Determine that the institution provides the notice confirming the consumer’s consent no later than the first periodic statement sent after the consumer has consented to the card issuer’s payment of over-the-limit transactions. The credit union must not assess an over-the-limit fee on the consumer’s account without first providing written confirmation. (§ 1026.56(d)(2) (opens new window))
- Determine that the institution provides the consumer notice in writing of the right to revoke consent following the assessment of an over-the-limit fee or charge is provided on the front of any page of each periodic statement that reflects the assessment of an over-the- limit fee or charge on a consumer’s account. (§ 1026.56(d)(3) (opens new window))
- For home-equity plans subject to the requirements of § 1026.40 (opens new window), whenever any term required to be disclosed under § 1026.6(a) (opens new window) is changed or the required minimum periodic payment is increased, determine that the credit union mails or delivers written notice of the change to each consumer who may be affected. Determine that the notice is mailed or delivered at least 15 days before the effective date of the change. If the consumer has agreed to the change, determine that the notice is given before the effective date of the change. (§ 1026.9(c)(1)(i) (opens new window))
- Notice to restrict credit. For home-equity plans subject to the requirements of § 1026.40 (opens new window), if the credit union prohibits additional extensions of credit or reduces the credit limit under §§ 1026.40(f)(3)(i) or (f)(3)(vi) (opens new window), determine that the credit union mails or delivers written notice of the action to each consumer who will be affected not later than three business days after the action is taken and contains specific reasons for the action. If the credit union requires the consumer to request reinstatement of credit privileges, determine that the notice states that fact. (§ 1026.9(c)(1)(iii) (opens new window))
Mortgage Loans Secured by Real Property or a Cooperative Unit—Early Disclosures (Loan Estimates)
- Provision of disclosures. For closed-end consumer loans secured by real property or a cooperative unit, other than a reverse mortgage subject to § 1026.33 (opens new window), determine whether the credit union provides the consumer (opens new window) with good faith estimates on the Loan Estimate (§ 1026.37 (opens new window)), or if the credit union satisfies its obligation by ensuring that a mortgage broker providing the Loan Estimate complied with all requirements of § 1026.19(e) (opens new window).
NOTE: Partial exemption. The special disclosure requirements of § 1026.19(e) (opens new window) do not apply if the following criteria are met:
(i) The transaction is secured by a subordinate lien,
(ii) The transaction is for buyer assistance such as down payments or closing costs, rehabilitation loans, energy efficiency assistance, or foreclosure prevention,
(iii) The credit contract does not require the payment of interest,
(iv) The credit contract provides for repayment is forgiven, deferred for 20 years, or deferred until the property is sold or is no longer the consumer’s principal dwelling, and
(v) the costs payable by the consumer in connection with the transaction at consummation are limited to recording fees, transfer taxes, a reasonable application fee, and a reasonable fee for housing counseling services; and the total of costs payable by the consumer for the application and housing counseling services is less than 1% of the amount of credit extended.
In addition to these requirements, the credit union must comply with other requirements of TILA, including the disclosures in § 1026.18 (opens new window). However, the credit union is permitted to provide the integrated disclosures (Loan Estimate and Closing Disclosure) as an alternative to providing the disclosure of the cost of credit under § 1026.18 (opens new window), and does not need to provide the special information booklet, Good Faith Estimate, or HUD-1 settlement statement. (§ 1026.3(h) (opens new window); Comment 1026.3(h)-1) (opens new window) - Timing after application. Determine whether the credit union delivers or places in the mail the Loan Estimate not later than the third business day after receiving the consumer’s application. As defined in § 1026.2(a)(3 (opens new window)), an application consists of the submission for purposes of obtaining an extension of credit of the consumer (opens new window)'s name, income, social security number to obtain a credit report, the property address, an estimate of the value of the property, and the mortgage loan amount sought. (§ 1026.19(e)(1)(iii)(A) (opens new window))
