Docutech has made minor adjustments to the Loan Terms, AP, and AIR Tables that will only impact the Loan Estimate and Closing Disclosure when the loan payment and/or the interest rate can adjust every month. The changes are as follows:
Loan Terms Table
The guidance for the Loan Terms section on the CD is derived in part from 37(a)(10)-3, via reference through the Commentary to 37(b)(6)-1. In subsection (ii) of 37(a)(10)-3 we read that “for products types and features that have introductory periods or adjustments periods that do not equate to a number of whole years, if the period is less than 24 months, §1026.37(a)(10) requires disclosure of the number of months, followed by the [appropriate] designation…” Since “every 1 month” and “every month” are conceptually identical, but “every month” is the preferred form, Docutech will disclose “Adjusts every month” when the adjustment period is one month.
AP Table
The Interpretation to 37(i)(5)-3 states that the “disclosure required by §1026.37(i)(5) must state the frequency of adjustments to the regular periodic principal and interest payment after the initial adjustment, if any, expressed in years, except if adjustments are more frequent than once every year, in which case the disclosure should be expressed as payments.” The interpretation gives examples for payments that occur on every 12th payment which should be disclosed as “Every Year” and adjustment of every sixth payment which should be disclosed as “Every 6th payment.” For loan programs that allow the payment to adjust every month, Docutech has changed the AP table to disclose that such loans may have subsequent changes “Every payment”.
AIR Table
Part of the guidance for the AIR table, found in 37(j)(5)-1, says that “the disclosure required by §1026.37(j)(5) must state the first month for which the interest may change. This month is typically scheduled in the terms of the legal obligation. However, if the exact month is not known at the time the creditor provides the Loan Estimate, the creditor must disclose the earliest possible month under the terms of the legal obligation, based on the best information available to the creditor at the time.” The guidance does not specifically state how it should be disclosed, but it does focus on months. Consequently, for applicable loans, the same change made to the AP table was also made to the AIR table, except instead of “Every payment” as on the AP table, the AIR table will show that subsequent interest rate changes can happen “Every month after first change”.
These changes will be in effect on January 4, 2017. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
DR 215198