Update: Upon further review by our Legal team, we will not be implementing these changes at this time. We will be publishing a comprehensive Integrated Disclosures rounding article in the near future.
On the Loan Estimate (Cx18565) 12 CFR 1026.37(o)(4)(ii) directs that the APR percentage “shall be disclosed up to three decimal places. If the amount is a whole number, then the amount disclosed shall be truncated at the decimal point.” [Emphasis added] Official Interpretation § 1026.37(o)(4)(ii)-1 further directs that “if any percentage amounts required to be disclosed contain more than three decimal places, they shall be rounded to three decimal places.” [Emphasis added]
The problem is that on the Closing Disclosure, § 38(t)(4)(ii) states that the APR “shall not be rounded and shall be disclosed up to three decimal places. If the amount is a whole number, then the amount disclosed shall be truncated at the decimal point.” [Emphasis added]
Since the Loan Estimate rounds to three decimal places and the Closing Disclosure truncates at three decimal places, this will occasionally result in a small difference between the two disclosures. Practically speaking, nothing has changed other than the way the regulation mandates the APR be displayed. However, this mandated difference could be a cause for concern. To alleviate this, Docutech is creating a new field, “Loan Estimate APR Display Option (TRID)” (102057), to allow clients to choose whether to round the APR on the Loan Estimate to three places or truncate to three places. The default behavior will be to round the APR on the Loan Estimate to three places.
Similarly, the rules for the rounding and truncating of the non-APR percentages (Interest Rate, TIP, etc) on the Loan Estimate are different from the rules controlling the rounding and truncating on the Closing Disclosure. Specifically, on the Loan Estimate the non-APR percentages can either be truncated to two places or rounded to three (see § 37(o)(4)(ii) and Official Interpretation § 1026.37(o)(4)(ii)-1). On the Closing Disclosure, these same percentages can either be truncated to two places or truncated to three places (see § 38(t)(4)(ii)). Consequently, Docutech is creating a new field “Closing Disclosure Interest Rate Display Option (TRID)” (102191) to allow clients the option of truncating to two or three decimal places on the Closing Disclosure. By default, the field will set the non-APR percentages on the Closing Disclosure to truncate to three decimal places. The existing field “Loan Estimate Interest Rate Display Option (TRID)” (95498) will not change and only applies to the non-APR percentages on the Loan Estimate.
These new fields will be available on April 16, 2016. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.