NOTE: When a consumer uses an online application system that allows the information to be saved, the timing requirements for the Loan Estimate are not triggered until the application is submitted. - Timing before consummation. Determine whether the credit union delivers or places in the mail the Loan Estimate not later than the seventh business day before consummation (other than for transactions secured by a consumer’s interest in a timeshare plan). (§ 1026.19(e)(1)(iii)(B) (opens new window))
NOTE: Business day is defined differently for purposes of §§ 1026.19(e)(1)(iii)(A) and (B) (opens new window). For § 1026.19(e)(1)(iii)(A) (opens new window) business day is defined based on whether the credit union’s offices are open to the public for carrying on substantially all of its business functions on that day. For § 1026.19(e)(1)(iii)(B (opens new window)), a business day is all days except Sundays and federal holidays. (§ 1026.2(a)(6)). (opens new window) - Waive waiting period. Determine whether the consumer waived the waiting period before consummation under § 1026.19(e)(1)(iii)(B) (opens new window) by providing a dated written statement describing a bona-fide personal financial emergency, specifically modifying or waiving the waiting period, signed by all the consumers who are primarily liable on the obligation. (§ 1026.19(e)(1)(v) (opens new window))
NOTE: Preprinted forms for this purpose are prohibited. (§ 1026.19(a)(3) (opens new window)) - Shopping for settlement service providers. Determine whether a credit union permits a consumer to shop for a settlement service and if so, identifies the settlement services the consumer (opens new window) is permitted to shop for. If so, determine whether the credit union provides a written list identifying at least one available provider for each settlement service for which the consumer may shop and stating that the consumer (opens new window) may choose a different provider for that service. Determine that the credit union provides the written list separately from initial Loan Estimate but in accordance with the same timing requirements. The settlement service providers identified on the written list must correspond to required settlement services for which the consumer may shop, disclosed under § 1026.37(f)(3) (opens new window). (§ 1026.19(e)(1)(vi) (opens new window); Comment 1026.19(e)(1)(vi)-3 (opens new window))
- Fee restriction. Determine that the credit union does not charge any fees before the consumer receives the Loan Estimate and before the consumer indicated to the credit union an intent to proceed with the transaction, except for bona fide and reasonable credit report fees. (§ 1026.19(e)(2)(i)(A) (opens new window))
- Disclaimer on early estimates. Determine whether a credit union (opens new window) that provides a consumer (opens new window) with a written estimate of terms or costs specific to that consumer (opens new window) before the consumer (opens new window) receives the Loan Estimate clearly and conspicuously state (opens new window)s on the first page in no smaller than 12-point font “Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan,” and that the estimate does not use a format or content substantially similar to the Loan Estimate (form H-24 or H-25 of Appendix H (opens new window)). (§ 1026.19(e)(2)(ii) (opens new window))
- Verification of information. Determine whether the credit union (opens new window) requires a consumer (opens new window) to submit documents verifying information related to the consumer (opens new window)'s application before providing the credit union provides the Loan Estimate. (§ 1026.19(e)(2)(iii) (opens new window))
- Permissible variations. Determine whether the credit union disclosed estimated closing costs in good faith and consistent with the best information reasonably available to the credit union at the time the disclosures are provided. The estimated closing costs are in good faith if the amount charged to the consumer at closing does not exceed the estimated closing costs disclosed on the Loan Estimate, unless one of the following exceptions apply. (§ 1026.19(e)(3) (opens new window))
- Ten percent cumulative increase permitted. Estimates for third party services or a recording fee are in good faith if:
- The aggregate charges do not exceed the aggregate estimate for those charges by more than 10 percent (§ 1026.19(e)(3)(ii)(A) (opens new window) Comment 1026.19(e)(3)(ii)-2 (opens new window));
- The third party service charge is not paid to the credit union or affiliate of the credit union (§ 1026.19(e)(3)(ii)(B) (opens new window)); and
- The credit union permits the consumer to shop for the third party service. (§ 1026.19(e)(3)(ii)(C) (opens new window))
- A credit union may permit a consumer to shop even if a credit union fails to issue the written list of providers required by § 1026.19(e)(1)(vi)(C) (opens new window).
- Determine whether the credit union permits the consumer to shop consistent with § 1026.19(e)(1)(vi)(A) (opens new window) based on all the relevant facts and circumstances.
