The Payment and Interest Rate tables displayed on the Truth-in-Lending Disclosures are required under 12 CFR § 1026.18(s). Depending on the type of loan, a number of columns must print displaying the interest rate and monthly payment through the life of the loan, including an Introductory, Maximum During the First Five Years, and Maximum Ever columns, as applicable.
In clarifying which columns should print for adjustable-rate (ARM) and step-rate mortgages, the CFPB’s Official Staff Commentary states the following:
“The creditor must disclose the maximum rate that could apply during the first five years after consummation. If there are no interest rate caps other than the maximum rate required under 12 CFR § 1026.30, then the creditor should disclose only the rate at consummation and the maximum rate. Such a table would have only two columns.” (12 CFR Pt. 1026, Supp. I, Paragraph 18[s][i][B] – )
When this subsection of law was originally put into place under the older FRB’s version of Regulation Z, the analysis for it in the Federal Register provided further clarification:
“If an amortizing adjustable-rate mortgage has intermediate limitations on interest rate increases, then the table required by proposed § 226.18(s) will have at least three columns; if the transaction has no intermediate limitations on interest rates, then the table will have two columns, one showing the rate at consummation and the other showing the maximum possible under the loan’s terms.” (75 FR 58475 )
Currently for ARMs, we are printing all three columns. Based upon these commentaries, we will be configuring our generic Truth-in-Lending Disclosures to only print the Introductory and Maximum Ever columns when the initial, periodic, and maximum rate caps are all equal. The documents affected by this change are:
- Initial Truth-In-Lending Disclosure (Cx1591 & Cx14380)
- Truth-In-Lending Disclosure (Cx18 & Cx14363)
- Spanish Truth-In-Lending Disclosure (Cx7383 & Cx14389)
This change will take effect on June 24, 2014. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.
June 17, 2014