On May 5, 2022, Acting Commissioner of Financial Regulation David F. Provost signed an Order In Re: High Rate Mortgage Loan Disclosure which temporarily suspends the disclosure requirements pursuant to Regulation B-98-2 (Vt. Admin. Code 4-2-6) and Vt. Stat. Ann. Tit. 9 § 104.
The Findings in the Order In Re: High Rate Mortgage Loan Disclosure state:
- On November 1, 2021, the Commissioner of Taxes established the rate pursuant to 32 V.S.A. § 3108 at 3.25% (the “2022 Declared Rate”), which is the average prime loan rate charged by banks (as determined by the Board of Governors of the Federal Reserve System) for the 12-month period beginning October 1, 2020 and ending September 30, 2021.
- Based on the 2022 Declared Rate, the Disclosure requirements for High Rate Mortgage Loans are triggered by any first lien mortgage loan offered in 2022 having an interest rate in excess of 6.25% (the “2022 Disclosure Threshold”).
- When the Commissioner of Taxes set the Declared Rate at 3.25% on November 1, 2021, the 30-Year Fixed Rate Conforming Mortgage Index rate was 3.269% – less than two basis points above the Declared Rate.
- Since November 1, 2021, the 30-Year Fixed Rate Conforming Mortgage Index rate has increased by 67.8%, rising by 221.7 basis points to 5.486%, as of May 2, 2022.
- Due to the substantial rise in prevailing mortgage rates since November 1, 2022, it is now increasingly likely that the interest rates on Market Rate Mortgage Loans may exceed the 2022 Disclosure Threshold.
- The Disclosure is not intended for prospective borrowers of Market Rate Mortgage Loans.
- Providing prospective borrowers of Market Rate Mortgage Loans with the Disclosure, notifying them that they may be eligible for a loan with a lower interest rate from another lender, may confuse and mislead such borrowers.
- The Commissioner finds the temporary suspension of the disclosure requirements of Regulation B-98-2 for High Rate Mortgage Loans until January 1, 2023 to be in the best interests of the public.
Consequently, the Vermont High Rate/High Point Notices disclosure (Cx3708) is being temporarily suspended from printing generically until such time that Vermont’s Department of Financial Regulation determines otherwise.
At this time, the Vermont High Rate/High Point Notices disclosure (Cx3708) will only continue to print for clients who have custom configurations in place for this document. Docutech encourages their customers to reach out to their own legal counsel to verify whether or not the Vermont High Rate/High Point Notices disclosure (Cx3708) should continue to be included in their first lien mortgage loan initial disclosure packages.
These changes will be in effect on June 29, 2022. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.