- Variations permitted for certain charges. For the following, determine whether the estimate has been made in good faith. An estimate is in good faith if it is consistent with the best information reasonably available to the credit union at the time it is disclosed, regardless of whether the amount paid by the consumer exceeds the amount disclosed in the Loan Estimate, even if such charges are paid to the credit union or affiliates of the credit union, as long as the charges are bona fide: (§ 1026.19(e)(3)(iii) (opens new window))
- Prepaid interest; (§ 1026.19(e)(3)(iii)(A) (opens new window))
- Property insurance premiums; (§ 1026.19(e)(3)(iii)(B) (opens new window))
- Amounts placed into an escrow, impound, reserve, or similar account; (§ 1026.19(e)(3)(iii)(C) (opens new window))
- Charges paid to third-party service providers the consumer selected that are not on the list provided by the credit union; and (§ 1026.19(e)(3)(iii)(D) (opens new window))
- Property taxes and other charges paid for third-party services not required by the credit union. (§ 1026.19(e)(3)(iii)(E) (opens new window))
- Revised loan estimates. Determine whether the credit union may use a revised estimate of charges, instead of the estimate of charges originally disclosed to the consumer, to compare charges actually paid by or imposed on the consumer for purposes of determining good faith. Credit unions are permitted to use a revised estimate for this purpose (i.e., to reset tolerances) for any of the following reasons: (§ 1026.19(e)(3)(iv) (opens new window))
- Changed circumstances affecting settlement charge. Changed Circumstances that cause the estimated settlement charges to increase or, in the case of estimated charges identified in § 1026.19(e)(3)(ii) (opens new window), cause the aggregate amount of such charges to increase by more than 10 percent. (§ 1026.19(e)(3)(iv)(A) (opens new window)) For purposes of this and the following procedure, “changed circumstance” means:
- An extraordinary event beyond the control of any interested party or other unexpected event specific to the consumer (opens new window) or transaction; (§ 1026.19(e)(3)(iv)(A)(1) (opens new window))
- Information specific to the consumer (opens new window) or transaction that the credit union (opens new window) relied upon when providing the Loan Estimate and that was inaccurate or changed after the disclosures were provided; or (§ 1026.19(e)(3)(iv)(A)(2) (opens new window))
- New information specific to the consumer (opens new window) or transaction that the credit union (opens new window) did not rely on when providing the original Loan Estimate. (§ 1026.19(e)(3)(iv)(A)(3) (opens new window))
- Changed circumstance affecting eligibility. The consumer (opens new window) is ineligible for an estimated charge previously disclosed because a changed circumstance affected the consumer (opens new window)'s creditworthiness or the value of the security for the loan. (§ 1026.19(e)(3)(iv)(B) (opens new window))
- Revisions requested by the consumer (opens new window). The consumer (opens new window) requests revisions to the credit (opens new window) terms or the settlement that cause an estimated charge to increase. (§ 1026.19(e)(3)(iv)(C) (opens new window))
- Interest rate dependent charges. The points or lender credits (opens new window) change because the interest rate was not locked when the Loan Estimate was provided. (§ 1026.19(e)(3)(iv)(D) (opens new window))
- Intent to Proceed. The consumer indicates an intent to proceed with the transaction more than 10 business days after the Loan Estimate is provided or within an extended period of time if the credit union has voluntarily extended the expiration date either orally or in writing. (§ 1026.19(e)(3)(iv)(E) (opens new window))
- Construction loan. The loan involves new construction where settlement is not expected to occur until more than 60 days after the Loan Estimate has been provided to the consumer and the credit union states clearly and conspicuously that a revised disclosure may be used at any time prior to 60 days before consummation, unless otherwise provided by § 1026.19(e)(3)(iv) (opens new window). (§ 1026.19(e)(3)(iv)(F) (opens new window))
NOTE: A loan involves “new construction” if it is a loan for the purchase of a home that has yet to be constructed, or a loan to purchase a home under construction (i.e., construction is currently underway). (Comment 1026.19(e)(3)((iv)(F)-1 (opens new window))
NOTE: A credit union may issue a revised disclosure for informational purposes, even if the revised disclosure may not be used for purposes of determining good faith under §§ 1026.19(e)(3)(i) and (ii) (opens new window). (Comment 1026.19(e)(3)(iv)-4 (opens new window))
- Changed circumstances affecting settlement charge. Changed Circumstances that cause the estimated settlement charges to increase or, in the case of estimated charges identified in § 1026.19(e)(3)(ii) (opens new window), cause the aggregate amount of such charges to increase by more than 10 percent. (§ 1026.19(e)(3)(iv)(A) (opens new window)) For purposes of this and the following procedure, “changed circumstance” means:
- Revised disclosures. Determine whether the revised disclosures, even those provided only for informational purposes (i.e., not to reset tolerances), were based on the best information reasonably available to the credit union at the time the disclosure was provided to the consumer. (§ 1026.17(c)(2)(i) (opens new window)).
- Provision and receipt of revised closing disclosures. Determine whether the credit union has already provided a Closing Disclosure in accordance with § 1026.19(f)(1)(i) (opens new window).
NOTE: If the credit union has provided a Closing Disclosure, the credit union may not provide a revised version of the Loan Estimate on or after the date on which it provided the Closing Disclosure. (§ 1026.19(e)(4)(ii) (opens new window)) Instead, the credit union may use the initial o