Document Updates: Vermont High Rate/High Point Notices (Cx3708) Continues to Be Temporarily Suspended

As previously announced, on May 5, 2022, Acting Commissioner of Financial Regulation David F. Provost signed an Order In Re: High Rate Mortgage Loan Disclosure which temporarily suspended until December 31, 2022 the disclosure requirements pursuant to Regulation B-98-2 (Vt. Admin. Code 4-2-6) and Vt. Stat. Ann. Tit. 9 § 104.

Also previously announced, on December 15, 2022, Commissioner of Financial Regulation Kevin J. Gaffney signed a subsequent Order In Re: High Rate Mortgage Loan Disclosure which continued to temporarily suspend until June 30, 2023 the disclosure requirements pursuant to Regulation B-98-2 (Vt. Admin. Code 4-2-6) and Vt. Stat. Ann. Tit. 9 § 104.

On June 8, 2023, Commissioner of Financial Regulation Kevin J. Gaffney signed another subsequent Order Extending Suspension which continues to temporarily suspend until December 31, 2023 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 subsequent Order Extending Suspension state:

1. 1. On November 1, 2022, the Commissioner of Taxes established the rate pursuant to 32V.S.A. § 3108 at 3.96% (the “2023 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, 2021 and ending September 30, 2022.
   2. Based on the 2023 Declared Rate, the Disclosure requirements for High Rate Mortgage Loans are triggered by any first lien mortgage loan offered in 2023 having an interest rate in excess of 6.96% (the “2023 Disclosure Threshold”).
   3. When the Commissioner of Taxes set the Declared Rate at 3.96% on November 1, 2022,the 30-Year Fixed Rate Conforming Mortgage Index rate was 7.053%, a rate far in excess of the Declared Rate.
   4. As of December 1, 2022 the 30-Year Fixed Rate Conforming Mortgage Index rate was 6.390%, a rate far higher than the Declared Rate.
   5. As of June 7, 2023 the 30-Year Fixed Rate Conforming Mortgage Index rate was 6.746%, a rate that remains far higher than the Declared Rate.
   6. Based on the prevailing mortgage rates, it is highly probable that during the next six months the interest rates on Market Rate Mortgage Loans may exceed the 2023 Disclosure Threshold.
   7. The Disclosure is not intended for prospective borrowers of Market Rate Mortgage Loans.
   8. 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.
   9. The Commissioner previously ordered the suspension of disclosure requirements of Regulation B-98-2 for High Rate Mortgage Loans from May 5, 2022 through December 31, 2022 and subsequently extended the temporary suspension until July 1, 2023.
   10. The Commissioner finds that extending the temporary suspension of the disclosure requirements of Regulation B-98-2 for High Rate Mortgage Loans again, until January 1, 2024, to be in the best interests of the public.

The Vermont High Rate/High Point Notices disclosure (Cx3708) will continue to be temporarily suspended from printing generically until such time that Vermont’s Department of Financial Regulation determines otherwise.

If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.

LEG-1139

The preceding is for informational purposes only and is not and may not be construed as legal advice. No third party entity may rely upon anything contained herein when making legal and/or other determinations regarding its practices, and such third party should consult with an attorney prior to embarking upon any specific course of action.